2005 D e c i sion s O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit 8-4-2005 

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w . vi ll anova . e du/thir dc ir c uit_2005/739NOT P RE CE DE NT I AL UN I TED STATES CO UR T OF A PP EALS F O R T H E T H IR D C IR C U IT N o. 04- 2500 HAM P DEN REAL ES TAT E, I NC. , GENERAL P ARTNER ; J AGDI S H B ANS AL ; AS HOK L UHADI A; I NDU GA RG ; ANI L GUP T A, L I M I T E D P AR T NE RS , T RA DI NG AS H A M P D E N E N T E R P R IS E S , L . P . , A N E W JE R S E Y L IM IT E D P A R T N E R S H IP v. M E T R O P O L IT A N M A N A G E M E N T G R O U P , IN C .; SKY LI NE A PARTM ENTS, LLC, A PA . LI M I TED L I AB I L I T Y C OM P ANY; KE VI N T I M OC HE NKO M e tr o p o lita n M a n a g e m e n t G ro u p , In c .,

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C O W E N , C i r cui tJ udge. M etr opol i t an M anage m entG r oup, I nc. appea l s t he D i s t r i ctC our t ’ s or dergr ant i ng s um m aryj udgm enti n favorof H ampden R eal E s t at e and a gai ns tM etr opol i t an M anage m entw i t h r es pectt o t he br eac h of contr actcl ai m . M etr opol i t an M anage m ent cont ends t hatt he part i es m odi fi ed and a m ended the agr eementof s al e t o excl ude the e s c r o w a c c o u n tc r e d i tb y e x e c u t i n g t h e f i n a l s e t t l e m e n ts t a t e m e n t . A l t e r n a t i v e l y, M etr opol i t an M anage m entas s er t s t hatt her e w as ata mi ni m um di s put ed i s s ues of m at er i al fac tconce r ni ng w hether( 1) t he part i es i nt ended the fi nal s et t l ements t at ementt o r epr es ent t he fi nal pur chas e pr i ce, ( 2) t he part i es i nt ended thatt he es cr ow acc ountcr edi tw oul d be r el eas ed byH ampden R eal E s t at e as par tof the s al e negot i at i ons , and ( 3) M etr opol i t an M anage m entw oul d have pr ocee ded t o cl os e the tr ans act i on i f i tw as aw ar e i tw oul d have t o p a yt h e e s c r o w a c c o u n tc r e d i t . Th e Di s t r i c tCo u r th a d j u r i s d i c t i o n p u r s u a n tt o 2 8 U. S . C. § 1332 and w e have j ur i s di ct i on pur s uantt o 28 U . S. C . § 1291. W e w i l l r ever s e the D i stri ctC ou rt ’s j ud gm ent and rem and for further proceedings. A s w e w ri te s o le ly f

o r t h e p a rt ie s , w e o n ly p ro v id e a b ri e f re c ita tio n o f

th e f a c ts . H ampden R eal E s t at e s ol d M etr opol i t an M anage m enta r es i dent i al pr oper t ypur s uantt o an A m ended A gr eementof Sal e ( t he “Sal e A gr eement ”) . T he Sal e A gr eementpr ovi ded that t h e p r o p e r t ywo u l d b e s o l d f o r$ 3 . 7 mi l l i o n , t h a tM e t r o p o l i t a n M a n a g e me n two u l d a s s u me H a m p d e n R e a l E sta te’ s m o rtg a g e o n th e b u ild in g , an d th a t H a m p d e n R e a l E sta te w o u ld3

r ece i ve a c r edi ti n t he amountof $120, 549. 78— t he amountbei ng hel d i n es cr ow pur s uant to the m o rt g ag e (the “E scro w A cc o u n t C red it ”). B etw een the exe cut i on of the Sal e A gr eementand the cl os i ng, t he part i es n e g o tia te d c e rt a in a d

ju s tm e n ts to th e p u rc h a s e p ri c e to c o m p e n s a te f o r r e q u ir e d re p a ir s . D ur i ng t hes e negot i at i ons , t he part i es r evi ew ed a dr aftand fi nal H U D - 1 Set t l ement S t at em ent ( t he “S et t l em ent St at em ent”) , prepared byt he closi ng agen t , w hich di d n ot l i st t he Escr ow A ccountC r edi tamong t he var i ous debi t s and cr edi t s . A few w eeks aft ert he c lo s in g , H a m p d e n R e a l E s ta te d e m a n d e d p a ym e n t o f th e E s c ro w A c c o u n t C re d it. F o llo w in g M e tro p o lit a n M a n a g e m e n t’s re f u sa l to p a yth e E sc ro w A c c o u n t C re d it, H a m p d e n R e a l E sta te f iled a c o m p lain t cla im in g b re a c h o f c o n tra c t, un

ju st e n ric h m e n t, a n d c o n v e rsio n . M e tro p o lit a n M a n a g e m e n t b ro u g h t co u n ter c laim s f o r b re a c h o f

c o n tra c t, u n ju st e n ric h m e n t, an d f

ra u d u len t o r n e g lig e n t m isre p re se n tatio n . H a m p d e n R e a l E sta te br oughta part i al m ot i on fors um m aryj udgm entas t o t he br eac h of contr actcl ai m , w hi ch w a s g ra n te d a n d its u n

ju s t e n ri c h m e n t a n d c o n v e rs io n c la im s w e re d is m is s e d a s m o o t. M etr opol i t an M anage m ent ’ s cr os s m ot i on fors um m aryj udgm enton al l count s w as deni ed. A ft ers um m aryj udgm entw as gr ant ed as t o t he br eac h of contr actcl ai m , t he p a rt ie s w ith d re w a ll r e m a in in g c la im s . W e re v iew a d istri ct co u rt ’s ord er g ran ti n g p lai n ti ff ’s m o ti o n fo r sum m ary jud g m en t un d er a p lena rystan d ard , ap p ly ing the s am e test em p loy ed b ythe d istri ct co u rt u n d e r F e d e ra l R u le o f

C iv il P ro c e d u re 5 6 (c ). Mor t on I nt ’ l , I nc. v. A . E . St al ey M

f g. C o. ,4

34 3 F . 3d 66 9, 67 9 (3d C i r. 20 03 ). S um m aryj ud gm ent i s approp ri at e i f “t he p l eadings, dep osi t i on s, answ ers t o int err og at ori es, and adm i ssi on s on fil e, t og et her w i t h the affi dav i t s, if a n y , sh o w th a t th e re is n o g e n u in e iss u e a s to a n ym a ter ial f a c t an d th a t th e m o v in g p a rty is e n tit led to ju d g m e n t as a m a tter o f law .” F e d . R . C iv . P . 5 6 (c ). In m a k in g th is d e te rm in a tio n , w e v ie w th e f a c ts in th e lig h t m o s t f

a v o ra b le to th e n o n -m o v in g p a rt y . T he D i s t r i ctC our tcorr ect l ydet erm i ned thatt he thr es hol d i s s ue i s t he r ol e of the Set t l ementSt at ement , “bas ed on both t he i nt entof the part i es and the cus t om and us age of t he document . ” ( A pp. at7. ) H ow ever , t he C our tr efus ed t o cons i derextr i ns i c orpar ol e v id e n c e to d e ter m in e th e in ten t o f th e p a rties , rea so n in g th a t th e p a ro l ev id e n c e ru le pr ecl uded s uch cons i der at i on abs entambi gui t yi n t he w r i t t en contr act . W e fi nd t hatt he D istric t C o u rt m isa p p lied th e ru le. T h e p a ro l ev id e n c e ru le s e e k s to p re se rv e th e in teg rity of w r i t t en agr eement s bypr ecl udi ng t he i nt r oduct i on of cont empora neous orpr i or d e c la ra tio n s to a lte r t h e m e a n in g o f w ri tte n a g re e m e n ts . See Rose v. Food Fai rSt or es , In c ., 262 A . 2d 851, 863 ( Pa. 1970) . T he rul e does notappl y , how ever , w her e a pa r t ys eeks to in tr o d u c e e v id e n c e o f s u b s e q u e n t o ra l m o d if

ic a tio n s . S e e Ke rs e

y M fg . C o . v. R o zic , 215 A .2 d 3 2 3 (P a . S u p e r. C t. 1 9 6 5 ), rev’ d o n o ther grou nd s 222 A . 2d 713 ( Pa. 1966) . A s t he Kers ey cour thel d, a “w r i t t en agr eementm aybe modi fi ed bya s ubs equentw r i t t en oror al agr eementand thi s m odi fi cat i on m aybe s how n byw r i t i ngs orbyw or ds orbyconductor byal l t hr ee. I n s uch a s i tuat i on t he par ol evi dence rul e i s i nappl i cabl e. ” Id . at324. H er e, t he par ol evi dence rul e does notpr ecl ude t es t i m onyr egar di ng t he part i es i nt ent i on t o al t er5

t he fi nal pur chas e pr i ce byexec ut i ng a Set t l ementSt at ement , aft ert he exe cut i on of the S a le A g re e m e n t, w h ic h o m itte d th e E s c ro w A c c o u n t C re d it. T he ca s es ci t ed byH ampden R eal E s t at e ar e nott o t he contr aryas eac h i nvol ved t he admi s s i bi l i t yof pr i ornegot i at i ons t o demonstr at e mi s r epr es ent at i ons m ade i n t he i nducementof the contr act . A s exampl e, t he courti n R e m p e l v. N a tio n w id e L ife I ns ur ance Com

pany , h e ld th a t “[ i]f

a p a rtyc o n ten d s th a t a w riting is n o t an a c c u ra te expr es s i on of the agr eementbetw een the part i es , and thatcert ai n pr ovi s i ons w er e omi t t ed th e re f ro m , the p a ro l ev id e n c e ru le d o e s n o t ap p ly .” 3 7 0 A .2 d 3 6 6 , 3 7 1 (P a . S u p e r. C t. 1977) ( perm i t t i ng t he i nt r oduct i on of par ol evi dence t o es t abl i s h t hatt he contr actom i t t ed p ro v isio n s w h ich a p p e llee s re p re se n ted w o u ld b e in c lu d e d in th e w riting ); s ee al s o 1726 C h e r r y S tr e e t P ’s h ip v . B e ll A tla n tic P r o p ., In c ., 653 A . 2d 663 ( Pa. Super . C t . 1995) ( pr ecl udi ng t he i nt r oduct i on of evi dence of a pr i orr epr es ent at i on t o pr ove fr audul ent in d u c e m e n t) . T he D i s t r i ctC our tfur t herhel d t hatt he i nt egr at i on cl aus e cont ai ned i n t he w r i t t en contr acts uppor t s t he conc l us i on t hatt he Set t l ementSt at ement , w hi ch ment i oned nei t her th e E sc ro w A c c o u n t C re d it n o r th a t itw a s a m e n d in g th e S a le A g re e m e n t, i s n o t a m odi fi cat i on of the Sal e A gr eement . T he C our texpl ai ned thatt he out come m i ghtbe di ffe r enti f the Set t l ementSt at ementm ent i oned “the es cr ow cr edi tbutpr ovi ded di ffe r ent det ai l s , butas t he [Sett l ementSt at ement ] i n t hi s cas e s i m pl yi gnor ed the es cr ow cr edi t , and bot h par t i es agr ee thatt her e w er e no or al di s cus s i ons r egar di ng t he es cr ow cr edi t , t he6

[Set t l ementSt at ement ] cannotbe s ai d t o m odi fyt he es cr ow cr edi tpr ovi s i on i n t he A g re e m e n t o f

S a le .” (A p p . a t 9 .) W e d is a g re e . I ti s w el l - s et t l ed l aw i n Penns y l vani a thata “w r i t t en contr actw hi ch i s notfort he s al e of goods m aybe modi fi ed or al l y , even w hen the contr actpr ovi des t hatm odi fi cat i ons m ayonl ybe made i n w r i t i ng. ” Som ers et C m t y. H os p. v. A l l an B . Mi t chel l& Ass ocs . , I nc. , 685 A . 2d 141, 146 ( Pa. Super . C t . 1996) . “The m odi fi cat i on m aybe ac compl i s hed ei t her byw or ds orconduct , ” F i rs tN at ’ lB ank of

P a. v. Li ncoln N

at ’ lLi f e I ns . C o. , 824 F. 2d 277, 280 ( 3d C i r . 1987) demonstr at i ng t hatt he part i es i nt ended t o w ai ve the r equi r ementt hat a m e n d m e n ts b e m a d e in w ri tin g , Som ers et C m t y. H os p. , 685 A . 2d at146. A n or al m odi fi cat i on of a w r i t t en contr actm us tbe pr oven by“cl ear , pr eci s e and c onvi nci ng evi dence . ” F i na v. F i na , 737 A . 2d 760, 765 ( Pa. Super . C t . 1999) . V i ew i ng t he evi dence in the li g h t m o st fav o rab le t o M etrop o li tan M an ag em en t, w e f ind that the D istri ct C o u rt err ed i n concl udi ng t hatt her e w as i ns uffi ci entevi dence i n t he r ecor d t o r ai s e a ge nui ne iss u e o f m a ter ial f

a c t as to w h e th e r th e p a rties in ten d e d to o ra llym o d if yth e S a le A gr eement . M etr opol i t an M anage m enti nt r oduced a Set t l ementSt at ementw hi ch omi t t ed t he Escr ow A ccountC r edi t , w hi l e l i s t i ng al l ot herdebi t s and cr edi t s ( app. at94- 95) and s ubm i t t ed an a ffi davi tfr om i t s Pr es i dentw ho “r evi ew ed the D r aftSet t l ementSt at ement and under s t ood t hatt he Escr ow A ccountC r edi thad bee n om i t t ed as par tof the ongoi ng negot i at i ons betw een the part i es conce r ni ng t he amountof the cr edi tt o w hi ch7

M etr opol i t an M anage m entw as ent i t l ed” due t o t he poorcondi t i on of the pr oper t y( app. at 1 1 7 -18 ). A ccor di ngl y , t he D i s t r i ctC our terr ed i n gr ant i ng s um m aryj udgm enti n favorof H ampden R eal E s t at e. A ta mi ni m um , t her e w as a tr i abl e i s s ue of f actconce r ni ng w hether t he Set t l ementSt at ementw as i nt ended t o m odi fyt he pr i orw r i t t en Sal e A gr eementand s erve as t he fi nal and bi ndi ng m ani fes t at i on of the pur chas e pr i ce. Speci fi cal l y , w hether the p arti es in tend ed to ex clud e the E scro w A cc o u n t C red itfro m the p u rch ase p ri ce as p art o f th e n e g o tia tio n s to a d d re s s H a m p d e n R e a l E s ta te ’s f a ilu re to m a in ta in th e p ro p e rt y . F o r th e f o reg o ing rea so n s, the ju d g m en t of the D istri ct C o u rten tered o n F eb rua ry 18 , 20 04 , w i l l be reversed and rem and ed fo r fur t her proceedings. S i nce w e w i l l rever se t he D i s t r i ctC our t ’ s gr antof s um m aryj udgm entas t o C ountI ( B r eac h of C ont r act ) and the D i s t r i ctC our tdi s m i s s ed C ount s I I ( U nj us tE nr i chment ) and I I I ( C onver s i on) as m ootby it s issua n ce o f su m m aryjud g m en t, w e li k ew ise rem an d tho se c o u n ts t o the D istri ct C o u rt forfur t hercons i der at i on.