Court Opinion

ID: 5139318
Source: CourtListenerOpinion
Date Created: 2021-12-21 18:15:10.785748+00
Date Added: 2024-06-11T08:24:16.701839
License: Public Domain

J-A26031-21

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

    BT STONE HILL, LP                          :   IN THE SUPERIOR COURT OF
                                               :        PENNSYLVANIA
                       Appellant               :
                                               :
                                               :
                v.                             :
                                               :
                                               :
    ASHLEY DEVELOPMENT                         :   No. 970 EDA 2021
    CORPORATION                                :

               Appeal from the Judgment Entered April 14, 2021
     In the Court of Common Pleas of Lehigh County Civil Division at No(s):
                                 2019-C-0322

BEFORE: BOWES, J., STABILE, J., and McCAFFERY, J.

MEMORANDUM BY McCAFFERY, J.:                         FILED DECEMBER 21, 2021

       BT Stone Hill, LP (Appellant) appeals from the judgment entered in the

Lehigh County Court of Common Pleas, after a non-jury trial, in favor of Ashley

Development Corporation (Appellee) in the amount of $0.00.1           Appellant
____________________________________________

1  On April 14, 2021, the trial court entered an order announcing its verdict in
favor of Appellee. On the same day — and thus before the 10-day period for
filing a post-trial motion expired — the court also entered judgment. See
Shonberger v. Oswell, 530 A.2d 112, 115 (Pa. Super. 1987) (an “initial[ ]
and erroneously labelled[ ] judgment[,] entered before the filing and denial of
post-verdict motions, . . . was premature and void”). On April 23rd, Appellant
filed a post-trial motion and, before the trial court ruled on it, a notice of
appeal on May 14th. On May 19th, the court filed an order, staying the post-
trial motion pending this appeal.

       On July 9, 2021, this Court issued a per curiam rule to show cause on
Appellant as to whether this Court had jurisdiction to hear the appeal. See
Melani v. Nw. Eng’g, Inc., 909 A.2d 404, 406 (Pa. Super. 2006) (“The entry
of an appropriate judgment is a prerequisite to this Court’s exercise of
jurisdiction and ‘an appeal filed while a post-trial motion is pending before
(Footnote Continued Next Page)
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alleges the trial court erred when it found: (1) it did not suffer actual damages;

(2) Appellee did not breach its indemnity agreement with Appellant; and (3)

Appellant’s unjust enrichment claim was precluded because “the relationship

between Appellant and Appellee was governed by a contract[.]” Appellant’s

Brief at 27. For the following reasons, we affirm.

       Appellant, a real estate development company in Altoona, Pennsylvania,

is owned by its sole managing member, Bruce Thaler.            Appellee, a land

planning and development firm in Bethlehem, Pennsylvania, is owned by its

sole shareholder, Louis Pektor.

____________________________________________

[the] trial court will be considered premature . . . .’”). Appellant responded
that although it had filed the post-trial motion, “in an abundance of caution,
and given that the Trial Court’s Order went as far as to enter judgment in
favor of Appellee, Appellant thought it appropriate to adequately preserve its
appeal rights by timely filing an appeal within 30-days of the Trial Court’s
Order[.]” Appellant’s Show Cause Brief at 14-15. Appellant argued this Court
has jurisdiction over this matter, where “the Trial Court failed to take any
action within the 30-day time period following the entry of judgment that
would toll the . . . time for appeal[.]” Id. at 15-16.

       In light of the foregoing, including Appellant’s lack of objection to the
trial court’s not ruling on its post-trial motion, as well as the lack of any
objection by Appellee, we deem Appellant’s May 14, 2021, notice of appeal
timely filed. See, e.g., Eichman v. McKeon, 824 A.2d 305, 310, n.1 (Pa.
Super. 2003) (“As judgment was properly entered on February 21, 2001, we
will regard as done what ought to have been done and treat this appeal as if
properly filed from the judgment.”).

      While counsel for Appellant purports to appeal from the order docketed
on April 14, 2021, we note the appeal properly lies from the judgment entered
in favor of Appellee docketed the same day. We have corrected the caption
accordingly.

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        The trial court made the following findings of facts.       In May 2007,

Appellee obtained a $561,000 loan from Embassy Bank, secured by the

“Bergstresser” and “406-408 East Third Street” properties.2         Trial Ct. Op.,

4/14/21, at 6. The maturity date of the loan was February 28, 2013. First

Omnibus Amendment to the Indemnity Agreement, 3/25/13, at 1.

        On March 25, 2013, Appellant, Appellee, and Embassy Bank signed an

Omnibus Agreement, wherein they agreed to shift the collateral from

Appellee’s Embassy Bank loan to a property Appellant owned in Lower

Macungie Township in Lehigh County, Pennsylvania.                  First Omnibus

Amendment to the Indemnity Agreement at 1; Trial Ct. Op. at 6-7.

Additionally, the maturity date of Appellee’s Embassy Bank loan was extended

approximately three years, to March 30, 2016.          Id.   Appellant signed this

agreement as Limited Guarantor. Trial Ct. Op. at 7.

        On the same day, Appellee signed an Indemnity Agreement with

Appellant.    Trial Ct. Op. at 7.      In relevant part, the indemnity agreement

provided:

        3. In consideration of the execution by [Appellant] of the Mortgage
        and Guaranty, [Appellee] agrees to pay [Appellant] an annual fee
        equal to 1% of the outstanding balance of the Loan payable upon
        execution of this Agreement and upon each anniversary thereafter
        until the Loan is paid in full. The outstanding balance of the Loan
        shall be determined as of the close of business the day prior to
        the date upon which the payment is due.

____________________________________________

2   The record does not indicate where these properties are located.

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       4. [Appellee] agrees to indemnify [Appellant] from and against
       any claims, demands, losses, damages, liabilities, costs and
       expenses, including attorneys’ fees, which [Appellant] may incur
       in connection with the Guaranty or the Mortgage or which are in
       any way related to Embassy’s or its successor’s exercise of their
       rights and remedies under the Mortgage, the Guaranty, or the
       Loan against [Appellant], including, without limitation, any
       amounts [Appellant] may pay in compromise or settlement of any
       of the foregoing.

       5. In the event [Appellee] fails or refuses to pay any amounts due
       to [Appellant] pursuant to this agreement within ten (10) days of
       written demand therefor from [Appellant, Appellant] shall be
       entitled to all rights and remedies available in law or in equity to
       collect such amounts shall accrue interest at the rate of ten (10%0
       percent per annum until paid.

Indemnity Agreement, 3/25/13, at 1-2 (unpaginated).

       In September 2015, Appellant sought financing from Malvern Bank “to

move forward with construction at [its property] encumbered by the $561,000

Mortgage held by Embassy Bank as collateral for” Appellee’s Embassy Bank

loan.3 Trial Ct. Op. at 8 (footnote omitted); N.T. Non-Jury Trial, 12/3/20, at

54. However, Malvern Bank required the Embassy Bank loan be satisfied, paid

off, or “moved”4 because Malvern Bank would not “permit any subordinate

debt.” Trial. Ct. Op. at 9; N.T. Non-Jury Trial, at 34, 54.

       On September 16, 2015, Embassy Bank approved Thaler and his wife,

Phyllis, in their individual capacities, for a “personal commercial” loan for

____________________________________________

3 The trial court stated Thaler obtained financing from Malvern Bank, however
the notes of testimony clarify it was Appellant who sought financing. Trial Ct.
Op. at 8 (footnote omitted); N.T. Non-Jury Trial, 12/3/20, at 54.

4Throughout his testimony, Thaler stated the loan must be “moved,” but did
not provide further explanation. See N.T. Non-Jury Trial, at 34, 54.

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$360,000. Trial Ct. Op. at 9. On the same day, Appellant notified Appellee

by letter, of the amount — $566,252.33 — needed to fully satisfy the Embassy

Bank loan, interest, and fees. Id. Additionally, on September 18th, Thaler

emailed Pektor, notifying him that Appellant received a loan commitment

from Malvern Bank. Id. Thaler stated that Malvern Bank would not “permit

any subordinate debt,” and if Pektor/Appellee could not pay off the $561,000

Embassy Bank loan, Thaler would “personally lend” Pecktor/Appellee the

money “from [his] line of credit[.]” Id. The email included a demand note

for $566,252.33.   Id.   On September 21st, Appellant, through its general

partner BT Management, LLC, sent a follow up email to Pektor regarding the

Embassy Bank loan. Id. at 10.

     Pektor did not sign the September 18, 2015, demand note individually

or on behalf of Appellee, nor did he agree to satisfy Appellee’s Embassy Bank

loan before the March 30, 2016, maturity date.     Trial Ct. Op. at 10.   On

September 23rd, Thaler and his wife, in their individual capacities, took out

the Embassy Bank “personal commercial” loan in the amount of $360,000.

Appellee’s entire $561,000 loan was paid in full in one sum.     The Thalers

applied their entire $360,000 loan towards the payment.      Thaler provided

testimony at trial that the remaining balance could have come from

“anywhere” and that he paid it “personally.” N.T. Non-Jury Trial, at 31, 33.

The trial court found the Thalers personally paid the entire Embassy bank

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loan.5 Trial Ct. Op. at 10. The Thalers had “no personal guaranty obligating”

them to pay off the Embassy bank loan for $561,000. Id. at 10-11 (footnote

omitted); N.T. Non-Jury Trial, 12/3/20, at 30-33.

       “At most, seven days elapsed between the first written demand for

payment of [Appellee’s Embassy Bank loan]” and the Thalers’ payment on the

Embassy Bank loan.         Trial Ct. Op. at 10.   On December 16, 2015, Pektor

emailed Thaler “express[ing] his displeasure” with Thaler’s decision to pay

Appellee’s Embassy bank loan. Id. at 11. After December 2015, there was

no communication between the parties regarding the payment of the Embassy

Bank loan or the indemnity agreement until this litigation commenced on

January 31, 2019. Id. at 4, 12.

       On January 31, 2019, Appellant filed a two-count complaint against

Appellee, first asserting breach of contract.      Appellant averred the parties’

March 25, 2013, Indemnity Agreement entitled it to, at any time, demand

____________________________________________

5 The trial court stated the Thalers personally paid the entire $561,000 loan.
Trial Ct. Op. at 10. However, at trial Thaler testified that the remaining
amount paid “could have been made from anywhere” and he “would have no
idea.” See N.T. Non-Jury Trial, at 30-33. Thaler testified, contradicting his
statement that the payment could have come from “anywhere,” the Embassy
Bank loan was paid by “a combination of cash and another mortgage through
[Thaler] personally.” See id. at 31 (emphasis added).

      At trial, Appellee’s counsel stated Appellant “provided [ ] a closing
spreadsheet that shows a payoff from [Appellant] to the Embassy Bank loan
[in the amount of] $206,319.33. The balance [ ] owed on that loan was
paid by [the Thalers] personally.” N.T. Non-Jury Trial at 6. On appeal,
Appellee contests that this was accepted as a stipulation by the trial court.
Appellee’s Brief at 24-27.

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Appellee to pay off its $561,000 loan with Embassy Bank, or to reimburse

Appellant if it paid off the loan. The complaint then claimed Appellee failed

“to timely reimburse it for all costs incurred” with Appellant’s paying off

Appellee’s Embassy Bank loan; Appellant alleged damages of $754,589.41

plus costs and attorneys’ fees.    Trial Ct. Op. at 13.    The complaint then

presented, in the alternative, a cause of action for unjust enrichment. On May

14, 2019, Appellee filed an answer to the complaint with new matter. On May

31st, Appellant answered Appellee’s new matter.

      Following an unsuccessful mediation, this case proceeded to a remote-

video non-jury trial on December 3, 2020. Trial Ct. Op. at 5. Thaler admitted

that he and his wife, in their individual capacities, paid the loan owed by

Appellee to Embassy Bank through a “combination of cash and a personal

commercial loan.” Id. at 10. Thaler testified he paid Appellee’s loan because

of a “personal guaranty” and “because he wanted to protect his reputation

with Embassy Bank.” Id. at 11. Thaler further testified that he “is” Appellant,

and it is “kind of irrelevant” who paid the loan because it was made on behalf

of Appellant. Id. at 11, 15; N.T. Non-Jury Trial at 98. However, Appellant

stipulated that there was no personal guaranty obliging Thaler to personally

pay off Appellee’s loan. Trial Ct. Op. at 11.

      On April 14, 2021, the trial court issued an order, announcing its verdict

for Appellee against Appellant in the amount of $0.00. The trial court based

its decision on two grounds. First, the trial court concluded neither Appellant

nor Thaler had the right to “call in” Appellee’s loan before the maturity date.

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The court reasoned the Indemnity Agreement “entitled [ ] indemnification

from [Appellee only] if [it] defaulted on the $561,000 [l]oan with Embassy

Bank and Embassy Bank sought payment from” Appellant. Trial Ct. Op. at 14

(emphasis added). However, the trial court found Appellant “cannot and did

not prove that it incurred any costs or expenses associated” with the $561,000

loan; and a cause of action for unjust enrichment was “not available” to

Appellant. Id. at 14, 17-18. Second, the trial court noted the Thalers and

Appellant are not the same entity. Trial Ct. Op. at 15-16.

        As stated above, the trial court entered judgment the same day and

Appellant filed this timely appeal. On May 17, 2021, the trial court ordered,

and Appellant subsequently filed, a concise statement of errors complained of

on appeal pursuant to Pa.R.A.P. 1925(b).

        Appellant raises three claims on appeal:

        1. Did the [t]rial [c]ourt err in finding the Indemnity Agreement
           was not breached by [Appellee]?

        2. Did the [t]rial [c]ourt err in finding [Appellant’s] claim of unjust
           enrichment was precluded?

        3. Did the [t]rial [c]ourt err in determining that [Appellant] did
           not suffer any actual damages?

Appellant’s Brief at 5.6

        First, Appellant argues the trial court erred in concluding it could not

recover from Appellee under a breach of contract theory. Appellant’s Brief at

____________________________________________

6   We have reordered Appellant’s claims for ease of review.

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24.    Appellant avers the trial court “erred in concluding [ ] the Indemnity

Agreement only applied if Embassy Bank was to take action as a result of a

default by Appellee[.]” Id. at 25. Appellant contends “[t]he clear language

of” the indemnity agreement states Appellant may recover damages related

to the guaranty, mortgage, or “any amounts [Appellant] may pay in

compromise or settlement of any of the foregoing.” Id. at 24-25. Appellant

insists that it, not the Thalers personally, “suffered the damages in the full

amount required to satisfy the loan[.]” Id. at 19. We conclude no relief is

due.

       The relevant standard of review of a court’s decision in a non-jury trial

is as follows:

       [We are] limited to a determination of whether the findings of the
       trial court are supported by competent evidence and whether the
       trial court committed error in the application of law. Findings of
       the trial judge in a non-jury case must be given the same weight
       and effect on appeal as a verdict of a jury and will not be disturbed
       on appeal absent error of law or abuse of discretion. When this
       Court reviews the findings of the trial judge, the evidence is
       viewed in the light most favorable to the victorious party below
       and all evidence and proper inferences favorable to that party
       must be taken as true and all unfavorable inferences rejected.

Hart v. Arnold, 884 A.2d 316, 330-31 (Pa. Super. 2005) (citation omitted).

       “It is well-established that three elements are necessary to plead a

cause of action for breach of contract:       (1) the existence of a contract,

including its essential terms, (2) a breach of the contract; and, (3) resultant

damages.” Meyer, Darragh, Buckler, Bebenek & Eck, P.L.L.C. v. Law

Firm of Malone Middleman, P.C., 137 A.3d 1247, 1258 (Pa. 2016) (citation

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omitted). Further, “[i]t is fundamental contract law that one cannot be liable

for a breach of contract unless one is a party to that contract[.]” Id., citing

Electron Energy Corp. v. Short, 597 A.2d 175, 177 (Pa. Super. 1991).

      This Court has stated:

      [T]here is a strong presumption in Pennsylvania against piercing
      the corporate veil. Wedner v. Unemployment Board, 296 A.2d
      792, 794 (1972) (“[A]ny court must start from the general rule
      that the corporate entity should be recognized and upheld, unless
      specific, unusual circumstances call for an exception. . . . Care
      should be taken on all occasions to avoid making the entire theory
      of corporate entity[ ] useless[ ]”). Also the general rule is that a
      corporation shall be regarded as an independent entity
      even if its stock is owned entirely by one person.

Advanced Tel. Sys. v. Com-Net Prof’l Mobile Radio, LLC, 846 A.2d 1264,

1278 (Pa. Super. 2004) (emphasis added and some citations omitted).

      A contract is formed when:

      [T]he parties to it 1) reach a mutual understanding, 2) exchange
      consideration, and 3) delineate the terms of their bargain with
      sufficient clarity.

Co. Image Knitware, Ltd. v. Mothers Work, Inc., 909 A.2d 324, 330 (Pa.

Super. 2006) (citation omitted).

      Preliminarily, we note Appellant’s argument continues to conflate its

status as a separate corporate entity with that of its sole managing member.

The trial court properly found that Thaler, and Appellant are two separate

entities that cannot intermix for the purposes of this litigation. See Advanced

Tel. Sys., 846 A.2d at 1278; Trial Ct. Op. at 16. On appeal, Appellant ignores

this clear discussion by the trial court. See Trial Ct. Op. at 16.

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      Appellant cannot establish a claim for breach of contract based on the

indemnity agreement. We agree with the trial court’s conclusions that the

Indemnity Agreement “entitled [ ] indemnification from [Appellee only] if [it]

defaulted on the $561,000 [l]oan with Embassy Bank and Embassy Bank

sought payment from [Appellant].”      Trial Ct. Op. at 14 (emphasis added).

Embassy Bank never issued a notice of default to Appellee, nor did it seek

satisfaction of the loan from Appellant. To the extent Appellant argues it paid

a portion of Appellee’s loan, it was acting outside the terms of the Indemnity

Agreement and thus had no contractual right to demand repayment of the

loan. See Meyer, 137 A.3d at 1258; Co. Image Knitware, Ltd., 909 A.2d

at 330. Further, the trial court found the Thalers paid the Embassy Bank loan

personally. Trial Ct. Op. at 10. Thaler testified that he paid the Embassy Loan

in his personal capacity and the trial court found this testimony credible. Thus,

the record supports this finding.    See Hart, 884 A.2d at 330-31.       In this

matter, the Thalers have not made any claim in their individual capacities to

recover any payments they made on Appellee’s Embassy Bank loan.             See

Meyer, 137 A.3d at 1258. Therefore, we do not disturb the trial court’s finding

that Appellant failed to establish a breach of the Indemnity Agreement

      Next, Appellant argues the trial court erred in concluding it “does not

have a basis for damages based upon the alternative theory of unjust

enrichment against Appellee.” Appellant’s Brief at 27. Appellant contends

Appellee provided no evidence suggesting Appellant “did not confer a benefit

on Appellee, [and] that Appellee did not appreciate the benefit” of the loan

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payment. Id. at 28. Appellant avers Appellee “entirely realized” the benefit

while Appellant received no benefit in exchange. Id. at 30. Thus, Appellant

insists “the entire mortgage balance was satisfied by or on behalf of Appellant

for Appellee’s benefit,” and as such the trial court erred in concluding Appellant

had no unjust enrichment claim against Appellee.

      We now consider the elements of an unjust enrichment claim:

            Unjust enrichment is essentially an equitable doctrine,
      application of which depends on the particular factual
      circumstances of each individual case. To prevail on a claim for
      unjust enrichment, a plaintiff must prove: (1) benefits conferred
      on defendant by plaintiff; (2) appreciation of such benefits by
      defendant; and (3) acceptance and retention of such benefits
      under such circumstances that it would be inequitable for
      defendant to retain the benefit without payment of value. This
      Court has summarized our analysis under this doctrine as follows:

         In determining if the doctrine applies, our focus is not on
         the intention of the parties, but rather on whether the
         defendant has been unjustly enriched. The most important
         factor to be considered in applying the doctrine is whether
         the enrichment of the defendant is unjust. Where unjust
         enrichment is found, the law implies a contract, referred to
         as either a quasi contract or a contract implied in law, which
         requires that the defendant pay to plaintiff the value of the
         benefit conferred.

            It is well-settled that “the doctrine [of unjust enrichment]
      does not apply simply because the defendant may have benefited
      as a result of the actions of the plaintiff.”

Walter v. Magee Womens Hosp. of UPMC Health Sys., 876 A.2d 400, 407

(Pa. Super. 2005) (citations omitted).

      We agree with the trial court’s conclusion that “a cause of action for

unjust enrichment is not available” to Appellant. See Trial Ct. Op. at 18. As

discussed supra, the trial court’s finding, that the Thalers personally paid the

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Embassy Bank loan, is supported by the record.       As such, we accept this

finding as true for the purposes of this appeal. See Hart, 884 A.2d at 330-

31.

      Further, Thaler had the opportunity, during his testimony, to clarify who

paid what portion of the Embassy Bank loan.         Instead of testifying that

Appellant, as an entity separate from the Thalers, paid the Embassy Bank

loan, he stated the payment could have been made from “anywhere” and he

“would have no idea” where the payment came from. See N.T. Non-Jury Trial,

at 30-33. He continued in admitting the payment on the Embassy Bank loan

was paid by “a combination of cash and another mortgage through [Thaler]

personally.” See id. at 31 (emphasis added).

      To the extent Appellant argues Thaler and his wife are entitled to

recovery for their personal payment on the Embassy Bank loan, no relief is

due. The trial court properly found that while Appellee “received the benefit

of having the [Embassy Bank loan] paid by a third party[,]” the Thalers are

not party to this litigation, and thus unjust enrichment does not apply in the

present case. See Trial Ct. Op. at 18. Furthermore, Appellant improperly

attempts to shift the burden onto Appellee to prove it did not “appreciate” a

benefit.   Appellant’s Brief at 28.     Here Appellant provides no authority

suggesting Appellee bore the burden to show it did not receive a benefit.

      As we have discussed, Appellant insists upon ignoring the trial court’s

discussion that a corporation and its sole managing partner are separate

entities. See Advanced Tel. Sys., 846 A.2d at 1278. We agree with the trial

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court’s determination that neither Thaler nor his wife are parties to this matter

and Appellant has presented “no evidence to suggest [it] has the right to

pursue legal action on behalf of” the Thalers. Trial Ct. Op. at 18-19; see

Walter, 876 A.2d at 407 (the elements of unjust enrichment include “benefits

conferred on defendant by plaintiff.”).

      In its final claim, Appellant argues the trial court erred in not granting it

relief “because Appellee failed to present evidence . . . that Appellant did not

suffer damages.” Appellant’s Brief at 17. Appellee, through its representative,

did not dispute it was obligated to pay the $561,000 debt to “either Embassy

Bank or [Appellant].”    Id. at 17-18.     Appellant avers Appellee offered no

evidence to contradict Appellant paid $206,917.33 of the Embassy loan

directly to Embassy Bank and the Thaler’s paid the remaining $360,000 “on

behalf of Appellant[.]” Id. at 18. Appellant insists it was the corporation, not

the Thalers, “who suffered the damages in the full amount required to satisfy

the loan,” and interest. Id. at 19.

      We agree with the trial court’s conclusion that Appellant had the right

to recover under the indemnity agreement only if Appellee defaulted on the

Embassy Bank loan and Embassy Bank sought payment. See Trial Ct. Op. at

14. Since Embassy Bank never sought to exercise this right, Appellant had

no contractual right to demand early fulfillment of the Embassy Bank loan. As

such, Appellee did not breach any agreement between the parties. Further,

contrary to Appellant’s argument, Appellee did not have the burden of

rebutting Appellant’s evidence of damages. See Spang & Co. v. U.S. Steel

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Corp., 545 A.2d 861 (Pa. 1988) (citation omitted) (“[T]he plaintiff in an action

for breach of contract has the burden of proving damages resulting from the

breach.”). As Appellee is not liable for breach, it cannot be liable for damages.

No relief is due.

      Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 12/21/2021

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