Appeal from the Order entered August 2, 1985 in the Court of Common Pleas of Cambria County, Civil, No. 1974-3379.
Edwin J. Strassburger, Pittsburgh, for appellant.
Adrienne Johnson, Coraopolis, for Pennsylvania State, appellee.
Richard J. Green, Jr., Johnstown, for Cambria Sav., appellee.
Brosky, Kelly and Roberts, JJ.
[ 360 Pa. Super. Page 146]
Appellant Associated East Mortgage Company ("Associated East") appeals from an order dismissing all of its claims against appellee Cambria Savings and Loan Association ("Cambria"). The sole issue presented for review is whether the evidence was sufficient to prove that Associated East was guilty of fraud in causing appellee Penn State Construction Company ("Penn State") to default on a construction contract. The trial court determined that Associated East committed fraud, thereby releasing Cambria from its duty to honor a standby letter of credit issued to Associated East. We affirm.
On September 10, 1974, Penn State filed a complaint against Cambria to enjoin them from honoring a letter of credit which Cambria had issued to Associated East. The complaint was filed in response to an oral demand on the letter of credit made by Associated East on September 6, 1974. The demand was based on Associated East's contention that Penn State had defaulted on a construction contract by failing to complete the project by the date specified in the agreement. After a default judgment had been entered against Cambria, Associated East filed a petition to open judgment and a petition to intervene in May, 1976. Both petitions were granted in October, 1978. Associated
[ 360 Pa. Super. Page 147]
East then filed answers and counterclaims, alleging that Cambria was obligated to honor the letter of credit. The case was tried in August, 1984, after which the chancellor issued his opinion and order dismissing Associated East's claims. Associated East then filed a motion for post trial relief which was denied by the court en banc. This appeal followed.
The evidence establishes that on January 11, 1973, Phillipsburg U.A.W. Housing Company, owner of a tract of land in Phillipsburg, Clearfield County, entered into a construction contract with Phillipsburg Construction Company for the construction of a project known as Sunnyslope Apartments. Penn State was the managing joint venturer of the Phillipsburg Construction Company. Associated East supplied the construction mortgage to Phillipsburg U.A.W. Housing Company. The parties then entered into a Completion Assurance Agreement which specifically referred to the construction contract of January 11, 1973. The agreement required Penn State to deposit $114,918.00 as a Completion Assurance Fund in order to indemnify Associated East in the result of default by Penn State in performing the construction contract.*fn1 Penn State then deposited $115,000.00 with Cambria, which in turn issued a letter of credit to Associated East, confirming the assignment of $115,000.00 as a Completion Assurance Fund.*fn2
[ 360 Pa. Super. Page 148]
The financing of the construction project was to be made through requisitions. The construction contract specified that requests for payment were to be made 5 days before payment was desired, and payment was to be made within 7 days of approval by the architect. The trial court found that Associated East was substantially late in making the payments on 9 approved ...