J-S03016-20
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
ARROWHEAD CONVEYOR : IN THE SUPERIOR COURT OF CORPORATION AND BUSSE/SJI : PENNSYLVANIA CORPORATION : : Appellants : : : v. : : No. 309 WDA 2019 : GIUSEPPE’S FINER FOODS, INC., ICP : GLOBAL HOLDINGS, INC., ICP ASSET : MANAGEMENT, INC., AND DENNIS V. : RAYBUCK :
Appeal from the Judgment Entered February 1, 2019 In the Court of Common Pleas of Clearfield County Civil Division at No(s): No. 2006-2159-CD
ARROWHEAD CONVEYOR : IN THE SUPERIOR COURT OF CORPORATION AND BUSSE/SJI : PENNSYLVANIA CORPORATION : : : v. : : : GIUSEPPE’S FINER FOODS, INC., ICP : No. 351 WDA 2019 GLOBAL HOLDINGS, INC., ICP ASSET : MANAGEMENT, INC. AND DENNIS V. : RAYBUCK : : Appellants :
Appeal from the Judgment Entered February 1, 2019 In the Court of Common Pleas of Clearfield County Civil Division at No(s): 2006-2159-CD
BEFORE: McLAUGHLIN, J., McCAFFERY, J., and PELLEGRINI, J.*
* Retired Senior Judge assigned to the Superior Court. J-S03016-20
MEMORANDUM BY McCAFFERY, J.: FILED MARCH 24, 2020
Arrowhead Conveyer Corporation and its affiliate, Busse/SJI Corporation
(Busse) (collectively, Arrowhead), plaintiffs below, appeal at 309 WDA 2019
from the judgment entered against their claim to pierce the corporate veil in
the Clearfield County Court of Common Pleas, following the first portion of a
bifurcated trial. Dennis V. Raybuck (Raybuck), Giuseppe’s Finer Foods, Inc.
(Giuseppe’s), ICP Global Holdings, Inc., and ICP Asset Management, Inc.
(collectively, the Raybuck Entities or Raybuck), the defendants below, cross-
appeal at 351 WDA 2019 from the judgment entered against them, following
a jury trial, in this breach of contract action. We affirm.
Arrowhead and Busse are Wisconsin corporations that design,
manufacture, and supply container and material handling equipment. Mr.
Raybuck was the president of the now-defunct Giuseppe’s, as well as the
remaining two Raybuck Entities. At all relevant times, the Raybuck Entities
were closely-held corporations owned by Raybuck and members of his family,
and controlled by Raybuck. The Raybuck Entities engaged in the food
importation industry. Giuseppe’s was formed to manufacture food products
using products imported by the other entities. In pursuit of this business, the
Raybuck Entities issued multiple purchase orders totaling approximately $24
million.
In October of 2004, the Raybuck Entities issued an invitation for bids for
the provision of equipment for the Giuseppe’s facility. On December 29, 2004,
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Arrowhead submitted a proposal to furnish a bulk glass depalletizer, a spray
cooler, a pouch cooler for a base price of $754,900, and additional options for
$228,400. The proposal contained a section entitled “Terms and Conditions
of Equipment Sale,” which stated, in toto:
2. Acceptance: [Giuseppe’s] acceptance of this proposal is limited to the terms and conditions contained herein and excludes any different or additional conditions contained in [Giuseppe’s] acceptance. If, for [Giuseppe’s] convenience, [Giuseppe’s] regular purchase order forms are used in accepting this proposal or in ordering equipment covered by this proposal, Arrowhead Conveyor’s acceptance is expressly conditioned upon [Giuseppe’s] assent to any additional or different terms and conditions contained herein. Any contract made by and between the parties is expressly conditioned upon Arrowhead Conveyor’s review and approval of [Giuseppe’s] credit.
A. Equipment Purchase Terms of Payment: The purchase prices shall be payable in United States current funds as per the terms expressed in this proposal (to be determined by Arrowhead Conveyor and communicated to [Giuseppe’s] in writing).
B. Parts & Service and equipment orders less than $15,000 value Terms of Payment: The purchase price shall be payable in United States current funds as follows:
100% due upon shipment or completion of services
Amounts due upon shipment shall be due when equipment is ready for shipment if [Giuseppe’s] notifies Arrowhead Conveyor that [Giuseppe’s] is not ready to receive the shipment. Such delayed shipment is subject to storage and handling charges and is payable upon presentation of invoice. If Arrowhead Conveyor is responsible for installation and [Giuseppe’s] delays or interrupts installation, the full balance of the purchase price less cost of completion of installation shall immediately become due. If installation is resumed, [Giuseppe’s] shall reimburse Arrowhead Conveyor for any increased costs resulting from such delays. In the event [Giuseppe’s] does not satisfy the terms of payment
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outlined herein, Arrowhead Conveyor reserves the right to assess a service charge of 1½% per month on the amount due on a pro-rata basis for any partial month on the amount due in arrears, provided there is no conflict with local or state law.
Arrowhead’s Amended Complaint, 8/7/08, Exh. D, at 24 (incorporated by
reference, Second Amended Complaint of 3/23/09).
On January 5, 2005, Giuseppe’s accepted Arrowhead’s proposal and
issued a purchase order. The purchase order, for $831,000, confirmed that it
was issued per Arrowhead’s proposal dated December 29, 2004. Through a
change order executed by Giuseppe’s in May of 2005, the total contract price
was increased to $879,600. Arrowhead’s affiliate, Busse, separately entered
into an oral agreement with Giuseppe’s to perform field service work on the
equipment.
Giuseppe’s began to experience funding shortfalls affecting its ability to
pay vendors. Raybuck’s bank facilitated a financial restructuring plan
pursuant to which the bank agreed to make a loan conditioned upon creditors
agreeing to a payment plan. Under the plan, which would supersede any
contractual terms to the contrary, creditors would receive an immediate
payment of 75% of the balance owed them. The final 25% would be secured
with a two-year promissory note at annual interest of 6%. The bank’s plan
was designed to keep vendors engaged with Giuseppe’s while it regained its
financial footing.
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As part of this negotiation with the bank, Raybuck executed a certificate
on December 21, 2006. The certificate compiled a list of all vendors owed in
excess of $100,000 and was created as part of the debt restructuring. The
certificate created by Raybuck delineated two classifications of vendors –
those with whom no dispute existed as to amount owed, and those with whom
amounts owed were disputed. Arrowhead and Busse were included in the
undisputed list, where vendors’ claims were acknowledged as valid. Next to
the amounts owed to Arrowhead and Busse, Raybuck wrote “no dispute but
no agreement signed.” In this context, it appears that “no agreement signed”
indicates that Arrowhead and Busse had not agreed to the bank’s proposed
payment and restructuring terms. Arrowhead, however, rejected the
proposed plan and elected instead to proceed under the terms of its
agreement with Giuseppe’s.
When Giuseppe’s failed to make payment in response to Arrowhead’s
invoices, Arrowhead commenced this action against the Raybuck Entities by
complaint on December 29, 2006, raising two counts of breach of contract and
one count for piercing the corporate veil. The complaint also sought interest,
fees, and costs under the Contractor and Subcontractor Payment Act 1
(CASPA). The Raybuck Entities raised counterclaims of breach of contract
(one each for Arrowhead’s contract and Busse’s oral agreement), breach of
1 73 P.S. §§ 501-516.
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express warranty, breach of implied warranty of merchantability, and breach
of implied warranty of fitness for a particular purpose. Raybuck Entities’
Answer, New Matter, & Counterclaims to Second Amended Complaint,
8/20/19. We note that ultimately, Giuseppe’s ceased business and is now
defunct.
The Honorable Stewart Kurtz, Senior Judge of Huntingdon County, held
a bifurcated bench trial on Arrowhead’s veil-piercing claim on March 2 to 4,
2016. On June 7, 2017, he entered an order dismissing that claim and a
memorandum explaining his ruling. 2
2 Initially, this Court noted a lack of clarity as to whether Arrowhead filed post- trial motions following the timely entry of the verdict. On March 12, 2019, this Court issued a rule to show cause directing Arrowhead, appellant in 309 WDA 2019, to show cause why the appeal should not be dismissed. On March 14, this Court received Arrowhead’s letter explaining that lead counsel was on vacation when the order of judgment from the trial court was received. Counsel further explained he prepared a motion for post-trial relief remotely during his vacation, and emailed the motion to the trial court on June 15, 2017, within eight days of the trial court’s order filed on June 7, 2017. Counsel also instructed his office to send the motion via UPS next day delivery to the Court of Common Pleas of Clearfield County. The motion was delivered on June 16, 2017. The Court of Common Pleas’ Prothonotary notified counsel’s office it was dissatisfied with the electronic signature and requested a physically signed motion. Another attorney from counsel’s law office entered her appearance and prepared a physically signed version of the motion, which was sent overnight and received by the Court of Common Pleas on Monday, June 19, 2017. On March 26, 2019, this Court entered an order discharging the rule to show cause.
Under Pa.R.Civ.P. 227.1(c), post-trial motions must be filed within ten days. In this case, the tenth day was Saturday, June 17, 2017. Unquestionably, the electronically-signed motion, delivered on Friday, June 16th, met this deadline. Per Pa.R.Civ.P 106, periods of time in rules shall be so computed as to exclude the first and include the last day of such period, and whenever the last day of such period falls on a Saturday, Sunday, or legal
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On May 1, 2018, over eleven years after the commencement of this suit,
the Honorable David Grine, Senior Judge of Centre County, presided over a
jury trial on Arrowhead’s breach of contract claims and the Raybuck Entities’
counterclaims. Pertinently, he granted Arrowhead’s motion to exclude certain
evidence the Raybuck Entities sought to offer as to alleged defects with the
equipment and services supplied by Arrowhead. On May 2, the jury returned
a verdict in favor of Arrowhead. On September 11, 2018, the court entered
an order applying CASPA and awarding a total amount of $844,686.98 to
Arrowhead on all counts.3 On February 1, 2019, the court denied Raybuck’s
motion for post-trial relief and ordered that judgment be entered in favor of
Arrowhead on the breach claims and all of Raybuck’s counterclaims, and in
favor of Raybuck as to piercing the corporate veil.
Arrowhead filed a timely notice of appeal on February 25, 2019, and
Raybuck filed one on March 1st. On March 26th, this Court consolidated the
appeals. The trial court ordered statements per Pa.R.A.P. 1925(b), and both
parties timely filed such statements. On June 19 and July 17 of 2019, each
trial judge filed a letter advising the Prothonotary he would submit no further
opinion.
holiday, such day shall be omitted from the computation. Thus, the physically- signed motion, received by the court on Monday, June 19th, also met the deadline imposed by Rule 227.1. 3 The CASPA ruling affected the rate of interest to be applied to the judgment
for breach.
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We first consider Raybuck’s cross-appeal. Raybuck presents five issues
for our review (reordered for ease of discussion):
Whether the trial court erred in precluding [Raybuck] from offering evidence of substantial defects in the equipment and services provided by [Arrowhead] as a counterclaim, as a defense, and in determining whether [Arrowhead] established a prima facie case of [its] proper performance of the contracts and satisfaction of all conditions precedent to [Raybuck’s] payment obligations.
Whether the trial court erred in refusing to issue a curative instruction after counsel for [Arrowhead] made a highly prejudicial and improper statement, telling the jury that [Raybuck] never made any complaints, despite knowing that [Raybuck] repeatedly complained and would have offered evidence of such complaints and the substantial defects in the equipment but for the trial court’s preclusion of such evidence.
Whether the trial court erred in permitting [Busse] to change its claim from an oral contract claim to written contract claim when the cause of action pled in Count II of the Second Amended Complaint expressly alleged an oral contract between [Giuseppe’s] and [Busse], and when the email that allegedly formed the basis of a written contract was not attached to the Second Amended Complaint.
Whether the trial court erred in issuing its Finding of Fact No. 2, finding that Section 2.B of the written contract between [Giuseppe’s] and [Arrowhead] was applicable when the plain language of Section 2.B states that Section 2.B is only applicable to “Parts & Services and equipment order less than $15,000 value” and when it is undisputed that the order in question substantially exceeded $15,000 in value.
Whether the trial court erred in determining that [CASPA] was applicable to [Arrowhead] when it did not qualify as a “Contractor” under the Act because it was not contracted to improve real property, it was only contracted to supply and not install equipment.
Raybuck’s Brief at xi-xiii.
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Arrowhead’s Motion in Limine
First, Raybuck argues the trial court erred in granting Arrowhead’s
motion in limine and precluding proffered evidence of alleged defects in
equipment and services Arrowhead provided, which Raybuck offered as a
counterclaim and a defense. Raybuck claims as follows:
This Court should reverse and remand for a new trial as to Phase II only because the trial court erred in refusing to allow [Raybuck] to present evidence that the [e]quipment (the depalletizer, spray cooler and TUCS pouch cooler provided by Arrowhead) was defective and that the services provided by [Busse] were defective.
Raybuck Entities’ Brief at 43-44 (footnote omitted).
“The question of whether evidence is admissible is a determination that
rests within the sound discretion of the trial court and will not be reversed on
appeal absent a showing that the court clearly abused its discretion.”
Moroney v. General Motors Corp., 850 A.2d 629, 632 (Pa. Super. 2004).
“Discretion is abused when the course pursued represents not merely an error
of judgment, but where the judgment is manifestly unreasonable or where the
law is not applied or where the record shows that the action is a result of
partiality, prejudice, bias or ill will.” Schmalz v. Manufacturers & Traders
Tr. Co., 67 A.3d 800, 803 (Pa. Super. 2013), quoting Catlin v. Hamburg, 56
A.3d 914, 922 (Pa. Super. 2012).
Preliminarily, we note that while the trial record indicates that oral
argument was scheduled on Arrowhead’s motion in limine, and that the trial
court granted this motion, we have found no indication of the court’s reasoning
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for its ruling. Nevertheless, we note Arrowhead’s motion in limine cited
Raybuck’s certification to the bank, signed and executed by Mr. Raybuck as
president of Giuseppe’s, as proof that it did not dispute that Arrowhead was
properly owed the amounts still outstanding under their agreement. The
motion also sought to exclude evidence of problems with the production line
due to programming errors or deficiencies caused by parties other than
Arrowhead. The reasoning of Arrowhead’s motion, on its own, was sufficient
to demonstrate that the trial court’s ruling was not an abuse of discretion. If
Raybuck had already acknowledged that the remaining balance was properly
owed, the trial court could preclude evidence claiming, belatedly, that
Arrowhead had not satisfied conditions precedent to Raybuck’s obligation to
pay. Furthermore, the trial court could exclude evidence as to programming
errors made by parties other than Arrowhead and Busse, because it was not
appropriate to fault Arrowhead and Busse for the errors of others, especially
independent third parties who were not party to the contract. Such evidence
seems to be more prejudicial than probative. See Pa.R.E. 403 (evidence is
excludable “if its probative value is outweighed by a danger of one or more of
the following: unfair prejudice, confusing the issues, misleading the jury,
undue delay, wasting time, or needlessly presenting cumulative evidence”).
Because Raybuck could not establish the trial court’s decision was clearly
erroneous, this claim fails.
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Denial of a Curative Instruction
In its second issue, Raybuck argues that the trial court erred in declining
to issue a curative instruction after Arrowhead’s counsel made a statement in
closing argument to which Raybuck objected. We note Arrowhead’s attorney
said, “You didn’t hear any evidence that there was any complaints [as to the
depalletizer.] After it was installed, did [Giuseppe’s] come back and say these
items that we noted earlier at the factory acceptance test weren’t done? There
were no complaints that came back that said anything wasn’t corrected.” N.T.
Trial, 5/1/18, at 161-62. Raybuck’s counsel objected, and the objection was
sustained. Id. Raybuck’s counsel then requested that the jury be instructed
not to make any inferences about the absence of complaints. After hearing
argument, the trial court refused to give such an instruction. Id. at 166-67.
In its opinion and order of September 11, 2018, denying post-trial motions,
the trial court described the comment as de minimis and as therefore not
warranting a separate curative instruction. Trial Ct. Op., 9/11/18, at 2.
“It is well settled that in reviewing a challenge to a jury instruction the
charge, as a whole, must be considered. Furthermore, the trial court has
broad discretion in phrasing the instructions, so long as the directions given
‘clearly, adequately, and accurately’ reflect the law.” Grove v. Port Auth. of
Allegheny Cty., 218 A.3d 877, 887 (Pa. 2019) (citation omitted). “[A]
reviewing court will not grant a new trial on the ground of inadequacy of the
charge unless there is a prejudicial omission of something basic or
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fundamental.” Id. at 888, quoting Stewart v. Motts, 654 A.2d 535, 540 (Pa.
1995). Absent prejudice, a reviewing court will not disturb a jury verdict
based on a supposed error in the charge; a harmless error is not sufficient to
warrant a new trial. Id.
Here, Raybuck attempts to extrapolate from its first argument,
concerning the excluded evidence, into this claim regarding Arrowhead’s
counsel’s closing argument. Raybuck claims the comment was doubly unfair
because the harm of the comment was compounded by the evidentiary ruling
excluding Raybuck’s alleged complaints about Arrowhead’s equipment.
However, it is clear from the context that counsel’s comment was limited in
scope, and was further cut short because of Raybuck’s timely objection, which
was sustained. Arrowhead’s counsel was speaking of a finite period of time,
and of a single machine. It is reasonable that the trial court would not want
to call further attention to such a minor transgression.
Furthermore, Arrowhead’s comments appear to have been in response
to comments made during Raybuck’s closing argument, wherein his counsel
argued to the jury that there was not sufficient evidence that Arrowhead met
all its performance requirements. N.T. Trial, 5/1/18, at 156. Although
Raybuck’s objection was sustained, the comment about the lack of complaints
was in response to this line of argument.
In addition, the court properly instructed the jury that the attorneys’
arguments are not evidence. N.T. Trial, 5/1/18, at 170. At the beginning of
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trial, the court instructed jurors that they were to disregard the subject of
lawyers’ objections if the court sustained the objection. N.T. 4/30/18, at 25-
26. This Court cannot conclude that, when taken as a whole, the jury
instructions were inaccurate or inadequate.
Although Raybuck cites cases, on appeal, on comments that inflame
passion or prejudice, applying these cases to a description of a depalletizer
and factory installation and review can only cast into stark contrast the relative
mildness of the commentary at issue here. Raybuck cites: Narciso v. Mauch
Chunk Twp., 87 A.2d 233 (Pa. 1952), in which counsel argued that the action
was “really” against the taxpayers and not the municipality; Mirabel v.
Morales, 57 A.3d 144 (Pa. Super. 2012), in which trial counsel used closing
arguments to inject the issue of racism into a case arising from a car accident;
Poust v. Hylton, 940 A.2d 380 (Pa. Super. 2007), in which counsel, having
been expressly forbidden from making mention of cocaine, nevertheless
stated that the decedent in a wrongful death action had a cocaine metabolite
in his system when he died; and Young v. Washington Hosp., 761 A.2d 559
(Pa. Super. 2000), in which counsel claimed that parents of an injured infant
were seeking only to profit from her injuries. Here, Arrowhead’s counsel’s
comment, limited in scope to a single piece of equipment, and limited
temporally, pertained to something that, while having great import to the
parties, had no inherent inflammatory qualities. Because Raybuck has not
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established that the comment was especially inflammatory or that Raybuck
was prejudiced thereby, this claim fails.
Breach of Contract
In its third issue, Raybuck argues that the trial court erred in permitting
Arrowhead to change its claim as to Busse, its subsidiary, from an oral contract
claim to a written contract claim. Arrowhead pled in its complaint and argued
at trial that Busse and Raybuck had an oral agreement. At trial Arrowhead
submitted evidence of an email message from one of Raybuck’s employees
referring to that oral agreement. Raybuck now argues that Arrowhead pled
pretrial that Busse had an oral agreement with Raybuck, but that Arrowhead
then switched at the eleventh hour to a different breach theory, relying on the
email. Raybuck argues that in doing so, Arrowhead failed to give adequate
notice in its pleadings and to comply with pleading requirements. See
Pa.R.Civ.P. 1019(h) (“When any claim or defense is based upon an agreement,
the pleading shall state specifically if the agreement is oral or written.”). When
the agreement is written, it must be attached to the pleading. Pa.R.Civ.P.
1019(i).
Arrowhead, in turn, notes that Pennsylvania courts have admitted
emails as circumstantial evidence of the terms of an oral contract. See, e.g.,
F. Zacherl, Inc. v. Flaherty Mech. Contractors, LLC, 131 A.3d 1030, 1038
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(Pa. Cmwlth. 2016).4 Arrowhead asserts that its position has always been
that the contract at issue was oral, and thus that Raybuck is mischaracterizing
its position. Arrowhead’s Response Brief, at 29-32.
The evidence adduced at trial includes an email discussion relating to an
oral agreement that Busse would perform certain on-site work. N.T. 4/30/18,
at 164-67. In an email message, a Raybuck employee requested a technical
service visit from Busse, offered that Raybuck would pay travel and expenses,
and stated that costs incurred would be added to a purchase order (although
it appears the purchase order was never so modified). Id. at 164-65.
What Raybuck characterizes as Arrowhead’s vacillation between two
different theories of contract formation appears instead to be introduction of
circumstantial evidence to corroborate the existence of an oral agreement via
email. An email message can contain a contract or it can refer to a contract.
If an email message refers to a written contract, it does not necessarily render
it part of the contract. Instead it is evidence related to it. The same is true
here, though the contract was oral. The email message, produced by Raybuck
years before trial, is evidence tending to establish the existence of an oral
agreement.
Although Raybuck frames its position as inadequate notice (per its
invocation of Rule 1019’s pleading requirements), its argument goes instead
4“Although a decision of the Commonwealth Court is not binding upon this Court, it can be considered as persuasive authority.” Nw. Sav. Bank v. Knapp, 149 A.3d 95, 98 n.3 (Pa. Super. 2016) (citation omitted).
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to sufficiency of the evidence. Raybuck argues explicitly that there was
insufficient evidence to prove that an oral agreement had been reached.
Raybuck’s Brief at 61.
Our Supreme Court has explained:
When reviewing a sufficiency of the evidence claim in a civil case . . . an appellate court, viewing all the evidence and reasonable inferences therefrom in the light most favorable to the verdict winner, must determine whether the evidence was sufficient to enable the factfinder to find that all the elements of the causes of action were established by a preponderance of the evidence. Whether a claim was established under a preponderance of the evidence standard is “tantamount to a ‘more likely than not’ inquiry.”
Samuel-Bassett v. Kia Motors Am., Inc., 34 A.3d 1, 34-35 (Pa. 2011)
(citations omitted).
In its order and opinion of September 11, 2018, the trial court notes its
review of the record and concludes that the jury had ample evidence to find
the necessary elements for Arrowhead’s claims of breach. Order & Opinion,
9/11/18, at 3. The record confirms that the emails, coupled with relevant
testimony, establishes the existence of an oral agreement for additional
technical support supplemental to Arrowhead’s contract. The emails,
produced by Raybuck, cannot form the basis for unfair surprise. Thus,
whether posed as a sufficiency argument or a notice argument, this claim fails.
Raybuck also claims the trial court erred in finding that Section 2.B of
the contract between Giuseppe’s and Arrowhead was applicable because it
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specified that it applied to “Parts & Service and equipment order less than
$15,000 value.”5 For ease of discussion, we reproduce that section:
B. Parts & Service and equipment orders less than $15,000 value Terms of Payment: The purchase price shall be payable in United States current funds as follows:
Amounts due upon shipment shall be due when equipment is ready for shipment if [Giuseppe’s] notifies Arrowhead Conveyor that [Giuseppe’s] is not ready to receive the shipment. Such delayed shipment is subject to storage and handling charges and is payable upon presentation of invoice. If Arrowhead Conveyor is responsible for installation and [Giuseppe’s] delays or interrupts installation, the full balance of the purchase price less cost of completion of installation shall immediately become due. If installation is resumed, [Giuseppe’s] shall reimburse Arrowhead Conveyor for any increased costs resulting from such delays. In the event [Giuseppe’s] does not satisfy the terms of payment outlined herein, Arrowhead Conveyor reserves the right to assess a service charge of 1½% per month on the amount due on a pro-rata basis for any partial month on the amount due in arrears, provided there is no conflict with local or state law.
Arrowhead’s Amended Complaint, 8/7/08, Exh. D, at 24 (incorporated by
Raybuck’s argument contests the award of 1.5% interest per month for
overdue amounts owed under the contract, and relies on a typographical
indentation of the section carrying the disputed language as to interest on late
payments. Raybuck argues the indentation shows that the terms apply only
to a subsection on smaller purchases, and not all purchases. We disagree.
5 This section of the contract is quoted at length on pages 3 and 4, supra.
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“[T]he interpretation of the terms of a contract is a question of law for
which our standard of review is de novo, and our scope of review is plenary.”
McMullen v. Kutz, 985 A.2d 769, 773 (Pa. 2009) (citation omitted). When
a contract is susceptible to two competing constructions, the one “which
makes it fair, customary and such as prudent [persons] would naturally
execute” is preferred. Felmont Oil Corp. v. Cavanaugh, 446 A.2d 1280,
1283 (Pa. Super. 1982) (citations & quotation marks omitted).
Raybuck’s support lies solely in its interpretation of what it characterizes
as industry custom; there is no authority in Raybuck’s brief supporting its
interpretation of the contract. Raybuck’s argument is, essentially, that for
larger orders, custom dictates a bespoke payment term rather than a
boilerplate term. However, Raybuck’s resort to this argument is a blade that
cuts both ways – an adversary could just as easily argue that, because of the
large sums involved in more significant purchases, it is more important to rely
on standard terms for interest on tardy payments, as the impact of such
tardiness is greater.
Raybuck’s argument would render the indented subsection in question
mere surplusage, and would leave the contract silent as to late payment. “A
term in a contract should not be treated as mere surplusage.” Gralka v.
Isaacson, 556 A.2d 888, 891 (Pa. Super. 1989). Further, Raybuck’s
proposed interpretation, in which the term on interest for payments in arrears
is tucked into the subsection on orders of less than $15,000 of value, would
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render that subsection internally inconsistent. For such lower-cost orders,
payment is due in its entirety upon shipment or completion of services. The
disputed section, however, explicitly refers to amounts due upon shipment,
and refers to other terms including amounts due in arrears, as opposed to
amounts already paid, which would not apply to the lower-value scenario in
which there is one invoice, one payment due date, and no further
complications. This is neither a reasonable reading of the contract nor of the
laws of contract interpretation. Contracts must be given a reasonable
interpretation reflecting the intention of the parties. CBS Inc. v. Capital
Cities Commc’ns, Inc., 448 A.2d 48, 54 (Pa. Super. 1982). There being no
error in the application of the trial court of the operative contract term, this
argument fails.
CASPA
In its final issue, Raybuck avers the trial court erred in applying CASPA
to the judgment for Arrowhead. Raybuck argues that Arrowhead and Busse
are not contractors or subcontractors as defined by CASPA, that the underlying
agreements are not construction contracts as defined by the Act, and that
Arrowhead and Busse did not “improve” real property as defined by the Act.6
Raybuck raised its opposition to application of CASPA in a summary judgment
6 In its brief, Raybuck also argues that an ownership exclusion applies; this argument does not appear in Raybuck’s Rule 1925(b) statement of matters complained of on appeal and is therefore waived. See Pa.R.A.P. 1925(b)(4)(viii).
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motion which was denied on November 10, 2014. Arrowhead responds on
appeal that it set forth competent evidence that the start-up and additional
technical services attendant to installation of Arrowhead’s equipment at
Raybuck’s facility satisfied CASPA’s requirements.
This Court has stated:
CASPA [is] a comprehensive statute enacted in 1994 to cure abuses within the building industry involving payments due from owners to contractors, contractors to subcontractors, and subcontractors to other subcontractors. The underlying purpose of [CASPA] is to protect contractors and subcontractors . . . [and] to encourage fair dealing among parties to a construction contract. The statute provides rules and deadlines to ensure prompt payments, to discourage unreasonable withholding of payments, and to address the matter of progress payments and retainages. Under circumstances prescribed in the statute, interest, penalty, attorney fees and litigation expenses may be imposed on an owner, contractor or subcontractor who fails to make payment to a contractor or subcontractor in compliance with the statute.
Zimmerman v. Harrisburg Fudd I, L.P., 984 A.2d 497, 500–01 (Pa. Super.
2009) (citations, footnotes, & quotations omitted); see also Prieto Corp. v.
Gambone Const. Co., 100 A.3d 602, 607 (Pa. Super. 2014). CASPA is a
remedial statute, and courts must accord it a liberal construction to effect its
objects and promote justice. Lomas v. Kravitz, 130 A.3d 107, 131 (Pa.
Super. 2015).
“Because statutory interpretation is a question of law, our standard of
review is de novo, and our scope of review is plenary.” Snead v. Soc’y for
Prevention of Cruelty to Animals of Pa., 985 A.2d 909, 912 (Pa. 2009).
The object of interpretation and construction of all statutes is to ascertain and effectuate the intention of the General Assembly.
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See 1 Pa.C.S. § 1921(a) . . . . When the words of a statute are clear and free from all ambiguity, their plain language is generally the best indication of legislative intent. A reviewing court should resort to other considerations to determine legislative intent only when the words of the statute are not explicit. 1 Pa.C.S. § 1921(b) . . . In ascertaining legislative intent, this Court is guided by, among other things, the primary purpose of the statute, see 1 Pa.C.S. § 1921(c)(4), and the consequences of a particular interpretation. Id. § 1921(c)(6).
In re Carroll, 896 A.2d 566, 573 (Pa. 2006) (some citations omitted). “[I]t
is axiomatic that in determining legislative intent, all sections of a statute must
be read together and in conjunction with each other, and construed with
reference to the entire statute.” Penn Jersey Advance, Inc. v. Grim, 962
A.2d 632, 634 (Pa. 2009). “All other provisions of a statute shall be liberally
construed to effect their objects and to promote justice.” 1 Pa.C.S. § 1928(c).
Under CASPA, a “contractor” is “[a] person authorized or engaged by an
owner to improve real property.” 73 P.S. § 502 (“Definitions”). A
“construction contract” is an agreement to perform work on any real property
located in Pennsylvania. Id. To “improve” is “[t]o design, effect, alter,
provide professional or skilled services, repair or demolish any improvement
upon, connected with, or on or beneath the surface of any real property . . .
to furnish materials, . . . or to perform any labor upon improvements.” Id.
Arrowhead argues it submitted evidence sufficient to support the trial
court’s determination that it provided startup support and additional technical
services on the equipment installed on the factory floor at Giuseppe’s. The
plain language of CASPA, where any analysis of statutory application must
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begin, broadly outlines the relevant terms. CASPA defines “improve” using
inclusive language, like “any”, and catalogs a broad variety of actions in
defining improvement. That language includes “any labor upon
improvements.” 73 P.S. § 502.
Raybuck cites Reco Equip. v. John T. Subrick Contracting, 780 A.2d
684 (Pa. Super. 2001), a case involving equipment rental. This case, about
the temporary furnishing of equipment, is not relevant and is distinguishable
from a case arising from a contract for permanent, fundamental improvements
to a manufacturing facility. The equipment that Arrowhead provided was part
of what made the facility a factory and not a warehouse or other type of
building. Raybuck also cites Apostolou Assocs., Inc. v. DiPardo, 2011 Pa.
Dist. & Cnty. Dec. LEXIS 76 (March 31, 2011), a Court of Common Pleas case
involving an agreement to explore the feasibility of a development project,
entered into before either party even owned the subject property, for
assistance with dealings with local planning and zoning officials. That opinion
is not binding on this Court; neither is it persuasive in this instance, given that
the facts are inapposite. See Branham v. Rohm & Haas Co., 19 A.3d 1094,
1103 (Pa. Super. 2011) (“[C]ommon pleas court decisions are not binding on
appellate courts.”).
Arrowhead established both that it provided some level of customization
to the equipment and that it provided startup services on site. This is sufficient
to invoke CASPA’s protections. Even if the work provided was ancillary to the
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sale of equipment, the broad language of CASPA covers the work provided
and therefore its protections apply. Arrowhead was there, on site, to provide
labor upon improvements to real property. It submitted sufficient competent
evidence to establish that it did so. This argument fails.
Piercing the Corporate Veil
Arrowhead raises a sole issue on appeal: whether the trial court erred
in denying its claim to pierce the corporate veil:
Whether justice and equity require piercing the corporate veil and holding [Mr.] Raybuck personally liable for Giuseppes’ debt to [Arrowhead] where Giuseppes was grossly undercapitalized and rendered judgment proof as a result of Raybuck’s failure to contribute money from either ICP Global or his personal money so that Giuseppes had the ability to fully pay the equipment vendors involved in supplying equipment for the start up of Giuseppes’ food processing operations.
Arrowhead’s Brief at 3.
Arrowhead argues that Raybuck himself exercised exclusive control over
all the corporate entities involved in the deal and was aware that the bank’s
financing was not sufficient to satisfy the debts incurred to equipment
vendors. It argues that Giuseppe’s was grossly undercapitalized for purposes
of paying vendors, and Raybuck did nothing to remedy the situation. It argues
that justice and equity support piercing the corporate veil.
The trial court noted the strong presumption against veil-piercing in
Pennsylvania law and found that the factors governing piercing the veil were
not established by Arrowhead. Trial Ct. Op., 6/2/17, at 29.
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Our appellate role in cases arising from non-jury trial verdicts is to determine whether the findings of the trial court are supported by competent evidence and whether the trial court committed error in any application of the law. The findings of fact of the trial judge must be given the same weight and effect on appeal as the verdict of a jury. We consider the evidence in a light most favorable to the verdict winner. We will reverse the trial court only if its findings of fact are not supported by competent evidence in the record or if its findings are premised on an error of law. However, [where] the issue . . . concerns a question of law, our review is plenary.
Stephan v. Waldron Electric Heating & Cooling LLC, 100 A.3d 660, 664–
665 (Pa. Super. 2014) (citation omitted).
The “legal fiction of a separate corporate entity was designed to serve
convenience and justice, and will be disregarded whenever justice or public
policy demand and when the rights of innocent parties are not prejudiced nor
the theory of corporate entity rendered useless.” Ashley v. Ashley, 393 A.2d
637, 641 (Pa. 1978) (citations omitted). “[T]here is a strong presumption in
Pennsylvania against piercing the corporate veil.” Lumax Industries, Inc.
v. Aultman, 669 A.2d 893, 895 (Pa. 1995). Establishing that all stock in a
corporation is owned by one person is not sufficient to pierce the corporate
veil in Pennsylvania. Kaites v. Pa. Dep’t. Enviro. Resources, 529 A.2d
1148 (Pa. Cmwlth. 1987) (rejecting application of alter ego liability theory).
Our courts consider the following factors when determining whether to
pierce the corporate veil: (1) undercapitalization; (2) failure to adhere to
corporate formalities; (3) substantial intermingling of corporate and personal
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affairs, and (4) use of the corporate form to perpetrate a fraud. Lumax
Industries, 669 A.2d at 895. This Court has relied on the elements of
common law fraud in applying the Lumax Industries factors. See, e.g.,
Fletcher-Harlee Corp. v. Szymanski, 936 A.2d 87, 111-01 (Pa. Super.
2007).
Undercapitalization, substantial intermingling, failure to adhere to
corporate formalities, and fraud: these are the guideposts of our inquiry. The
record suggests some intermingling between Raybuck’s various corporations.
For instance, ICP Global Payroll, LLC acted as paymaster for all employees,
regardless of which subsidiary employed them. Trial Ct. Op., 6/2/17, at 14.
Raybuck was president of, and managed daily operations for, all of the
corporate entities at issue here. Id. The strongest evidence concerned
undercapitalization, and there Arrowhead has made a substantial showing.
Evidence of the other Lumax Industries factors is weak or altogether
lacking. The evidence as to intermingling between corporate forms does not
necessarily establish intermingling of corporate and personal affairs. It is not
fraudulent for investors to take reasonable, legal steps to wind down a failing
business venture. Although there is some evidence that Raybuck used its
various corporate structures to move assets in a way that would make them
less available to creditors by, for instance, transferring ownership of valuable
equipment from Giuseppe’s to ICP Asset and then leasing the equipment back
to Giuseppe’s, Arrowhead has not proven sufficient facts for this Court to
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conclude that veil-piercing is justified. Where actions could be seen as
reasonable winding-down of a faltering investment, we will not view them
harshly and call it fraud without ample evidence.
Although Arrowhead established evidence of undercapitalization, it did
not establish any of the other Lumax Industries factors to the extent
necessary to set aside the factual findings below. Given the presumption
against veil-piercing, we affirm the judgment entered against Arrowhead on
this claim.
February 1, 2019 judgment against Arrowhead on its piercing-the-
corporate-veil claim affirmed. February 1, 2019 judgment on the parties’
remaining claims and counter-claims affirmed.
Judge Pellegrini joins this memorandum.
Judge McLaughlin concurs in the result.
Judgment Entered.
Joseph D. Seletyn, Esq. Prothonotary
Date: 3/24/2020
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