J-A25043-14

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

FREY LUTZ CORPORATION, IN THE SUPERIOR COURT OF

PENNSYLVANIA

Appellant

v.

E.R. STUEBNER, INC.,

Appellee No. 883 EDA 2014

Appeal from the Order Entered February 18, 2014

in the Court of Common Pleas of Chester County

Civil Division at No.: 2013-03233-CT

BEFORE: DONOHUE, J., WECHT, J., and PLATT, J.*

MEMORANDUM BY PLATT, J.: FILED APRIL 07, 2015

Appellant, Frey Lutz Corporation, appeals from the order sustaining 

the preliminary objections of Appellee, E. R. Stuebner, Inc., and dismissing 

Appellant’s complaint with prejudice. Appellant, an HVAC1contractor, claims 

as a third party beneficiary to a contract provision making Appellee, the 

general contractor, financially responsible to other prime contractors on the 

same project for undue delay, notwithstanding a separate definitional 

provision disclaiming the creation of any contractual relationship except 

between the school district and the general contractor. We vacate and 

remand. 

____________________________________________

* Retired Senior Judge assigned to the Superior Court.

1 Heating, ventilating, and air conditioning.
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This is a contract dispute between two prime contractors for the 

construction of an elementary school in the Kennett Consolidated School 

District (sometimes referred to in the contract documents as the Owner). 

Appellant executed a contract as of January 12, 2010, with the School 

District to provide HVAC construction for the New Bancroft Elementary 

School. Appellee executed a similar contract as of the same date, for 

general construction of the same project. Both contracts were executed on 

a model form contract, with additional specific information inserted.2 

Appellant alleges Appellee is liable for delays on the project. 

Two provisions of the Stuebner contract are at issue in this appeal. 

For clarity and completeness we present both provisions in their entirety: 

§ 1.1.2 THE CONTRACT

The Contract Documents form the Contract for Construction. 

The Contract represents the entire and integrated agreement 

between the parties hereto and supersedes prior negotiations, 

representations or agreements, either written or oral. The 

Contract may be amended or modified only by a Modification. 

The Contract Documents shall not be construed to create a 

contractual relationship of any kind (1) between the Architect 

and Contractor, (2) between the Construction Manager and 

Contractor, (3) between the Architect and Construction Manager, 

(4) between the Owner and a Subcontractor or Subsubcontractor or (5) between any persons or entities other than 

the Owner and Contractor. The Construction Manager and 

Architect shall, however, be entitled to performance and 

____________________________________________

2 Both contracts used the same form: the AIA [American Institute of 

Architects] Document A101/CMa ─ 1992, “Standard Form of Agreement 

Between Owner and Contractor where the basis of the payment is a 

STIPULATED SUM” (Construction Manager-Adviser edition). 
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enforcement of obligations under the Contract intended to 

facilitate performance of their duties.

* * *

§3.10.2 [CONTRACTOR’S CONSTRUCTION SCHEDULE] 

* * *

.3: The Contractors [sic] shall cooperate and consult with 

other Prime Contractors during the construction of this Project. 

The Contractor shall schedule and execute his Work so as to 

avoid delay to other contractors. The Contractor is financially 

responsible to the other prime contractors for undue 

delay caused by him to other prime contractors on the 

Project. The Contractor shall indemnify and hold harmless the 

Owner, Architect, and Construction Manager for any claims, 

losses or delays of any kind made by other contractors.

(E.R. Stuebner, Inc. Contract with Kennett Consolidated School District, 

dated as of January 12, 2010, §§ 1.1.2; 3.10.2.3) (emphasis added). 

On April 9, 2013, Appellant filed a complaint against Appellee under 

section 3.10.2.3 of the contract between the Owner/School District and 

Appellee. (See Complaint, 4/09/13, at 3-4). 

Appellee filed preliminary objections, maintaining that Appellant could 

not recover as a third party beneficiary because under § 1.1.2 of the General 

Conditions, both parties, Appellee and the School District, disclaim the 

intention to create a contractual relationship of any kind between various 

enumerated entities. (See Preliminary Objections, 5/22/13, at 4). 
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The trial court agreed, sustained the preliminary objections, and 

dismissed the complaint with prejudice. (See Order, 2/18/14; Trial Court 

Opinion, 5/05/14, at 1). This timely appeal followed.3 

Appellant raises two questions for our review on appeal. 

1. Whether the Court of Common Pleas erred when it 

sustained the Preliminary Objections of E.R. Stuebner, Inc. 

because Section 3.10.2.3. of the General Conditions establishes 

Frey Lutz Corporation as a third party beneficiary?

2. Whether the Court of Common Pleas erred when it 

sustained the Preliminary Objections of E.R. Stuebner, Inc. 

because Section 1.1.2 of the General Conditions does not 

expressly disclaim Frey Lutz Corporation’s third party beneficiary 

rights?

(Appellant’s Brief, at 4).

Appellant argues that the trial court’s exclusionary reading of the “no 

contractual relationship” language of section 1.1.2(5) would render 

“superfluous” the “financially responsible to the other prime contractors” 

language of section 3.10.2.3. (Appellant’s Brief, at 9). We agree.

Our standard of review when the trial court sustains preliminary 

objections is well-settled:

Our standard of review of an order of the trial court 

overruling or granting preliminary objections is to 

determine whether the trial court committed an error of 

law. When considering the appropriateness of a ruling on 

____________________________________________

3 Appellant filed a timely statement of errors on April 25, 2014. See

Pa.R.A.P. 1925(b). The trial court filed an opinion on May 5, 2014. See

Pa.R.A.P. 1925(a).
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preliminary objections, the appellate court must apply the 

same standard as the trial court.

Preliminary objections in the nature of a demurrer test the 

legal sufficiency of the complaint. When considering 

preliminary objections, all material facts set forth in the 

challenged pleadings are admitted as true, as well as all 

inferences reasonably deducible therefrom. Preliminary 

objections which seek the dismissal of a cause of action 

should be sustained only in cases in which it is clear and 

free from doubt that the pleader will be unable to prove 

facts legally sufficient to establish the right to relief. If 

any doubt exists as to whether a demurrer should be 

sustained, it should be resolved in favor of 

overruling the preliminary objections.

* * *

It is also well[-]established that under the law of contracts, 

in interpreting an agreement, the court must ascertain the 

intent of the parties.

In the cases of a written contract, the intent of the parties 

is the writing itself. If left undefined, the words of a 

contract are to be given their ordinary meaning. When the 

terms of a contract are clear and unambiguous, the intent 

of the parties is to be ascertained from the document 

itself. When, however, an ambiguity exists, parol evidence 

is admissible to explain or clarify or resolve the ambiguity, 

irrespective of whether the ambiguity is patent, created by 

the language of the instrument, or latent, created by 

extrinsic or collateral circumstances. 

With specific reference to what constitutes “ambiguity” in 

the context of contract interpretation, our Supreme Court has 

opined as follows:

Contractual language is ambiguous if it is reasonably 

susceptible of different constructions and capable of being 

understood in more than one sense. This is not a question 

to be resolved in a vacuum. Rather, contractual terms are 

ambiguous if they are subject to more than one reasonable 

interpretation when applied to a particular set of facts. We 

will not, however, distort the meaning of the language or 
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resort to a strained contrivance in order to find an 

ambiguity. 

Additionally, [i]t is axiomatic that contractual clauses must be 

construed, whenever possible, in a manner that effectuates all 

of the clauses being considered. It is fundamental that one 

part of a contract cannot be so interpreted as to annul another 

part and that writings which comprise an agreement must be 

interpreted as a whole. 

Lenau v. Co-eXprise, Inc., 102 A.3d 423, 428-30 (Pa. Super. 2014) 

(citations and internal quotation marks omitted) (emphases added). 

Similarly, 

The interpretation of any contract is a question of law and this 

Court’s scope of review is plenary. Moreover, we need not defer 

to the conclusions of the trial court and are free to draw our own 

inferences. In interpreting a contract, the ultimate goal is to 

ascertain and give effect to the intent of the parties as 

reasonably manifested by the language of their written 

agreement. When construing agreements involving clear and 

unambiguous terms, this Court need only examine the writing 

itself to give effect to the parties’ understanding. This Court 

must construe the contract only as written and may not modify 

the plain meaning under the guise of interpretation.

* * *

Moreover, when the language of a contract is clear and 

unequivocal, courts interpret its meaning by its content alone, 

within the four corners of the document. 

Stephan v. Waldron Elec. Heating and Cooling LLC, 100 A.3d 660, 

665 (Pa. Super. 2014) (internal quotation marks and citations omitted).

[W]e accept as true the material facts set forth in [a]ppellee’s 

complaint along with any reasonable inferences therefrom. The 

question presented by the demurrer is whether, on the facts 

averred, the law says with certainty that no recovery is possible. 
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Shafer Elec. & Const. v. Mantia, 96 A.3d 989, 994 (Pa. 2014) (citations 

and internal quotation marks omitted). Furthermore, it is well-settled that 

“[a]n agreement or instrument which reduces legal rights which would 

otherwise exist is strictly construed against the party asserting it and must 

spell out with the utmost particularity the intention of the parties.” 

Maloney v. Valley Medical Facilities, Inc., 946 A.2d 702, 707 (Pa. Super. 

2008), affirmed, 984 A.2d 478 (Pa. 2009) (citation omitted). “Pennsylvania 

contract law prescribes that, ‘an interpretation will not be given to one part 

of the contract which will annul another part of it.’” Id. (citing Capek v. 

Devito, 767 A.2d 1047, 1050 (Pa. 2001)). 

Here, in its Rule 1925(a) opinion, the trial court concluded that 

Appellant offered “a tortured interpretation” of the definitional language in 

section 1.1.2. (Trial Ct. Op., at unnumbered page 4). We are constrained 

to disagree. 

Preliminarily, we note that the trial court’s reasoning reads more into 

the definitional section than the context, or any controlling authority, 

requires or permits. Section 1.1.2, in relevant part, says no more than that 

the contract documents “shall not be construed to create a contractual 

relationship of any kind,” with five relationships enumerated. (Stuebner 

Contract, at § 1.1.2). 

However, Appellant is not claiming as a contracting party under the 

Stuebner contract. It is claiming as a third party beneficiary. A contracting 
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party and a third party beneficiary to a contract are mutually exclusive 

positions; neither Appellee nor the trial court offers any legal authority in 

support of their assumed equivalence. The trial court erred by accepting 

Appellee’s argument and reading them as equivalent. 

The legal principles controlling third party beneficiary status are wellsettled. 

“In order for a third party beneficiary to have standing to 

recover on a contract, both contracting parties must have 

expressed an intention that the third party be a beneficiary, and 

that intention must have affirmatively appeared in the contract 

itself.” Scarpitti v. Weborg, 530 Pa. 366, 609 A.2d 147, 149 

(1992). Furthermore,

to be a third party beneficiary entitled to recover on a 

contract it is not enough that it be intended by one of the 

parties to the contract and the third person that the 

latter should be a beneficiary, but both parties to the 

contract must so intend and must indicate that intention 

in the contract; in other words, a promisor cannot be held 

liable to an alleged beneficiary of a contract unless the 

latter was within his contemplation at the time the contract 

was entered into and such liability was intentionally 

assumed by him in his undertaking.

Spires v. Hanover Fire Ins. Co., 364 Pa. 52, 70 A.2d 828, 

830–31 (1950) (emphasis in original). While Spires was 

overruled by Guy v. Liederbach, 501 Pa. 47, 459 A.2d 744 

(1983), it was only overruled “to the extent that it states the 

exclusive test for third party beneficiaries.” Id. at 751; accord 

Burks v. Fed. Ins. Co., 883 A.2d 1086, 1088 (Pa. Super. 

2005). 

In Guy, our Supreme Court established a “narrow class of 

third party beneficiaries.” Scarpitti, 609 A.2d at 151. This 

narrow exception established a “restricted cause of action” for 

third party beneficiaries by adopting Section 302 of the 

Restatement (Second) of Contracts (1979). Scarpitti, 609 A.2d 

at 151. Section 302 involves a two-part test to determine 
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whether one is a third party beneficiary to a contract, which 

requires that (1) the recognition of the beneficiary’s right must 

be appropriate to effectuate the intention of the parties, and (2) 

the performance must satisfy an obligation of the promisee to 

pay money to the beneficiary or the circumstances indicate that 

the promisee intends to give the beneficiary the benefit of the 

promised performance. Guy, 459 A.2d at 751 (quotation marks 

omitted); accord Burks v. Fed. Ins. Co., 883 A.2d 1086, 1088 

(Pa. Super. 2005). Thus, even when the contract does not 

expressly state that the third party is intended to be a 

beneficiary, the party may still be a third party beneficiary under 

the foregoing test. Burks, 883 A.2d at 1088. “But Guy did not 

alter the requirement that in order for one to achieve third party 

beneficiary status, that party must show that both parties to the 

contract so intended, and that such intent was within the parties’ 

contemplation at the time the contract was formed.” Id.

Kirschner v. K & L Gates LLP, 46 A.3d 737, 762 (Pa. Super. 2012), appeal 

denied, 65 A.3d 414 (Pa. 2013).

Here, on review, we conclude that both of the parties (Appellee 

Stuebner and the school district), expressly intended that the other prime 

contractors be third party beneficiaries under the plain meaning of the 

“financially responsible to the other prime contractors for undue delay” 

language of section 3.10.2.3. The trial court’s exclusionary reading of 

section 1.1.2 annuls the protection of the financial responsibility clause, in 

violation of the contract interpretation principles set forth in Lenau, supra

at 430. The trial court erred in interpreting the contract by ignoring the 

plain unambiguous meaning of the financial responsibility clause. See

Kirschner, supra at 762; Maloney, supra at 707. 

The trial court also posits that Appellant has an indirect remedy 

because it could sue the school district. (See Trial Ct. Op., at unnumbered 
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page five). However, the relevant provision of the contract only says that 

that the School District has a right to reimbursement from Appellee 

Stuebner. The trial court offers no controlling authority for its inferential 

interpretation that Appellant Frey Lutz can claim indirectly through the 

School District. Furthermore, the trial court offers no authority in support of 

its assumption that the School District’s right of indemnification against 

Stuebner includes a contractual obligation of reimbursement to Appellant. 

(See id.). 

Moreover, as noted by Appellant, section 8.3.2 of the Stuebner 

contract (as well as the Frey Lutz contract) expressly prohibits claims 

against the School District for delays “from any cause whatsoever . . . 

including . . . the actions or inactions of other contractors[.]” (Stuebner 

Contract, at § 8.3.2) (emphasis added). The trial court’s assumption of an 

alternative available remedy is contradicted by the plain language of the 

contracts.4 

____________________________________________

4 Appellee also maintains in a footnote that Appellant Frey Lutz was not 

intended to be a beneficiary of the Stuebner contract under the Separation 

Act, (71 P.S. § 1618). (See Appellee’s Brief, at 22 n.2). Appellee asserts, 

correctly, that the Separation Act applies to public school building 

construction contracts. (See id., (citing Mechanical Contractors Ass'n of 

E. Pa., Inc. v. Commonwealth, Dept. of Educ., 934 A.2d 1262, 1271 (Pa. 

2007))). However, here there is no dispute that the Separation Act, 

(mandating separate contracts), was complied with in the contract under 

review. Further, the specific claim of waiver at issue in Mechanical 

Contractors, supra, is not present in this appeal. We conclude the 

argument based on the Separation Act is undeveloped and without merit. 

(Footnote Continued Next Page)
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We are constrained to conclude that the trial court erred in its 

interpretation of the contract, in sustaining the preliminary objections, and 

in its dismissal of the complaint with prejudice. 

Order vacated. Case remanded to the trial court for disposition in 

accordance with this decision.

Judge Wecht joins the Memorandum.

Judge Donohue files a Concurring Memorandum in which Judge Wecht 

joins.

Judgment Entered.

Joseph D. Seletyn, Esq.

Prothonotary

Date: 4/7/2015

(Footnote Continued) _______________________

On independent review, we find nothing in the Separation Act which 

mandates a result contrary to our disposition.