Valentino v. Philadelphia Triathlon, LLC., J-14-2018 (June 18, 2019). OPINION IN SUPPORT OF REVERSAL Justice Dougherty Decided June 18, 2019
The question before the Court is whether the Superior Court erred when it determined a pre-injury exculpatory waiver signed by a triathlon participant provides a complete defense to claims brought by the participant’s non-signatory heirs pursuant to the Wrongful Death Acct, 42 Pa.C.S. §8301. We would find the waiver is unenforceable against the heirs and does not preclude their wrongful death action. We would therefore reverse the Superior Court’s decision and remand to the trial court for further proceedings.
In determining whether the Waiver provides a defense to appellant’s wrongful death action, we must liberally apply the remedial Act while we simultaneously construe the Waiver strictly against appellee as the party seeking protection from the contract.
Allowing the Waiver to have a broad exculpatory effect with respect to non-signatory wrongful death claimants would essentially make the right the General Assembly created for certain heirs through the Act an illusory one. Abrogation of an express statutory right to recovery in this way violates public policy, and a pre-injury exculpatory waiver that contravenes public policy is invalid and unenforceable.
Accordingly, we would hold the Waiver is void and unenforceable with respect to appellant’s wrongful death claims and, as such, the Waiver should not be available to appellee as a defense in the underlying wrongful death litigation. We would hold the Superior Court erred in affirming summary judgment in favor of appellee on that basis, and reverse and remand to the trial court for further proceedings on appellant’s wrongful death claim.
ARBITRATION-FEDERAL ARBITRATION ACT-CONTRACTS OF EMPLOYMENT
New Prime, Inc. v. Oliveira, 2019, U.S. LEXIS 724 (January 15, 2019) Gorsuch, J.-The Federal Arbitration Act requires courts to enforce private arbitration agreements. But like most laws, this one bears its qualifications. Among other things, §1 says that “nothing herein” may be used to compel arbitration in disputes involving the “contracts of employment” of certain transportation workers. 9 U.S.C. §1. And that qualification has sparked these questions: When a contract delegates questions of arbitrability to an arbitrator, must a court leave disputes over the application of §1’s exception for the arbitrator to resolve? And does the term “contracts of employment” refer only to contracts between employers and employees, or does it also reach contracts with independent contractors? Because courts across the country have disagreed on the answers to these questions, we took this case to resolve them.
New Prime is an interstate trucking company and Dominic Oliveira works as one of its drivers. But, at least on paper, Mr. Oliveira isn’t an employee; the parties’ contracts label him an independent contractor. Those agreements also instruct that any disputes arising out of the parties’ relationship should be resolved by an arbitrator—even disputes over the scope of the arbitrator’s authority. Eventually, of course, a dispute did arise. In a class action lawsuit in federal court, Mr. Oliveira argued that New Prime denies its drivers lawful wages. The company may call its drivers independent contractors. But, Mr. Oliveira alleged, in reality New Prime treats them as employees and fails to pay the statutorily due minimum wage. In response to Mr. Oliveira’s complaint, New Prime asked the court to invoke its statutory authority under the Act and compel arbitration according to the terms found in the parties’ agreements. Given the statute’s terms and sequencing, we agree with the First Circuit that a court should decide for itself whether §1’s “contracts of employment” exclusion applies before ordering arbitration. After all, to invoke its statutory powers under §§3 and 4 to stay litigation and compel arbitration according to a contract’s terms, a court must first know whether the contract itself falls within or beyond the boundaries of §§1 and 2. The parties’ private agreement may be crystal clear and require arbitration of every question under the sun, but that does not necessarily mean the Act authorizes a court to stay litigation and send the parties to an arbitral forum. When Congress enacted the Arbitration Act in 1925, the term “contracts of employment” referred to agreements to perform work. No less than those who came before him, Mr. Oliveira is entitled to the benefit of that same understanding today. Accordingly, his agreement with New Prime falls within §1’s exception, the court of appeals was correct that it lacked authority under the Act to order arbitration, and the judgment is affirmed.
CONTRACTS-IMPOSSIBILITY OF PERFORMANCE-MOLD
Davis v Borough of Montrose, 2018 Superior Ct of PA, LEXIS 896 (2018) Nichols J. This case involves landlord/tenant action between a Borough and an individual where there was a mold problem discovered. A bench trial was held at the court below. The trial court did not abuse its discretion in finding the presence of mold did not entitle the Borough to terminate the lease. It has a calculation of damages. The matter will be remanded due to trial court error in its calculation of damages when it presumptively decreased the amount of damages. The landlord was entitled to relet the premises. The court also set as a prejudgment interest, the contract provided for a specified amount. Because the Borough breached the lease agreement to pay a definite sum of money, the landlord was entitled to prejudgment interest as a matter of law.
CONTRACTS-UNENFORCEABILITY-ILLEGALITY-FEDERAL HEALTHCARE PROGRAM
340B Management, LLC v. RX Blue Star Solutions, 2017 Pa. Super. LEXIS 1068 (December 19, 2017) Musmanno, J. 340B Management, LLC appealed from a judgment against it and in favor of Blue Star Solutions and others. The court affirmed the judgment. The court was not required to grant a new trial on a breach of contract claim. The court did not err in granting partial summary judgment to defendants with respect to 340B Management’s claim of breach of contract because the agreement was unenforceable based upon its violation of federal law. The plain language of 42 U.S.C.A. § 320a-7b(b)(1)(B) would bar 340B Management to receive remuneration in return for arranging for purchasing the products of Blue Star. This would be payment made in whole or in part under a Federal healthcare program. The trial court was correct to conclude that the agreement is unenforceable in that it contemplates a business arrangement that is prohibited by the law.
Gutteridge v. J3 Energy Group, Inc., 2017 Pa. Super. LEXIS 363 (May 17, 2017) Lazarus, J. Gutteridge and AEP commenced an action against Russial and J3, claiming promissory estoppel, breach of contract, unjust enrichment, breach of implied duty of good faith in tortious interference with contractual rights. The court issued a verdict in favor of appellee Gutteridge and Applied Energy Partners in the amount of $343,887 on the counts of unjust enrichment and promissory estoppel. The Superior Court affirmed the verdict.
The court’s conclusion that Gutteridge was dealing with Russial individually, and that Gutteridge and Russial were parties to a failed business dealing supported by evidence that the trial court deemed credible. Therefore there was individual liability. It was next asserted that the trial court abused its discretion or committed an error of law by finding liability against Russial under the theory of unjust enrichment. Again the court found no error or abuse of discretion. Here, the trial court found credible evidence that Russial committed wrongful acts by breaking its promises after performing services and reliance on those promises. As a result, Russial kept all the revenues and secured exclusive relationships with AEP’s most productive partners. Russiel has been enriched, unjustly, and the measure of damages is the value of the benefits conferred. That is, Russiel must make restitution in quantum meruit. The trial court found evidence that there were promises made to plaintiffs that were expected to induce action by the plaintiffs. The court found credible the testimony that Russiel personally promised the revenue-sharing arrangement to Gutteridge; that their personal business relationship continued while they attempted to formalize the arrangement; and that J3 promised AEP in exchange for marketing business, it would pay a percentage of revenues generated from AEP so that AEP could pay commissions to its existing sales force. The argument was made that damages could only be recovered for the reliance. The trial court heard sufficient evidence regarding sales and marketing activities. The court concluded that the damages which were necessary to prevent injustice for the benefit of the bargain. The Superior Court agreed this was appropriate. The verdict was not improperly calculated.
Wakeley v. M.J. Brunner, Inc., 147 A.3d 1 (Pa. Super. 2016). Appellant, whose case had been thrown out below, filed an appeal. The Superior Court affirmed. Appellant accepted an offer of employment and relocated her family from Dallas to Pittsburgh. Little training was received, and eventually appellant was fired. The application does not clearly establish the at-will nature of the employment. However, the confirmation signed by appellant just prior to commencing her employment is clear and dispositive. It specifically says that her employment was at-will. This effectively terminates any claim.
CONTRACTS-LAW FIRMS-FEE DISPUTE
Meyer, Darragh v. Malone Middleman, P.C., 137 A.3d 1247 (Pa. 2016) Baer, J. This case presents a dispute between two law firms over attorney’s fees earned in a wrongful death civil litigation settlement. We granted allocator to examine the propriety of the Superior Court’s holding that a law firm, which had formerly provided representation in the wrongful death action, was entitled to breach of contract damages against a successor law firm that ultimately obtained a settlement in the case when no contract existed between the two law firms. “For the reasons that follow, we reverse.” Consistent with this jurisprudence, we hold that under the specific facts presented, any recovery that may have been due to Meyer Darragh would lie in quantum meruit, and not breach of contract.
CONTRACTS-PUBLIC POLICY-CUSTODY AND SUPPORT AGREEMENT-SANCTION CLAUSE
Huss v. Weaver, 134 A.3d 449 (Pa. Super. 2016). The parties had agreed that if they had a child, Huss would have primary physical custody and Weaver would have specified visitation rights. If Weaver sought modification of these terms he would pay Huss $10,000 for each attempt. The lower court had found this to be a violation of public policy. The Superior Court en banc reversed. The court discussed what public policy is. No language in the agreement provides either that the $10,000 clause is intended to discourage Weaver from seeking court intervention, or evidence that the payment would act as an impediment to his ability to do so. Each of the parties clearly understood what they were signing. The Superior Court concluded that the trial court erred in ruling that the $10,000 clause in the agreement is unenforceable as against public policy. The record does not reflect that this provision constitutes any limitation on Weaver’s ability to seek court intervention to modify the custody and/or visitation provisions in the agreement between these parties in the best interests of the child.
STATUTE OF LIMITATIONS-CONTRACTS
This case deals with a limited partnership where supposedly one of the partners, the general partner, sold some property for below its proper value. The court found that the statute of limitations barred a tort claim. The other members of the partnership had notice of the sale. Due diligence is ascertained by an objective standard. The party seeking application of the discovery doctrine bears the burden of proof. The discovery rule will only operate to toll the running of the statute of limitations where, in spite of due diligence, one is unaware that he has been injured and has a cause of action. Here, the shareholders had enough notice. There was no fraudulent concealment to toll the statute of limitations. The two-year statute has run. The court was wrong to say a laches defense did not apply but the issue was not raised in post-trial relief. The court did err in dismissing breach of contract claim. There is an implied covenant of good faith and fair dealing. There may be discretion upon the general partner to sell property but he still has to operate in good faith and with fair dealing. The court cites to the Restatement (Second) of Contracts § 205 imposing this duty of good faith and fair dealing. Footnote 4 deals with Pennsylvania case law on the subject. A breach of the covenant of good faith and fair dealing is a breach of contract action not an independent breach for a duty of good faith. It does not add contractual duties. The behavior of the partner must be looked at through the lens of good faith and fair dealing. Pennsylvania will impute the same duty of good faith and fair dealing in a performance of contractual duties in a limited partnership and in other contracts. Pennsylvania is not adopting Delaware law, per se. There simply is no reason to treat a limited partnership differently than any other. There may have been discretion on the part of the general partner to sell property but the implied covenant of good faith and fair dealing imposed a duty to exercise that contractual obligation in good faith. Hanaway v. Parkesburg Group, LP, 132 A.3d 461 (Pa. Super. 2015).