J-S49002-20
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
GEORGE J. MORGAN : IN THE SUPERIOR COURT OF : PENNSYLVANIA Appellant : : : v. : : : A. FROST, INC., D/B/A FROST & CO. : No. 538 WDA 2020 DIAMONDS :
Appeal from the Order Entered March 11, 2020 In the Court of Common Pleas of Allegheny County Civil Division at No(s): AR-19-5649
BEFORE: OLSON, J., DUBOW, J., and STEVENS, P.J.E.*
MEMORANDUM BY OLSON, J.: FILED JANUARY 21, 2021
Appellant, George J. Morgan, appeals from the March 11, 2020 order
sustaining the preliminary objections filed by A. Frost, Inc. d/b/a Frost & Co.
Diamonds (“Frost”) and dismissing Appellant’s amended complaint with
prejudice.1 We affirm. ____________________________________________
* Former Justice specially assigned to the Superior Court.
1 The trial court’s order sustaining Frost’s preliminary objections in the nature of a demurrer and dismissing the amended complaint with prejudice is a final order for purposes of appeal without resorting to the filing of exceptions or reducing the order to a judgment. See U.S. Nat’l Bank in Johnstown v. Johnson, 487 A.2d 809, 814 (Pa. 1985). Appellant’s notice of appeal was filed on April 28, 2020, more than 30 days after entry of the order sustaining the preliminary objections and dismissing Appellant’s amended complaint with prejudice. See Pa.R.A.P. 903(a) (stating, “the notice of appeal . . . shall be filed within 30 days after the entry of the order from which the appeal is taken”). In a Second Supplemental Order entered on April 1, 2020, our Supreme Court, however, suspended “all time calculations for purposes of J-S49002-20
The trial court summarized the factual history as follows:
[Appellant] claims that on November 4, 2015, he put a $3,500[.00] down[-]payment on a diamond at [Frost’s] jewelry store. [Appellant] signed an invoice[,] which provided that the diamond was being sold to [Appellant] for [$12,529.70] and that [Appellant] paid a deposit of $3,500[.00]. Also, to complete the purchase, [Appellant was required to] pay the remaining balance of $9,029.70. Finally, the invoice expressly provided[,] "no cash refunds, store credit only". Within a few days [of signing the invoice, Appellant] changed his mind about this particular diamond. [Frost] was unable to find a diamond that met [Appellant’s] specifications. Four years later, [Appellant] filed [a] complaint seeking $3,500[.00 in damages]. [Appellant] allege[d] extrinsic evidence regarding the terms of the agreement.
Trial Court Opinion, 6/16/20, at unnumbered pages 1-2 (extraneous
capitalization omitted).
The record demonstrates that on November 15, 2019, Appellant filed a
complaint, alleging causes of action for violation of the Unfair Trade Practices
and Consumer Protection Law,2 breach of contract, breach of express
warranty, and unjust enrichment and seeking $3,500.00 in damages.3 Frost
filed preliminary objections, and Appellant subsequently filed an amended
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time computation relevant to court cases or other judicial business, as well as time deadlines” through April 30, 2020, due to the COVID-19 pandemic. See In re General Statewide Emergency, Judicial Docket Nos. 531 and 532, Second Supplemental Order, 4/1/20. Appellant’s appeal of the final order, therefore, was timely filed on April 28, 2020.
2 73 P.S. §§ 201-1 to 201-10.
3 A review of Appellant’s amended complaint demonstrates that Appellant is seeking relief in the form of, inter alia, a cash refund of his deposit.
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complaint on January 9, 2020, again setting forth the aforementioned causes
of action. Thereafter, Frost filed preliminary objections in the nature of a
demurrer to Appellant’s amended complaint, arguing, inter alia, that Appellant
failed to state a claim upon which relief could be granted because the parol
evidence rule barred Appellant from introducing evidence of alleged verbal
representations that varied from the terms set forth in the sales invoice. Frost
further maintained that Appellant was not entitled to a cash refund of his
deposit pursuant to the terms of the sales invoice. After entertaining
argument on the parties’ respective positions on March 11, 2020, the trial
court sustained Frost’s preliminary objections and dismissed Appellant’s
amended complaint with prejudice. This appeal followed.
Appellant raises the following issues for our review:
1. Whether the trial court erred in [sustaining Frost’s] preliminary objections, as a matter of law, when it found that the simple and attenuated invoice and receipt for the purchase of the diamond constituted the full and final agreement contemplated by the parties, thus barring parol evidence and dismissing []Appellant's claims with prejudice?
2. Whether the trial court erred in [sustaining Frost’s] preliminary objections, as a matter of law, when it found that statements made by [Frost], both oral and written, and the subsequent actions by [Frost] did not constitute a modification and waiver to the terms of the invoice and receipt under the Pennsylvania Commercial Code, thus barring parol evidence of the same and dismissing []Appellant's claims with prejudice?
3. Whether the trial court erred in dismissing []Appellant's breach of contract claim with prejudice where[,] regardless of the applicability of the parol evidence rule, [Frost] nevertheless failed to materially perform its duties under the
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invoice to provide a diamond or extend store credit to [Appellant]?
Appellant’s Brief at 2-3.
Appellant, in sum, challenges the trial court’s order sustaining Frost’s
preliminary objections. In reviewing an order disposing of preliminary
objections, our standard of review is well-settled. This Court reviews an order
sustaining, or overruling, preliminary objections for an error of law and in so
doing, must apply the same standard as the trial court. Haun v. Community
Health Sys., Inc., 14 A.3d 120, 123 (Pa. Super. 2011) (citation omitted).
Preliminary objections in the nature of a demurrer test the legal sufficiency of the complaint. When considering preliminary objections, all material facts set forth in the challenged pleadings are admitted as true, as well as all inferences reasonably deducible therefrom. Preliminary objections which seek the dismissal of a cause of action should be sustained only in cases in which it is clear and free from doubt that the pleader will be unable to prove facts legally sufficient to establish the right to relief. If any doubt exists as to whether a demurrer should be sustained, it should be resolved in favor of overruling the preliminary objections.
Id. (citation and quotation marks omitted).
Appellant’s first issue challenges the trial court’s conclusion that the
invoice was a full and final integrated written agreement between the parties
that barred, under the parol evidence rule, the introduction of extrinsic
evidence to prove additional terms not present in the written sales invoice.
Appellant’s Brief at 15.
In explaining the parol evidence rule, our Supreme Court has stated,
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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. All preliminary negotiations, conversations[,] and verbal agreements are merged in and superseded by the subsequent written contract and 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.
Yocca v. Pittsburgh Steelers Sports, Inc., 854 A.2d 425, 436 (Pa. 2004)
(ellipsis omitted), citing, Gianni v. Russell & Co., 126 A. 791 (Pa. 1924). In
order for the parol evidence rule to apply, the writing must represent the
entire contract between parties. Yocca, 854 A.2d at 436 (citation omitted).
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.
Id. (quotation marks, ellipsis, and brackets omitted). The absence of an
integration clause, however, “does not automatically subject the written
agreement to parol evidence.” Kehr Packages, Inc. v. Fidelity Bank, Nat’l
Ass’n, 710 A.2d 1169, 1173 (Pa. Super. 1998) (citation omitted). “Rather,
in the absence of an integration clause, the court must examine the text of
the agreement to determine its completeness.” Id. (citation, original
quotation marks, and brackets omitted). Parol evidence may not be received
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where the subject of the extrinsic evidence is referred to in a writing, and the
writing, which includes, inter alia, an invoice for the sale of goods, is found to
be the complete agreement between the parties. Knirnschild v. Pittsburgh
Brewing Co., 1369 A.2d 316, 319 (Pa. 1957).
A contract for the sale of goods is governed by Article 2 of the Uniform
Commercial Code, as adopted in Pennsylvania. Allegheny Energy Supply
Co. v. Wolf Run Mining Co., 53 A.3d 53, 62 (Pa. Super. 2012), appeal
denied, 69 A.3d 599 (Pa. 2013); see also 13 Pa.C.S.A. §§ 2101-2725.
Section 2201(a) of the Pennsylvania Uniform Commercial Code, Article 2,
Sales (“PA-UCC”) requires that a contract for the sale of goods for a price of
$500.00 or greater must be reduced to “some writing sufficient to indicate
that a contract for sale has been made between the parties and signed by the
party against whom enforcement is sought” in order to be enforceable. 13
Pa.C.S.A. § 2201(a). “A contract is formed when the parties to it 1) reach a
mutual understanding, 2) exchange consideration, and 3) delineate the terms
of their bargain with sufficient clarity.” Company Image Knitware, Ltd. v.
Mothers Work, Inc., 909 A.2d 324, 330 (Pa. Super. 2006) (citation and
original quotation marks omitted), appeal denied, 929 A.2d 645 (Pa. 2007).
“Interpreting the terms of a contract is a question of law, thus implicating a
de novo standard of review and a plenary scope of review.” Commonwealth
by Shapiro v. UPMC, 188 A.3d 1122, 1132 (Pa. 2018) (citation omitted).
“Where the terms of the contract are unambiguous, they are deemed to reflect
the intent of the parties.” Id. at 1131 (citation omitted). “Extrinsic evidence
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may be employed to ascertain the meaning of contractual terms only when
they are ambiguous, i.e., subject to more than one reasonable interpretation.”
Id. at 1132.
Here, Appellant contends that the sales invoice was “essentially a receipt
for [Appellant’s] deposit” and did not constitute a “fully integrated written
agreement between the parties.” Appellant’s Brief at 17. Appellant argues
that “the parol evidence rule should not apply[] because there was no fully
integrated written agreement” between the parties. Id. (internal quotation
marks omitted). Appellant asserts that the “lack of an integration clause
strongly militates toward a finding that [the sales invoice] was not a fully
integrated agreement.” Id. at 18. Appellant contends that the sales invoice
was not a fully integrated agreement but, rather, “merely prevented the sale
of that diamond” to another of Frost’s customers. Id. at 19-20. The sales
invoice, Appellant maintains, evidenced the deposit that he made in order for
Frost to hold that diamond in its inventory while Frost attempted to acquire a
different diamond that was certified by the Gemological Institute of America
(“GIA”).4 Id. The deposit was to be applied toward Appellant’s subsequent
purchase of the GIA-certified diamond, once it was located. Id.
4 We take judicial notice that,
GIA’s commitment to protecting diamond buyers inspired the Institute to create the Diamond 4Cs [(carat weight, color grade, clarity grade, and cut grade)] and the International Diamond
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The trial court found that the sales invoice “was a full and final
integrated written agreement between the parties” because the sales invoice
“provided a description of the diamond, the total cost, the deposit amount,
[Appellant’s] signature[,] and the words ‘no cash refunds store credit only.’”
Trial Court Opinion, 6/16/20, at unnumbered pages 2-3. Therefore, the trial
court concluded that Appellant was prohibited from introducing parol evidence
to substantiate his causes of action and that, pursuant to the terms of the
contract, he failed to state a claim upon which the relief he seeks could be
granted. Id.
The record demonstrates that on November 4, 2015, Appellant signed
a Frost sales invoice (invoice number 54641) for the purchase of a diamond.
See Appellant’s Amended Complaint, 1/9/20, at Exhibit C. The sales invoice
described the diamond as a 1.85-carat diamond with a round, brilliant cut, a
clarity of “SI2”, and the color classification of “E” (colorless). Id. The sales
invoice further identified the diamond by the number “3412167125.” Id. The
total cost of the diamond was $12,529.70. Id. The sales invoice showed that
Appellant paid a deposit of $3,500.00 towards the purchase of the diamond,
and the balance due was $9,029.70. Id. On the line above Appellant’s
Grading System™. These methods are the universal benchmarks by which all diamonds are judged.
See https://4cs.gia.edu/en-us/about-gia/ (last visited 12/15/20).
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signature, the sales invoice stated, “No Cash Refunds – Store Credit Only”.
Id.
We concur with the trial court that the sales invoice, as a matter of law,
represented the fully integrated written agreement between Appellant and
Frost, in which Frost agreed to sell Appellant a specific diamond and Appellant
agreed to purchase that diamond for a set purchase price. In consideration
for Frost’s promise to sell the diamond, Appellant paid a deposit to be applied
towards the full purchase price of the diamond. The sales invoice delineated
the terms of their bargained-for agreement, including the term that no cash
refunds would be given, and that only store credit would be provided if the
agreement were terminated. The sales invoice portrayed a complete
statement of contractual terms and the trial court correctly considered it a
fully integrated written agreement between the parties. Absent an averment
of fraud, accident, or mistake, Appellant was not entitled to offer parol
evidence of alleged oral conversations or written correspondence that
deviated from the terms set forth in the sales invoice. See Yocca, 854 A.2d
at 436.
A review of Appellant’s amended complaint demonstrates that Appellant
averred,
11. On November 4, 2015, [Appellant] visited the store and [Frost’s employee] showed him a 1.85[-]carat diamond that was not GIA certified, however the diamond was very close to [the] color, clarity, carat, and cut that [Appellant] was looking for. The cost of the diamond was $12,529.70, reasonably within [Appellant’s] $10,000.00 to $12,000.00 price range.
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12. At this November 4, 201[5] visit, [Frost’s employee] informed [Appellant] that he could not guarantee that he could hold [] the diamond in inventory for much longer, and that if [Appellant] wanted to ensure that the diamond would be kept in [Frost’s] inventory, then [Appellant] would have to pay a $3,500.00 deposit.
13. Prior to, contemporaneously, and subsequently with [Appellant’s] deposit, [Frost’s employee] guaranteed that [Frost] was going to obtain a diamond within [Appellant’s] previously stated specifications and price range, and if [Appellant] chose not to purchase this specific diamond, then [Appellant] would be entitled to a cash refund [of] the deposit. These terms and conditions formed the basis of [Appellant’s] and [Frost's] bargain.
14. [Appellant], [Frost’s employee], and [Appellant’s] nephew[] were present when [Frost’s employee] and [Appellant] entered into an oral agreement to put a $3,500.00 cash refundable deposit on the diamond so that [Frost] would hold [] the diamond in inventory and obtain a diamond within [Appellant’s] specifications and price range.
15. After [Frost’s employee’s] guarantee, [Appellant] paid the $3,500.00 [] deposit on November 4, 201[5], and received a receipt[,] as well as an invoice[,] for the deposit on the diamond. []
16. This invoice does not represent a full and final expression of the terms and conditions of [Appellant’s] agreement with [Frost] nor does the invoice contain an integration clause.
17. Indeed, the very next day, on November 5, 2015, [Appellant] emailed [Frost’s employee] explaining to him that [Appellant] would not be purchasing the diamond that [Frost’s employee] showed [Appellant] on November 4, 201[5], and specified that he was again looking for a diamond that [was] two carats, with a color grade of "E" or "F", and with a clarity grade of "SI1”[.]
Appellant’s Amended Complaint, 1/9/20, at ¶¶ 11-17.
In finding the absence of an averment of fraud, accident, or mistake in
the amended complaint, the trial court stated,
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The [amended] complaint alleges that [Appellant paid] a deposit on the diamond and [Frost] issued an invoice which stated[,] "no cash refunds store credit only". [Appellant] signed the invoice and then later changed his mind. The invoice clearly states that [Appellant] was not entitled to a cash refund.
Trial Court Opinion, 6/16/20, at unnumbered page 3 (extraneous
We concur with the trial court that Appellant’s averments do not give
rise to allegations of fraud, accident, or mistake in Appellant’s execution of
the sales invoice and agreement to purchase the diamond specified therein.
The parol evidence rule, therefore, bars reliance upon extrinsic evidence to
support Appellant’s causes of action. It is axiomatic that if Appellant took
steps to terminate the agreement to purchase the diamond via electronic mail
on November 5, 2015, Appellant understood at the time he signed the sales
invoice that he had entered an agreement to purchase that diamond. See
Appellant’s Amended Complaint, 1/9/20, at ¶ 17. Pursuant to the terms of
the sales invoice, which Appellant executed, if Appellant changed his mind on
the purchase of the diamond identified therein, he was entitled to a store
credit, and not a cash refund, of any money paid towards the purchase of that
diamond. Consequently, Appellant’s first issue is without merit.
In his second issue, Appellant contends that the trial court erred in
finding that the oral and written statements made by Frost’s employee, as
well as the subsequent actions by the employee to locate a GIA-certified
diamond did not constitute a modification and waiver of the terms of the sales
invoice. Appellant’s Brief at 24-26.
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Section 2209 of the PA-UCC, in pertinent part, states
§ 2209. Modification, rescission and waiver
...
(b) Writing excluding modification or rescission.--A signed agreement which excludes modification or rescission except by a signed writing cannot be otherwise modified or rescinded, but except as between merchants such a requirement on a form supplied by the merchant must be separately signed by the other party.
(c) Compliance of modified contract with statute of frauds.--The requirements of section 2201 (relating to formal requirements; statute of frauds) must be satisfied if the contract as modified is within its provisions.
(d) Ineffective modification or rescission as waiver.-- Although an attempt at modification or rescission does not satisfy the requirements of subsection (b) or (c) it can operate as a waiver.
13 Pa.C.S.A. § 2209(b)-(d).
Appellant argues, in the alternative, that if the sales “invoice
contractually bound [Appellant] to purchase the diamond described therein,
[the electronic mail] and oral statements [made by Frost’s employee]
operated as a contractual waiver” and modification of the terms of the
agreement. Appellant’s Brief at 23-24. Relying on Section 2209(d) of the
PA-UCC, Appellant contends, “[Frost’s employee] expressly agreed to search
for a GIA-certified diamond, in lieu of the diamond identified in the [sales]
invoice, which constituted both [] a modification [of the terms of] the [sales]
invoice and a waiver” of Appellant’s obligation to purchase the diamond
specified on the sales invoice. Id. at 24. Appellant asserts that the parol
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evidence rule does not apply to the doctrine of waiver, under Section 2209(d),
and the evidence establishes Frost’s intent to waive the terms of the invoice,
specifically releasing [Appellant] from purchasing the non-GIA certified
diamond identified in the sales invoice. Id.
In support of his causes of action, Appellant relied on the electronic
correspondence between Appellant and Frost’s employee, as well as alleged
oral statements made prior to Appellant’s execution of the sales invoice. As
discussed supra, evidence of electronic mail and alleged oral statements made
prior to Appellant executing the sales invoice on November 4, 2015, is barred
by the parol evidence rule because the sales invoice represented the entire
written agreement between the parties. Therefore, Appellant cannot rely on
this parol evidence to demonstrate a modification of the agreement, or a
waiver of its terms.
On November 5, 2015, Appellant notified Frost that he was terminating
the agreement to purchase the diamond specified in the sales invoice. The
parol evidence rule is not applicable to the electronic mail and alleged oral
statements made by Frost’s employee after Appellant terminated the
agreement. See Yocca, 854 A.2d 425, 436 (stating, the parol evidence rule
applies to evidence of previous oral or written statements or agreements
involving the same subject matter as the written contract). Because Appellant
terminated the original agreement on November 5, 2015, evidence of oral and
written statements made after the termination on November 5, 2015, could
only explain Appellant’s reason for terminating the agreement or explain his
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ongoing objective to purchase a GIA-certified diamond. Moreover, because
the oral and written statements occurred after the termination of the original
agreement, they could not be used to modify or invalidate the terms of the
fully integrated, and now terminated, agreement. Appellant’s second issue,
therefore, is without merit.
In his third issue, Appellant claims the trial court erred in sustaining
Frost’s preliminary objections and dismissing, with prejudice, Appellant’s
breach of contract claim because the allegations demonstrated that Frost
failed to materially perform its duties, pursuant to the sales invoice, by
providing the diamond specified in the sales invoice or extending Appellant
store credit. Appellant’s Brief at 30-31.
This Court recently reiterated,
It is well-established that three elements are necessary to plead a cause of action for breach of contract: (1) the existence of a contract, including its essential terms; (2) a breach of the contract; and, (3) resultant damages.
Kelly v. Carman Corp., 229 A.3d 634, 653 (Pa. Super. 2020) (citation
brackets omitted).
As discussed supra, the terms of the agreement, as delineated in the
sales invoice, required Appellant to purchase a 1.85-carat diamond for a
purchase price of $12,529.70. If Appellant changed his mind about the
purchase, no cash refunds of money paid towards the purchase would be
provided and only store credit would be issued. Pursuant to the written
agreement, Frost agreed and Appellant accepted the term of store credit if the
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transaction were not completed. By including the statement, “No Cash
Refunds – Store Credit Only” on the sales invoice, Appellant and Frost agreed
that any money paid towards the purchase of the diamond, and therefore, due
as a refund upon termination of the agreement, would be returned to
Appellant in the form of store credit and not a cash refund. Appellant is not
obligated to purchase the 1.85-carat diamond identified in the November 4,
2015 sales invoice because he terminated the agreement. Appellant,
however, is entitled only to a store credit of his deposit money and not a cash
refund per the terms of the agreement.5
Appellant, in his amended complaint, pleaded a cause of action for
breach of contract seeking the refund of his $3,500.00 deposit in cash. See
Appellant’s Amended Complaint, 1/9/20, at ¶¶ 26, 37-44. Pursuant to the
terms of the parties’ agreement, Appellant is not entitled to a cash refund of
his deposit since Frost never promised to refund his deposit in cash. Appellant,
therefore, failed to state a claim upon which the relief he seeks could be
granted. We find no abuse of discretion or error of law in the trial court’s
order sustaining Frost’s preliminary objections in the nature of a demurrer and
dismissing Appellant’s breach of contract claim, as framed, with prejudice.
Order affirmed.
5Frost concedes that Appellant is entitled to a store credit in the amount of $3,500.00. See Frost’s Renewed Preliminary Objection, 1/28/20, at 3 ¶9.
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Judgment Entered.
Joseph D. Seletyn, Esq. Prothonotary
Date: 1/21/2021
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