Justia Contracts Opinion SummariesArticles Posted in Pennsylvania Supreme Court
Vanderhoff v. Harleysville Ins. Co.
This case involved an uninsured motorist benefits claim filed in connection with injuries allegedly sustained by the appellant in a 2001 motor vehicle accident. Appellant was driving a truck insured by Harleysville Insurance Company when he rear-ended another vehicle. The police report contained no mention of a phantom vehicle being involved in the accident. Appellant later reported the accident to his employer, explaining he momentarily took his eyes off the road, and when he looked again, a vehicle was stopped in front of him; he was unable to stop and rear-ended the vehicle. Twenty days later, appellant completed a written Workers’ Compensation Employee’s Statement in which he reported the accident occurred due to the other vehicle stopping suddenly in front of him. But again, no phantom vehicle was reported. Over eight months later, appellant filed a claim for uninsured motorist benefits, alleging the accident was caused by a phantom vehicle pulling out in front of the other vehicle, causing appellant to stop suddenly. Harleysville denied appellant’s claim and sought a declaratory judgment that he was not entitled to uninsured motorist benefits. The Superior Court reversed the order of the Court of Common Pleas of Luzerne County, which held appellee Harleysville Insurance Company did not suffer prejudice as a result of appellant’s failure to report the phantom vehicle within a 30-day time requirement established by the Motor Vehicle Financial Responsibility Law (MVFRL). Upon review, the Supreme Court affirmed the Superior Court decision. View "Vanderhoff v. Harleysville Ins. Co." on Justia Law
Pulse Technologies v. Notaro
The Supreme Court granted allocatur to determine whether the Superior Court erred by declining to validate a restrictive covenant contained in an employment agreement, solely because the restrictive covenant was not expressly referenced in an initial offer letter which conditioned employment on the execution of the employment agreement. Upon concluding the Superior Court did not properly characterize the offer letter, the Supreme Court vacated and remanded for further proceedings. View "Pulse Technologies v. Notaro" on Justia Law
Osprey Portfolio, LLC v. Izett
Appellant, in his capacity as vice-president of Izett Manufacturing, Inc., executed a guaranty in connection with a loan agreement entered into by the company. The loan agreement entitled Izett Manufacturing to borrow up to $50,000 and was secured by a promissory note. The note and the guaranty both were dated 1999, and Appellant personally guarantied the payment of all liabilities under the note. The guaranty included a confession of judgment clause and stated that it was "executed under seal," with the designation "(SEAL)" as part of the signature line. By 2001, the company had borrowed $50,000 under the agreement. At that time, Appellee Osprey Portfolio, LLC purchased the loan and was assigned the note and guaranty. In late 2005, Osprey sent a letter to Izett Manufacturing, declaring the loan to be in default and demanding payment in full. Izett failed to remit payment. More than four years later, Osprey filed a Complaint in Confession of Judgment against Appellant as the guarantor of the loan. The court entered judgment the same day. Thereafter, Appellant filed a Petition to Strike and/or Open Judgment, claiming, in relevant part, that Osprey's action was precluded by Section 5525(a)(8) of the Judicial Code, which establishes a four-year limitation period for "[a]n action upon a contract, obligation or liability founded upon a writing . . .under seal . . ." The Supreme Court allowed this appeal to determine the limitation period that applies to an action on a guaranty executed under seal. Upon review, the Court held that the loan guaranty executed under seal by Appellant was an "instrument in writing under seal" subject to a 20-year limitation period set forth in Section 5529(b)(1) of the Judicial Code. Therefore, the Superior Court was affirmed. View "Osprey Portfolio, LLC v. Izett" on Justia Law
Bole v. Erie Insurance Exchange
Ronald Bole appealed a superior court's order that affirmed an arbitration award that denied him recovery of underinsured motorist benefits. The Supreme Court allowed the appeal to determine whether the rescue doctrine allowed a volunteer firefighter responding to a crash to recover despite finding his injuries were the result of a superseding cause. Upon review, the Supreme Court concluded that Bole could not, and did not disturb the arbitrator's determination. View "Bole v. Erie Insurance Exchange" on Justia Law
T.W. Phillips Gas and Oil Co. v. Jedlicka
The issue before the Supreme Court was the determination of the proper test for evaluating whether an oil or gas lease has produced "in paying quantities," as first discussed "Young v. Forest Oil Co.," (194 Pa. 243, 45 A. 1 (1899)). Appellant Ann Jedlicka owned a parcel of land consisting of approximately 70 acres. The Jedlicka tract is part of a larger tract of land consisting of approximately 163 acres, which was conveyed to Samuel Findley and David Findley by deed dated 1925. In 1928, the Findleys conveyed to T.W. Phillips Gas and Oil Co. an oil and gas lease covering all 163 acres of the Findley property which included the Jedlicka tract. The lease contained a habendum clause which provided for drilling and operating for oil and gas on the property so long as it was produced in "paying quantities." Notably, the term "in paying quantities" was not defined in the lease. Subsequently, the Findley property was subdivided and sold, including the Jedlicka tract, subject to the Findley lease. A successor to T.W. Philips, PC Exploration made plans to drill more wells on the Jedlicka tract. Jedlicka objected to construction of the new wells, claiming that W.W. Philips failed to maintain production "in paying quantities" under the Findley lease, and as a result, the lease lapsed and terminated. After careful consideration, the Supreme Court held that when production on a well has been marginal or sporadic, such that for some period profits did not exceed operating costs, the phrase "in paying quantities" must be construed with reference to an operator's good faith judgment. Furthermore, the Court found the lower courts considered the operator's good faith judgment in concluding the oil and gas lease at issue in the instant case has produced in paying quantities, the Court affirmed the order of the Superior Court which upheld the trial court's ruling in favor of T.W. Phillips Gas and Oil Co. and PC Exploration, Inc.
Barnett v. SKF USA, Inc.
The issue before the Supreme Court in this case concerned whether Section 514(a) of the Employee Retirement Income Security Act of 1974 (ERISA), preempted the breach of contract claim asserted by Appellees Lawrence J. Barnett, Christine Cookenback, James M. Defeo, and Madlin Laurent against Appellant SKF USA, Inc. under Pennsylvania law. Appellees were salaried, non-unionized, employees of SKF, working in its Philadelphia plant. The Company also employed hourly unionized employees at the plant. In 1991, SKF announced its decision to shut down the plant and terminate all workers. Over the course of the next year, the effect of the closing on employee retirement rights and benefits became a matter of discussion between Appellees and their supervisors. Appellees' retirement and pension rights were set forth in the an ERISA plan which SKF maintained and administered. Appellees became aware that, as a result of collectively bargaining the effects of plant closing, SKF agreed that any union worker with 20 years of service and 45 years of age, as of March 10, 1993, the date on which the collective bargaining agreement then in effect expired, would be entitled to receive an immediate and full pension (the creep provision). Two years after their employment with SKF was terminated, and prior to the submission of pension applications, Appellees commenced a breach of contract action against SKF alleging that throughout the course of their employment with the Company, they were employed under the same or better terms and conditions, including "pension eligibility," as SKF’s union workers. Upon review of the trial court record, the Supreme Court found that Appellees' claim was preempted, and accordingly reversed the Superior Court's order that affirmed the trial court's denial of summary judgment in favor of SKF.
Truserve Corp. v. Morgan’s Tool & Supply
The Supreme Court granted this appeal to consider whether a trial court could refuse to award contractual interest to the prevailing party in a contract dispute based on a finding of dilatory conduct by the prevailing party. Appellee Morgan's Tool & Supply (MTS) became delinquent on two accounts it had with TruServ, and after the parties were unable to agree on a payment plan to bring the accounts current, TruServ advised MTS by letter that it was terminating its Retail Member Agreement with MTS. TruServ filed a complaint against MTS alleging breach of contract and unjust enrichment. The trial court concluded MTS had breached its agreement with TruServ by failing to pay for the merchandise it had ordered and received. The court awarded TruServ damages plus costs and counsel fees. The court concluded however that "the decision of whether to award prejudgment interest is at the discretion of the court," and declined to award interest on the basis that TruServ was dilatory in prosecuting its claim. Upon review, the Supreme Court held that a trial court may not refuse to award interest to the prevailing party when the right to interest has been expressly reserved under the terms of the contract. Thus, the Court remanded this matter to the trial court for recalculation of its award in favor of TruServ.
Petty v. Hospital Service Assoc. of NE Penna.
Appellant Robert Petty is sole owner of Co-Appellant R.G. Petty Masonry. Appellants contracted with Respondent Blue Cross of Northeastern Pennsylvania (Blue Cross), a nonprofit hospital corporation that provides health insurance coverage for its employees. Appellants are covered under the group policy as subscribers. Appellants filed a four-count class action suit against Blue Cross, alleging that it violated the state Nonprofit Law by accumulating excessive profits and surplus well beyond the "incidental profit" permitted by statute. The second count alleged Blue Cross breached its contract with Appellants by violating the Nonprofit Law. The third count alleged Blue Cross owed appellants a fiduciary duty by virtue of their status as subscribers, and that duty was breached when it accrued the excess surplus. The fourth count requested an inspection of Blue Cross' business records. The trial court found Appellants lacked standing to challenge Blue Cross' alleged violations of the Nonprofit Law and dismissed the suit. The Commonwealth Court affirmed the trial court. Upon careful consideration of the briefs submitted by the parties in addition to the applicable legal authorities, the Supreme Court found that Appellants indeed lacked standing under the Nonprofit Law to challenge Blue Cross by their four-count complaint. Accordingly, the Court affirmed the lower courts' decisions and dismissed Appellants' case.
Walnut Street Associates, Inc. v. Brokerage Concepts, Inc.
Appellant Walnut Street Associates (WSA) provides insurance brokerage services and helps employers obtain health insurance for their employees. Appellee Brokerage Concepts, Inc. (BCI) is a third party administrator of employee benefit plans. Procacci retained BCI as administrator of its insurance plans, and BCI paid commissions to WSA based on premiums paid by Procacci. In 2005, Procacci requested BCI reduce its costs, but BCI would not meet Procacciâs proposal. Procacci then notified BCI that it would take its business elsewhere. BCI asked Procacci to reconsider, and in the process, disclosed to Procacci how much it paid to WSA as its broker. The amount was higher than Procacci believed WSA had been earning, but there was no dispute that BCIâs statements about WSAâs compensation were true. As a result of BCIâs letter, Procacci terminated its contract with WSA. WSA sued BCI alleging that BCI tortiously interfered with the WSA/Procacci contract by disclosing the amount of WSAâs compensation. BCI argued that it could not be liable for tortious interference because what it said was true, or otherwise justified and privileged. At trial, the jury found that BCI did interfere in the WSA/Procacci contract. BCI appealed, and the appellate court reversed the trial courtâs judgment. The appellate court adopted a section of the Restatement of Torts, which said that truth is a defense to a claim of tortious interference. WSA maintained that the Restatement was not applicable according to Pennsylvania law. The Supreme Court reviewed the case and adopted the Restatement defense that truth is a defense to claims of tortious interference with contractual relations. The Court affirmed the decision of the appellate court.