Estate of Matthews, J. v. MWA Acquisitions

CourtSuperior Court of Pennsylvania
DecidedDecember 16, 2022
Docket1440 WDA 2021
StatusUnpublished

This text of Estate of Matthews, J. v. MWA Acquisitions (Estate of Matthews, J. v. MWA Acquisitions) is published on Counsel Stack Legal Research, covering Superior Court of Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Estate of Matthews, J. v. MWA Acquisitions, (Pa. Ct. App. 2022).

Opinion

J-A22005-22

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

ESTATE OF JOHN B. MATTHEWS, : IN THE SUPERIOR COURT OF VIRGINIA MATTHEWS, KRISTIE : PENNSYLVANIA STEINMETZ, AND LISA MARCONI : : : v. : : : MWA ACQUISITIONS, LLC : No. 1440 WDA 2021 : Appellant :

Appeal from the Order Entered November 4, 2021 In the Court of Common Pleas of Beaver County Civil Division at No(s): A.D. 11230-2018

BEFORE: OLSON, J., DUBOW, J., and COLINS, J.*

MEMORANDUM BY OLSON, J.: FILED: DECEMBER 16, 2022

Appellant, MWA Acquisitions, LLC, appeals from the November 4, 2021

order granting summary judgment in favor of the Estate of John B. Matthews,

Virginia Matthews, Kristie Steinmetz, and Lisa Marconi (collectively,

“Matthews”) and denying summary judgment in favor of Appellant. We vacate

the November 4, 2021 order and remand this case for further proceedings in

accordance with this memorandum.

The record demonstrates that during 2009, and January 2010, Appellant

and Matthews engaged in negotiations whereby Appellant sought to acquire

the assets of a wall anchor services business owned by Matthews, including,

inter alia, the business’s tangible and intangible property. These negotiations ____________________________________________

* Retired Senior Judge assigned to the Superior Court. J-A22005-22

culminated in the execution of an asset purchase agreement (“APA”). The

APA, pursuant to the language set forth in the “In Witness Whereof” line, was

entered into on January 4, 2010. The agreed upon purchase price for

Matthews’ business was $1,365,000.00.1 The APA included a breakdown of

the purchase price between tangible and intangible assets, as well as

services.2 The APA contemplated that Appellant would make payment as

follows: (1) $238,500.00 in previously tendered earnest money;3 (2) payment

of a promissory note in the amount of $75,000.00 for consulting services with

a maturity date of January 29, 2017; (3) payment of a promissory note in the

____________________________________________

1 The written description of the purchase price was “One Million Four Hundred Fifty Thousand and 00/100 Dollars,” which differed from the numeric representation of the purchase price. Nevertheless, the parties agree that the purchase price was $1,365,000.00. The allocation of the purchase price between tangible and intangible assets, as well as services, confirms a purchase price of $1,365,000.00 because the sum of the allocated amounts is $1,365,000.00, as discussed infra.

2 Generally, an allocation of tangible and intangible assets, as well as services, will be set forth in an asset purchase agreement to ensure, inter alia, that all parties report the same information on tax forms and documents filed with the state and federal governments as a result of the sale. Here, the APA allocated the purchase price as follows: $475,000.00 to goodwill (an intangible asset subject to amortization); $740,000.00 to inventory and equipment (tangible assets subject to depreciation); $75,000.00 to a non-compete agreement payable in the form of a promissory note (an intangible asset subject to amortization); and $75,000.00 for consulting services (an expense) payable in the form of a promissory note.

3The check representing payment of the earnest money was dated February 10, 2008, which suggests that the negotiations may have begun as early as February 2008.

-2- J-A22005-22

amount of $75,000.00 as compensation for a non-compete agreement with a

maturity date of January 29, 2017; and (4) the remaining balance due at the

time of closing payable in “immediately available funds.”4

Assets transferred pursuant to the APA as part of the business would be

conveyed “clear and free of any and all liens, charges[,] and encumbrances

as of the Closing.” Asset Purchase Agreement, 1/4/10, at § 2.3. Section 7.6

of the APA, captioned “Entire Agreement”, stated,

This Agreement constitutes the entire agreement between the parties and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof. Notwithstanding the foregoing, this Agreement is to be entered into in conjunction and shall be construed with that certain Bill of Sale [(“BOS”)], Purchase and Sale Agreement [(“PSA”),5] Consulting Agreement[,] and Non-Compete Agreement entered into by and between the parties, each agreement being dated as of the Closing.

Asset Purchase Agreement, 1/4/10, at § 7.6.

4 Section 1.3 of the APA specifies that, at closing, the final sum due from Appellant to Matthews totaled $1,126,450.00. This final payment figure, when coupled with the earnest money amount of $238,550.00, equaled the purchase price of $1,365,000.00 without taking into consideration that a portion of the payment was made through Appellant’s obligation to pay $150,000.00 pursuant to two promissory notes, as described supra. A review of the settlement statement prepared at the closing on January 29, 2010, demonstrates that $150,000.00 was included as a portion of the payment of the total purchase price. The amount tendered by Appellant to Matthews at closing was, in fact, $744,541.24.

5 The PSA, executed on January 4, 2010, was an agreement in which Appellant agreed to purchase and Matthews agreed to sell certain land and premises located in Beaver Falls, Pennsylvania, as more fully described in the PSA.

-3- J-A22005-22

At the closing on January 29, 2010, settlement statements were

produced showing the final amounts Appellant would pay Matthews pursuant

to the APA and PSA. On that same date, the parties also executed two “stand

still promissory notes” each in the amount of $75,000.00 plus interest and

having a maturity date of January 29, 2017. A BOS was also executed,

although it is unclear whether the document was executed on January 29,

2010, because the day and month provisions were left blank. Based upon the

recitals contained in the BOS, which include, inter alia, the transfer of title

from Matthews to Appellant for Matthews’ business assets and tangible and

intangible property, we assume that the BOS was executed on January 29,

2010, the date of closing.

The parties also executed an Indemnification Agreement (“IA”) which

stated that the document was executed “as of the day and year first above

written.” The IA preamble, however, does not contain a date. Both parties

agree that the IA was executed on January 29, 2010. See Appellant’s Brief

at 13; see also Matthews’ Brief at 17. This January 29, 2010 date of

execution is further supported by the IA preamble clause that states,

“WHEREAS, [Appellant] and [Matthews] have entered into an [APA] for the

purchase of [Matthews’] business assets[,]” indicating that the IA was

executed at some point after the execution of the APA on January 4, 2010.

On September 21, 2018, Matthews filed a complaint asserting claims of

breach of contract and unjust enrichment based upon Appellant’s “fail[ure] to

satisfy its debts and obligations under the [Promissory] Notes and the [APA].”

-4- J-A22005-22

Matthews’ Complaint, 9/21/18, at ¶¶14-27. On October 15, 2018, Appellant

filed an answer, new matter, and a counterclaim asserting, inter alia, a claim

of breach of contract based upon Matthews’ failure “to indemnify and hold

[Appellant] harmless” under the terms of the IA for all warranty claims paid

by Appellant for work performed by Matthews prior to Appellant’s acquisition

of Matthews’ business. Appellant’s Answer, New Matter, and Counterclaim,

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