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[U] W.J. Pace & Associates, Inc. v. Pajoma Holdings, LLC.

Superior Court of Pennsylvania

January 13, 2014

W.J. PACE & ASSOCIATES, INC., Appellee
v.
PAJOMA HOLDINGS, LLC., Appellant W.J. PACE & ASSOCIATES, INC., Appellant
v.
PAJOMA HOLDINGS, LLC., Appellee

NON-PRECEDENTIAL DECISION

Appeal from the Judgment Entered April 3, 2013 In the Court of Common Pleas of Delaware County Civil Division at No(s): 2011-00529.

BEFORE: BENDER, P.J., LAZARUS, J., and FITZGERALD, J.[*]

MEMORANDUM

BENDER, P.J.

Pajoma Holdings, LLC, ("Pajoma") appeals, at Docket No. 1259 EDA 2013, the judgment entered against them and in favor of W.J. Pace & Associates, Inc. ("W.J. Pace" or "Pace"), following a bench trial. W.J. Pace cross-appeals at Docket No. 1336 EDA 2013. After review, we affirm in part and vacate in part. We remand only for an award of pre-judgment interest.

This litigation began when W.J. Pace filed suit against Pajoma, alleging breach of contract. The trial court cogently related the following factual and procedural history:

Pace is a licensed Pennsylvania real estate broker. Pajoma is the owner of certain real estate property identified generally as 2 Wilmington Pike, Glen Mills, Delaware County, Pennsylvania ("Subject Property"). In April, 2008, Pasquale Carlino and John DiMichele were the sole members of Pajoma, a Pennsylvania limited liability company. In 2008, after some negotiations between the parties, William J. Pace, a licensed real estate agent and broker and an employee and officer of Pace entered into a listing agreement ("Listing Contract") concerning the Subject Property with Pajoma. In April 2008, the Listing Contract was signed by Pasquale Carlino and John DiMichele on behalf of Pajoma, the owner of the Subject Property. Pace executed the Listing Contract on April 15, 2008.
In the Listing Contract, Pajoma provided Pace the exclusive right to lease the Subject Property, subject to one excluded prospective tenant, Nancy Pace. The Listing Contract provided Pace an exclusive listing in exchange for Pace, as the real estate broker, marketing the Subject Property to prospective tenants, and negotiating a lease with a tenant on terms acceptable to the owner, Pajoma. The exclusive listing period was six (6) months, beginning on April 15, 2008, and ending on October 15, 2008.
The exclusive listing period expired. The Listing Contact included a 365 day period of protection that required Pajoma to pay to Pace the commission where a tenant begins negotiations to lease the Subject Property during the exclusive listing period and subsequently enters into a lease agreement during the period of protection, and the Subject Property has not been listed with another real estate broker. Pajoma did not list the Subject Property with another real estate broker once the exclusive listing period expired, and for this reason, the period of protection under the Listing Contract ran from October 16, 2008, to October 15, 2009.
The Listing Contract further provided: "All showings, negotiations and discussions about the sale, lease or other tenancy of the property will be done by the Broker on Owner's behalf. All written or oral inquiries that Owner receives or learns of regarding the property, regardless of source, will be referred to Broker." (Exh. P-1 para. 5(B)). Under the terms of the Listing Contract, Pajoma agreed to pay to Pace a commission of the first month's rent of the first year of any lease term, plus six (6%) percent of the gross rent due and payable for any subsequent years of the lease term, including all renewals and extensions of the lease term.
Goddard Systems entered into negotiations with Pajoma directly regarding a lease of the Subject Property in June, 2008. On May 11, 2009, Pajoma entered into a lease with tenants Stephanie Grimaldi, Piero Grimaldi, Pasquale Carlino and John DiMichele ("Original Lease"). The Original Lease was signed during the period of protection.
Under the name Bella Regazzi, LLC, the individuals named as tenants under the Original Lease operate a Goddard School franchise at the Subject Property. The testimony of Stephanie Grimaldi was that the tenant under the Original Lease began rent payments in November 2009. The Original Lease required the tenant to pay a base rent monthly of $21, 200.00 during the first lease year of the 15 year initial lease term with an annual escalator of 3% or the consumer price index, whichever is greater.
As of January, 2013, the aggregate rent due under the Original Lease since November, 2009 totaled $831, 307.12. Pajoma made no commission payments to Pace under the Listing Contract or otherwise, in connection with the Original Lease. Pace served Pajoma certain requests for the production of documents in connection with this civil action. In response to the discovery requests, Pajoma produced a copy of a lease dated January 1, 2010, which identified as tenant an entity named: "Bella Regazzi, LLC." (the "2010 Lease"). In response to the discovery requests, Pajoma did not produce the Original Lease that was executed on May 11, 2009 prior to the expiration of the 365 day period. The 2010 Lease was signed by its parties after the expiration of the 365 day period.
A bench trial took place on January 11, 2013. Thereafter, this Court determined that Pace, had the burden of proof by a preponderance of the evidence as to its claim the Listing Contract is a valid and enforceable contract between Pace and Pajoma, that Pace performed its contractual obligations, and that Pajoma, despite entering into the Original Lease during the 365 day period of protection, failed to pay the commission due in breach of the Listing Contract. By Order dated March 28, 2013, this Court specifically found as follows:
1. On the claim made by Plaintiff, W.J. Pace & Associates, Inc., for breach of the Listing Contract entered by Plaintiff and Defendant on or by April 15, 2008, this Court enters judgment in favor of Plaintiff, W.J. Pace & Associates, Inc., and against Defendant, Pajoma Holdings, LLC., in the sum of $289, 829.82, together with post-judgment interest at 6% per annum.
2. In addition, because the Listing Contract entered by these parties on or by April 15, 2008, includes the option or options to extend the lease for additional term(s) of years beyond the current initial lease term of 15 years, this Court specifically authorizes Plaintiff, W. J. Pace & Associates, Inc., to record a lis pendens against the premises known generally as 2 Wilmington Pike, Glen Mills, Delaware County, Pennsylvania.
3. On the affirmative defenses, new matter and cross-claims, or counter claims made by Defendant, Pajoma Holdings, LLC., this Court enters judgment in favor of Plaintiff and against the Defendant.

Trial Court Opinion (T.C.O.), 7/31/13, at 1-4 (some citations to record omitted). Additionally, the trial court denied W.J. Pace's request for pre- judgment interest.

Pajoma timely appealed and W.J. Pace timely cross-appealed. On appeal, Pajoma raises four questions for our review:

1. Did the Trial Court err in basing its damages calculation upon the "Original Lease" as opposed to the Listing Agreement?
2. Did the Trial Court err in calculating damages based upon the rent of the "Original Lease" which provided that rent would be $21, 200 per month?
3. Did the Trial Court err in calculating damages pursuant to the Original Lease, which calculated the rent based upon other factors not part of the Listing Agreement?
4. Did the Trial Court err in allowing plaintiff a windfall by including in its damages calculation the monthly debt service that was the responsibility of Carlino, DiMichele, and the Grimaldi's alone, as opposed to the rental price provided by the Listing Agreement?

Pajoma's Brief at 19-20.[1]

Appellee/cross-appellant, W.J. Pace, raises one issue:

1. Did the Court of Common Pleas err by failing to include in its award pre-judgment interest from November 10, 2009[, ] when such interest was requested by Cross-Appellant/Plaintiff?

W.J. Pace's Brief at 5.

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 the trial judge in a non-jury case must be given the same weight and effect on appeal as the verdict of a jury, and the findings will not be disturbed on appeal unless predicated upon errors of law or unsupported by competent evidence in the record. Furthermore, our standard of review demands that we consider the evidence in a light most favorable to the verdict winner. Because the parties have stipulated to the facts as presented in their pleadings, we need only determine whether the trial court erred as a matter of law.

Baney v. Eoute, 784 A.2d 132, 135 (Pa.Super. 2001) (citations omitted).

This appeal concerns the interpretation and application of a contract between the parties. We have explained: "To successfully maintain a cause of action for breach of contract the plaintiff must establish: (1) the existence of a contract, including its essential terms, (2) a breach of a duty imposed by the contract, and (3) resultant damages." Hart v. Arnold, 884 A.2d 316, 332 (Pa.Super. 2005) (citation omitted). "The fundamental rule in interpreting the meaning of a contract is to ascertain and give effect to the intent of the contracting parties.... When a writing is clear and unequivocal, its meaning must be determined by its contents alone." Id. (citation omitted).

Here, there is no dispute that a contract existed between the parties, and that Pajoma breached a duty imposed by the contract by failing to pay the commission owed to W.J. Pace. The only issue on appeal is the calculation of damages and the incumbent interpretation of the contracts at issue, necessary for the calculation of damages.

The trial court, in calculating damages, looked to the lease obtained for the property and calculated the commission owed to W.J. Pace based on the rent due under the lease. The Listing Contract, discussed in the trial court's recitation of facts, provided for such a calculation by its "Broker's Fee" provision, which states that the broker's fee in the event of a lease, "will be paid as follows: 1st month[']s rent for 1 year lease, 6% of gross rent for remaining term including all renewals or extensions, paid annually if property managed by WJ Pace & Associates, Inc[.], or paid within 10 days of beginning lease term." Listing Contract ¶ 6; R.R. at 197.

The Original Lease, also discussed in the trial court's recitation of facts, specified that "monthly rent" shall be $21, 200 per month. See Original Lease at Exhibit "B"; R.R. at 341; Trial Court Findings of Fact and Conclusions of Law, 3/28/13, at 3-4. The trial court used this number and the Broker's Fee provision of the Listing Contract to calculate the broker's fee due under the Listing Contract.

Pajoma challenges the trial court's use of the monthly rent specified in the Original Lease, $21, 200, in calculating damages. Prior to the entry of judgment against it, Pajoma argued to the trial court that the Original Lease's "monthly rent" provision was not "rent" but, instead, was a combination of rent for the occupation of the property and debt service, arising out of the renovation of the property. On appeal, Pajoma asserts the trial court erred in failing to accept this characterization.

The Original Lease makes no suggestion that the "monthly rent" provision was intended to mean partly rent and partly debt service., but John DiMichele testified to this interpretation. See N.T., 1/11/13, at 155-160. The trial court found his testimony not believable, candid, or credible. See Trial Court Findings of Fact and Conclusions of Law, 3/28/13, at 5. Because we defer to the trial court on matters of credibility, and because there is no other evidence supporting Pajoma's assertion, there is no error in the trial court's conclusion that "rent" under the Original Lease did not include debt service. Thus, the trial court did not abuse its discretion in concluding that the property at issue was leased at a rental rate of $21, 200 per month.

Turning to their second and chief contention on appeal, Pajoma argues that the trial court erred as a matter of law in looking beyond the Listing Contract to calculate damages. Central to Pajoma's argument in the regard, is the "Listed Price and Terms" provision of the Listing Contract, which provides: "Owner is hiring Broker to negotiate the following type of transaction regarding the disposition of the Property . . . A lease, or other tenancy, for the following price and terms described here . . . 14.50 per sq foot per year plus R.E. taxes utilities." Listing Contract ¶ 3; R.R. at 239. Pajoma avers that, given the square footage of the property, this works out to approximately $10, 000 per month.

Pajoma contends that the listed price term is the only admissible figure upon which the broker's fee could be calculated. Pajoma argues that the Listing Contract is an integrated contract and, thus, the trial court was not permitted to look beyond the four corners of the Listing Contract in calculating damages.

Pajoma misinterprets the law concerning integrated contracts. The effect of an integrated contract is the exclusion of parol evidence to vary the terms of the contract. See Yocca v. Pittsburgh Steelers Sports, Inc., 854 A.2d 425, 436-37 (Pa. 2004) (describing relationship between integrated contracts and parol evidence rule). Put another way, the parol evidence rule proscribes the use of extrinsic evidence to modify or vary the terms, or the meaning of the terms, in an integrated contract. If a term is ambiguous, however, parol evidence is admissible to explain, clarify, or resolve the ambiguity. See id. at 437. However, "[w]hen a writing is clear and unequivocal, its meaning must be determined by its contents alone." Hart, 884 A.2d at 332 (citation omitted).

Here, the contract does not specify that "rent" shall be the "Listed Price." Thus, Pajoma's assertions would, at best, create ambiguity as to the meaning of the word "rent" in the contract. If the trial court found that term ambiguous, the parol evidence rule would permit the use of extrinsic evidence to resolve that ambiguity; exactly the opposite of Pajoma's interpretation of the law. Nevertheless, no such evidence was required, or even presented, in this case. The word "rent" is clear and unequivocal on the facts found by the trial court. The court took the word at its ordinary meaning and at the meaning within the real estate industry. As Pajoma observes in its own brief, rent is "consideration paid for the use or occupation of property." Pajoma's Brief at 38 (quoting Black's Law Dictionary). Pajoma merely asks this court to create ambiguity as to the meaning of the word "rent" where none exists. Indeed, Pajoma's interpretation of the Listing Contract would have this Court substitute the words "listed price" in place of "rent" for purposes of calculating the broker's fee. Such an interpretation runs against the plain language of the contract, which specified that the broker's fee is a function of rent, not a function of the listed price. See Listing Contract ¶ 6; R.R. at 197.

Finally, Pajoma argues that W.J. Pace failed to establish damages. Specifically, Pajoma contends that it is W.J. Pace who failed to divide the Original Lease's "rent" into a portion allotted to the occupation of the property and a portion allotted to debt service. Again, there was no evidence, other than the non-credible testimony of Mr. DiMichele, to establish that the rent under the lease was something other than rent for the occupation of the property. Pajoma, though, is correct in part. It was W.J. Pace's burden to establish damages. See Hart, 884 A.2d at 332. However, W.J. Pace met this burden by the evidence of the Listing Contract and the Original Lease.

We now turn to W.J. Pace's cross-appeal at Docket No. 1336 EDA 2013, concerning the omission of an award of pre-judgment interest. The trial court's entry of judgment awarded W.J. Pace $289, 829.82, plus post-judgment interest at 6% per annum, and permitted the recording of a lis pendens for commissions that will become due in the event that the option terms of the Original Lease are exercised. W.J. Pace now argues that it was entitled to pre-judgment as a matter of law.

An award of pre-judgment interest is, in general, a matter of a trial court's discretion. In certain situations, pre-judgment interest is awardable as of right, thereby presenting a question of law. See Cresci Construction Services, Inc. v. Martin, 64 A.3d 254, 258-59 (Pa.Super. 2013).

[A] party is not chargeable with interest on a sum unless its amount is fixed by the contract or he could have determined its amount with reasonable certainty so that he could have made a proper tender. Unless otherwise agreed, interest is always recoverable for the non-payment of money once payment has become due and there has been a breach.

Id. at 260 (quoting Restatement (Second) of Contracts § 354). As this Court recently reiterated:

In Penneys v. Pennsylvania R.R. Co., 408 Pa. 276, 183 A.2d 544 (1962), the Pennsylvania Supreme Court adopted section 337(a) of the Restatement of Contracts with regard to the awarding of prejudgment interest. That section provides:
If the parties have not by contract determined otherwise, simple interest at the statutory legal rate is recoverable as damages for breach of contract as follows:
(a) Where the defendant commits a breach of a contract to pay a definite sum of money, or to render a performance the value of which in money is stated in the contract or is ascertainable by mathematical calculation from a standard fixed in the contract or from established market prices of the subject matter, interest is allowed on the amount of the debt or money value from the time performance was due, after making all the deductions to which the defendant may be entitled.
Recovery of prejudgment interest under this standard is a matter of law, not of discretion. Thus, in Pennsylvania, prejudgment interest in a contract action may be recovered only if (1) a defendant commits a breach of a contract to pay a definite sum of money; or (2) a defendant commits a breach of contract to render a performance the value of which in money is stated in the contract; or (3) a defendant commits a breach of contract to render a performance the value of which is ascertainable by mathematical calculation from a standard fixed in the contract; or (4) a defendant commits a breach of a contract to render a performance the value of which in money is ascertainable from established market prices of the subject matter.

Cresci Construction Services, Inc., 64 A.3d at 259 (footnote omitted) (quoting Black Gold Coal Corp. v. Shawville Coal Co., 730 F.2d 941, 944 (3d Cir. 1984) (emphasis in original)).

Here, the trial court concluded that pre-judgment interest should not be awarded "as the terms [of] the Listing Contract included the assignment of six (6%) percent of the gross rent due and payable for any subsequent years of the lease term." T.C.O. at 8. The trial court's opinion omits an application of the law excerpted above. It appearing, however, that the amount to be tendered was determinable with reasonable certainty on the date of the breach, by way of the standards set forth in the Listing Contract, we conclude that pre-judgment interest was awardable as of right.[2] See Cresci Const. Services, Inc., 64 A.3d at 264-65.

Accordingly, we affirm with respect to the appeal at Docket No. 1259 EDA 2013 and vacate with respect to the cross-appeal at Docket No. 1336 EDA 2013. We remand solely for the trial court to award pre-judgment interest at the statutory legal rate.

Judgment affirmed in part, vacated in part. Case remanded.

Judgment Entered.


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