Opinion
J-A33019-16 No. 342 WDA 2016
03-17-2017
GREGORY THEOBALD Appellant v. R.H. KUHN COMPANY, INC.; PNC BANK, N.A.; COMPASS ADVISORY PARTNERS, LLC; AND CITIZENS BANK
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
Appeal from the Order Entered February 4, 2016
In the Court of Common Pleas of Allegheny County
Civil Division at No(s): GD 14-002425 BEFORE: LAZARUS, J., SOLANO, J., and STRASSBURGER, J. MEMORANDUM BY SOLANO, J.:
Retired Senior Judge assigned to the Superior Court.
Appellant, Gregory Theobald, appeals from the order of the Court of Common Pleas of Allegheny County, entered February 4, 2016, that denied Appellant's motion to file suit against a court-appointed receiver. See Warner v. Conn , 32 A.2d 740, 741 (Pa. 1943) (suit against receiver requires permission from the court that appointed the receiver). We affirm.
In its opinion, entered June 24, 2016, the trial court fully and correctly set forth the relevant facts and procedural history of this case. For the convenience of the reader, we will briefly summarize them.
According to Appellant, he was employed as an executive with Appellee R.H. Kuhn Company, Inc. from 2005 to 2009. See Tr. Ct. Op., 6/24/16, at 3. On January 4, 2010, Appellant and Kuhn entered into a written employment agreement and compensation incentive plan ("Agreement"). Id. Paragraphs 7(e), (i), and (k) of the Agreement state:
The parties agree that what was intended to be Paragraph 7(k) was misidentified as a second Paragraph 7(i) in the Agreement. For clarity, we refer to that paragraph here as 7(k).
(e) If [Kuhn] terminates this Agreement without "justifiable cause" as provided in subsection 7(a)(i), [Kuhn] shall pay [Appellant] his then current base salary for 12 months after the effectiveness of such termination, payable in equal payments in accordance with [Kuhn]'s customary payroll practices commencing with the first payroll period that begins at least 30 days after the termination of [Appellant]'s Term of Employment conditioned upon the [Appellant] having provided [Kuhn] with an executed general release in the form attached hereto as Exhibit A (the "General Release") and the time for [Appellant]'s revocation of the General Release having expired. Such payments shall be made in accordance with [Kuhn]'s customary payroll practices until paid in full. Any payment pursuant to this paragraph 7(e) is contingent upon [Appellant]'s execution of the General Release within 21 days after termination of the Term of Employment (and [Appellant]'s not revoking that General Release) and will be in lieu of payments to which [Appellant] might have been entitled under any other severance plan of [Kuhn].
. . .
(i) Change of Control. In the event the Term of Employment is terminated by [Kuhn] without justifiable cause (as defined herein) or [Appellant] resigns with Good Reason (as defined herein) within one (1) year following a Change of Control of [Kuhn] has occurred, then, in such event, [Kuhn] shall pay [Appellant] an amount equal to twenty-four (24) months of Base Salary in effect at the time of the termination. For the purposes of the foregoing, Change of Control shall have the meaning set
forth in [Kuhn]'s 2010 Incentive Compensation Plan (without regard to any subsequent amendments thereto). For purposes of the foregoing, "Good Reason" means the occurrence of any of the following: (i) a material diminution in [Appellant]'s base compensation; (ii) a material diminution in [Appellant]'s authority, duties, or responsibilities; (iii) a material change in the geographic location at which the Employee must perform the services under this Agreement; or (iv) any other action or inaction that constitutes a material breach by [Kuhn] of this Agreement. For purposes of this provision, Good Reason shall not be deemed to exist unless the Employee's termination of employment for Good Reason occurs within 2 years following the initial existence of one of the conditions specified in clauses (i) through (iv) above, the Employee provides [Kuhn] with written notice of the existence of such condition within 90 days after the initial existence of the condition, and [Kuhn] fails to remedy the condition within 30 days after its receipt of such notice. [Kuhn] shall pay the amount required under this paragraph 7(i) in a single payment thirty (30) days after termination of the Term of Employment, subject to and conditioned upon [Appellant]'s execution of the General Release required pursuant to paragraph 7(k) hereof and such release becoming irrevocable. Any payments made pursuant to this paragraph 7(j) [sic] will be in lieu of payments to which [Appellant] might have been entitled under paragraph 7(e) of this Agreement or under any other severance plan of [Kuhn].Agreement at ¶¶ 7(e), 7(i), 7(k) (bold emphasis added; italics in original).
. . .
(i [sic, k]) Any payment pursuant to paragraph 7(e) or 7(j) shall be contingent upon[Appellant]'s execution of the General Release within 21 days after termination of the Term of Employment, and [Appellant]'s not revoking that release.
After Kuhn defaulted on loans owed to Appellee PNC Bank, PNC confessed judgment against Kuhn and consented to an order of court ("Consent Order"), dated December 7, 2010, by which Appellee Compass Advisor Partners, LLC, was appointed as receiver for the benefit and protection of Kuhn's creditors. See Tr. Ct. Op., 6/24/16, at 2. Pursuant to Paragraph 20 of the Consent Order, Compass retained Gordon Brother Retail Partners, LLC ("the Liquidator"), to act as the Receiver's consultant in liquidating Kuhn's assets. See also Tr. Ct. Op., 6/24/16, at 3. Appellant contends that the appointment of the receiver constituted a "Change of Control" under the Agreement. Appellant's Brief at 11. Appellees do not dispute this characterization. Appellees' Brief at 5, 23.
Compass advised Appellant that his employment would end once the Liquidator "was functioning appropriately." Tr. Ct. Op., 6/24/16, at 3. Before being "let go," Appellant attempted to address the payout of his deferred compensation, which he valued at $288,000; however, PNC informed Appellant that Compass was able to not pay him the amount that he was seeking. Id. at 3-4.
On February 14, 2014, Appellant filed praecipes for writs of summons with the Allegheny County Department of Court Records as to all Appellees, including the receiver, Compass. Under Warner v. Conn , supra , a suit cannot be brought against a receiver without permission from the court which appointed it. Therefore, on July 15, 2015, Appellant filed a motion for leave to file a complaint against Compass, as well as against Kuhn and PNC, for breach of contract, conversion and violation of the Pennsylvania Wage Payment and Collection Law. In opposing the motion, one of the putative defendants' primary defenses was that Appellant never executed the General Release required under Paragraph 7. On February 4, 2016, the trial court denied Appellant's motion for leave to file the complaint. Appellant's timely appeal followed on March 4, 2016.
Appellant's motion for leave to file a complaint does not appear on the trial court docket and was not part of the certified record. Appellant included a copy in his reproduced record to this Court. Because Appellees have not objected and there is no dispute regarding the contents of this document, we will consider it. See Commonwealth v. Barnett , 121 A.3d 534, 545 n.3 (Pa. Super.), appeal denied , 128 A.3d 1204 (Pa. 2015), cert. denied , 136 S.Ct. 2391 (2016).
43 P.S. §§ 260.1-260.45.
Appellant raises the following questions on appeal:
1. Whether the lower court erred in its conclusion that execution of the General Release, attached to the Employment Agreement, within twenty-one days, is a condition precedent to payment of post-termination pay.Appellant's Brief at 5.
2. Whether the execution of the General Release is an absolute condition precedent to payment, or whether execution of the Release is an event which marks the time at which the obligation for payment must be fulfilled.
3. Whether PNC and Compass' anticipatory repudiation and refusal to pay [Appellant] the compensation at the time compensation was due operates to discharge [Appellant]'s ostensible duty to perform any condition precedent through execution of a General Release.
4. Whether Compass (and PNC) is protected or immune from [Appellant]'s underlying claims for violation of Pennsylvania's Wage Payment and Collection Law, Breach of Contract, and Conversion.
The Supreme Court of Pennsylvania has held that whether to grant leave to sue either on behalf of or against a receiver is a matter committed to the trial court's discretion. Warner, 32 A.2d at 740; see Wells Fargo Bank, Nat'l Ass'n as Indenture Tr. v. Parking Auth. of Scranton, 95 A.3d 371, 375 (Pa. Cmwlth. 2014) (en banc) (decision is "within the discretion of the receivership court"). We therefore review the trial court's decision for an abuse of discretion. See Warner, 32 A.2d at 742. In making this determination, we bear in mind that
It may be stated . . . as a general rule, that where receivers have . . . possession of property in which a third party has an interest which is paramount to that of the receivers, the court appointing them should, upon proper application, give leave to such third party to enforce, in the appropriate court, his claim to the property in a suit against the receivers, and a refusal to give such leave, when duly and properly applied for, is reversible error unless it clearly and certainly appears that the petitioner's alleged claim is not valid.Meehan v. Connell Anthracite Mining Co., 178 A. 833, 836 (Pa. 1935).
After a thorough review of the record, the briefs of the parties, the applicable law, and the well-reasoned opinion by the Honorable Christine Ward of the Court of Common Pleas of Allegheny County, we conclude that there is no merit to the first, second, and fourth issues that Appellant has raised on appeal. The trial court opinion properly disposes of these questions. See Tr. Ct. Op., 6/24/16, at 5-9 (holding the text of the Agreement is clear that payment under Section 7(e) of the Agreement is contingent on Appellant's execution of a General Release, Appellant never alleged that he had executed the General Release within 21 days of termination, and thus the Agreement bars him from recovery, id. at 5-6; Appellant's second issue does not allege additional error and merely rephrases the first issue, id.; and, with regard to the fourth issue, even assuming Appellant fulfilled the applicable conditions precedent, receivers are immune from suit as "appointive judicial officers," 42 Pa.C.S. § 102, and Compass and its indemnifier PNC therefore cannot be held liable to Appellant for deferred compensation, id. at 7-9).
Appellant's third argument is that Compass anticipatorily repudiated the Agreement by refusing to pay the deferred compensation, thereby discharging Appellant from his duty to execute the disputed General Release. The trial court stated that "[t]his argument does not appear of record prior to the filing of the Statement of Errors and therefore appears to have been waived. Pa.R.A.P. 302(a)." Tr. Ct. Op., 6/24/16, at 7. Appellant responds that, although his proposed complaint did not allege anticipatory repudiation and he did not make an argument to the trial court that explicitly used the words "anticipatory repudiation," he sufficiently presented this contention in briefing that argued that Compass' failure to first pay him the compensation he sought excused his failure to execute the General Release and made any argument about the release "illusory." Appellant's Brief at 23-24 (citing to brief in support of his motion for leave to file complaint). The trial court did address that argument in its initial memorandum denying Appellant's motion. The court stated:
[Appellant] argues that the General Release was not required because the consideration for such release would have been the payment. This fundamentally misunderstands how conditions precedent work. Quite simply, if a condition precedent to payment is not fulfilled, then no payment is owing, whether the consideration for the performance of the condition was the consideration or not. [Appellant] appears to believe that the payment would not have been forthcoming. If so, and [Appellant] had executed the General Release, Kuhn, but not necessarily any other defendants, would have been in breach of the [] Agreement. As it happens, [Appellant] did nothing.Tr. Ct. Mem., 2/4/16, at 2-3. We agree.
Appellant is correct that "an anticipatory repudiation by an obligor discharges an obligee's duty to perform a condition precedent." Jonnet Dev. Corp. v. Dietrich Indus., Inc., 463 A.2d 1026, 1031 (Pa. Super. 1983). But "to constitute anticipatory breach under Pennsylvania law there must be an absolute and unequivocal refusal to perform or a distinct and positive statement of an inability to do so." 2401 Pa. Ave. Corp. v. Fed'n of Jewish Agencies of Greater Phila., 489 A.2d 733, 736 (Pa. 1985); see also Harrison v. Cabot Oil & Gas Corp., 110 A.3d 178, 184 (Pa. 2015) (anticipatory repudiation of an agreement entails an essential declaration of an intention to breach thereby "reinforce[ing] the clear predicates of repudiation" expressed in 2401 Pa. Ave. Corp.). And the repudiation discharges the obligee's duty only if it actually causes the obligee to fail to perform. Empire Props., Inc. v. Equireal , Inc., 674 A.2d 297, 305 (Pa. Super. 1996) ("one party's breach of a contract may render the other party's tender of performance a futile act[;] it does not relieve the other party of the burden of proving its ability to perform under the contract").
There was no anticipatory repudiation here. The Agreement required Appellant to execute the release before any payment would be made, and, therefore, the fact that the putative defendants did not make any payment first cannot in itself have been an anticipatory repudiation; Compass was not required by the Agreement to pay first. There is no evidence that Compass or the other putative defendants made an "absolute and unequivocal" refusal to pay if a release was presented to them, or that such an "absolute and unequivocal" refusal caused Appellant to fail to execute the release. Appellant relies on a February 15, 2011 e-mail from PNC that said the receiver's budget did not include funds to pay the $288,000 claim, but the record shows that this e-mail was not the last word on the subject and that the parties continued negotiations after it was sent. In its brief to the trial court, Appellant supported its repudiation argument merely by stating: "it is unlikely that PNC or Compass had a check for $288,000.00 patiently waiting at the ready to give to [Appellant], even assuming [Appellant] was required to tender the Release prior to payment." Appellant's Brief at 24 (quoting trial court brief). Such unsupported speculation does not constitute an anticipatory repudiation.
Therefore, even if Appellant did not waive his anticipatory repudiation claim, he failed to provide any basis to support it. Appellant's third issue is therefore meritless.
In sum, we discern no abuse of discretion in the trial court's denial of leave to file a complaint against the receiver because "the petitioner's alleged claim is not valid." Meehan , 178 A. at 836; see also Warner , 32 A.2d at 742. The parties are instructed to attach a copy of the trial court's memorandum of February 4, 2016, and the trial court's opinion of June 24, 2016, to all future filings.
Order affirmed. Judgment Entered. /s/_________
Joseph D. Seletyn, Esq.
Prothonotary Date: 3/17/2017
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