Court Opinion

ID: 3006497
Source: CourtListenerOpinion
Date Created: 2015-10-01 16:09:31.817388+00
Date Added: 2024-06-11T12:44:09.952718
License: Public Domain

J-A08016-15

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

MARY BETH SPUHLER                                 IN THE SUPERIOR COURT OF
                                                        PENNSYLVANIA
                            Appellant

                       v.

MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY

                            Appellee                   No. 911 MDA 2014

                 Appeal from the Order Entered April 28, 2014
             In the Court of Common Pleas of Cumberland County
                       Civil Division at No.: 2013-02696

BEFORE: SHOGAN, J., WECHT, J., and STRASSBURGER, J.*

MEMORANDUM BY WECHT, J.:                           FILED OCTOBER 01, 2015

       Mary Beth Spuhler appeals from the trial court’s April 28, 2014 order

sustaining the preliminary objections of Massachusetts Mutual Life Insurance

Company (“MMLIC”), MML Investor Services (“MMLIS”), Connecticut Mutual

Life Insurance Company (“CMLIC”), and Matthew J. Dobbie d/b/a/ uFinancial

Group (“Dobbie”) and dismissing Spuhler’s amended complaint.             For the

reasons that follow, we reverse.

       The trial court set forth the following factual and procedural history:

       [Spuhler] is an adult individual residing at 422 Deerfield Road,
       Camp Hill, PA 17011. [Spuhler] is licensed to sell securities,
       retirement plans, insurance, and other financial products. As
       part of this occupation, [Spuhler] entered into a Career Contract
       with Dobbie on January 2, 2008. Under the Career Contract,
____________________________________________

*
       Retired Senior Judge assigned to the Superior Court.
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       [Spuhler] would serve under Dobbie, who is a general agent for
       MMLIC, as an insurance sales agent for MMLIC and CMLIC. The
       Career Contract contained the terms of the relationship.
       Similarly, [Spuhler] entered into a Representative’s Agreement
       whereby [Spuhler] was registered to sell securities for MMLIS.
       During the course of their relationship, [Spuhler] maintained an
       office within Dobbie’s headquarters, located in Camp Hill,
       Pennsylvania.

       Louis F. Grammes (hereinafter, “Grammes”) was also an agent
       with Dobbie. [Spuhler] avers that Grammes was Dobbie’s top-
       producing life insurance agent. [Spuhler] and Grammes had an
       oral agreement that they would split the commissions resulting
       from new clients that they secured jointly. [Spuhler] alleges
       that she would develop leads and Grammes would act as the
       closer.   On January 23, 2011, [Spuhler] discovered that
       Grammes had written a life insurance policy for a principal of one
       of their joint clients as to which he would receive all of the
       commissions, a violation of their oral agreement. Subsequently,
       [Spuhler] discovered that there were other instances where
       Grammes directed 100% of the commission from joint clients to
       himself. [Spuhler] believes that the value of these converted
       commissions is in excess of $20,000.

       Between January and August of 2011, [Spuhler] confronted
       Grammes several times regarding the violations of their
       agreement. Subsequently, on July 22, 2011, Dobbie informed
       [Spuhler] that she would no longer be allowed to work from
       Dobbie’s office due to her dispute with Grammes. As a result,
       [Spuhler] had to remove her personal belongings and files and
       establish a new office, which she believes to be a violation of her
       Career Contract.

       [Spuhler] further avers that, nearly a year after being told to
       leave Dobbie’s office, she received a letter from Dobbie
       terminating her employment relationship with him, MMLIC,
       CMLIC, and MMLIS.        The termination letter alleged that
       [Spuhler] had engaged in “selling away”[1] as well as other
       unspecified non-compliance and misbehavior. Within two hours
____________________________________________

1
      Spuhler’s amended complaint explains that “selling away” refers to the
sale of financial products not submitted to MMLIS. See Spuhler’s Amended
Complaint, 8/22/2013, at 7.

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      of receiving the termination letter, [Spuhler] claims that she sent
      Dobbie documents proving that she did not engage in selling
      away. [Spuhler] contends that the selling away allegations are
      damaging to her career. [Spuhler] sought, without success, to
      affiliate with another Massachusetts Mutual agency so that she
      [c]ould continue to collect renewal commissions on existing sales
      and make new sales.

      Notwithstanding [Spuhler’s] assertion that she provided Dobbie
      with proof that the selling away allegations were unfounded,
      Dobbie initially did nothing.       Dobbie eventually issued a
      backdated termination letter that did not contain allegations of
      selling away after [Spuhler’s] attorney threated MMLIC’s chief
      counsel with litigation.      Nonetheless, [Spuhler] has been
      unsuccessful in securing employment with another Mass Mutual
      agency.     [Spuhler] avers that a Mass Mutual agency in
      Philadelphia wanted to hire her, but the MMLIS home offices
      directed the agency not to hire her because their database lists
      [Spuhler] as “do not hire.” [Spuhler] avers that the do not hire
      designation was per Dobbie’s direction and that no independent
      investigation took place to confirm any allegations.

Trial Court Opinion (“T.C.O.”), 4/28/2014, at 2-4 (record citations omitted).

      On May 13, 2013, Spuhler filed a complaint against MMLIC, CMLIC,

MMLIS, and Dobbie (collectively “Appellees”).       Thereafter, Appellees filed

preliminary objections.   On August 22, 2013, Spuhler filed an amended

complaint, which consisted of seven counts: breach of contract, conversion,

civil conspiracy, unjust enrichment, breach of fiduciary duty, and two counts

of tortious interference with business relations.    The Appellees again filed

preliminary objections. On March 21, 2014, Spuhler filed a motion for leave

to file a second amended complaint.

      On April 28, 2014, the trial court sustained Appellees’ preliminary

objections in the nature of a demurrer, dismissing Spuhler’s amended

complaint.   Specifically, the trial court held that: (1) Spuhler’s breach of

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contract claim failed as a matter of law because she was classified as an

independent contractor and, therefore, could be terminated at will; (2) the

existence of a written contract between the parties precluded Spuhler from

asserting a claim for unjust enrichment; and (3) all of Spuhler’s other claims

were barred by the gist of the action doctrine.       The trial court’s April 28,

2014 order also dismissed as moot Spuhler’s motion for leave to amend her

complaint. Spuhler timely appealed.2

       Spuhler presents six issues for our review:

       1.     Whether the trial court committed reversible error and
              abused its discretion in sustaining preliminary objections in
              the nature of demurrers and dismissing the complaint
              without allowing for leave to amend?

       2.     Whether the trial court committed reversible error and
              abused its discretion in sustaining preliminary objections in
              the nature of demurrers and dismissing the complaint
              without giving any consideration to a pending motion for
              leave to file [a] Second Amended Complaint?

       3.     Whether the facts and allegations of the complaint,
              together with inferences deducible therefrom, adequately
              state a claim for breach of contract?

       4.     Whether the trial court wrongfully dismissed the complaint
              on the basis that no breach of duty claim could survive
              termination of the at will employment contract?

       5.     Whether the trial court improperly           dismissed   the
              alternative claim for unjust enrichment?

____________________________________________

2
      The trial court did not order, and Spuhler did not file, a concise
statement of errors complained of on appeal pursuant to Pa.R.A.P. 1925(b).

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      6.      Whether the trial court committed reversible error in
              dismissing the tort claims based on the gist of the action
              doctrine?

Spuhler’s Brief at 5-6 (numbering modified for clarity).

      The scope of our review of an order sustaining preliminary objections

is plenary. Solomon v. Gibson, 615 A.2d 367, 368 (Pa. Super. 1992). “In

reviewing the grant of a demurrer, we are not bound by the inferences

drawn by the trial court nor are we bound by its conclusions of law.

Moreover, the novelty of a claim or theory, alone, does not compel

affirmance of a demurrer.” Neff v. Lasso, 555 A.2d 1304, 1305 (Pa. Super.

1989).

      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 preliminary objections, the
      appellate court must apply the same standard as the trial court.

De Lage Landen Fin’l Servs., Inc., v. Urban P’ship, LLC, 903 A.2d 586,

589 (Pa. Super. 2006).      “Preliminary objections, the end result of which

would be dismissal of a cause of action, should be sustained only in cases

that are clear and free from doubt.” Bower v. Bower, 611 A.2d 181, 182

(Pa. 1992).

      A demurrer admits as true all well-pleaded facts and all
      inferences reasonably deducible from them, but not any
      conclusions of law. Only if upon the facts averred, the law says
      with certainty that no recovery is permitted will this Court
      sustain the demurrer. Where a doubt exists as to whether a
      demurrer should be sustained, this should be resolved in favor of
      overruling it.

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Buchanan v. Brentwood Fed. Sav. & Loan Ass’n, 320 A.2d 117, 120 (Pa.

1974) (citations and internal quotation marks omitted); Stahl v. First

Penna. Banking & Trust Co., 191 A.2d 386, 389 (Pa. 1963).

      In her first and second issues, Spuhler argues that the trial court erred

in dismissing her amended complaint without granting leave to amend,

despite her pending motion requesting the same. Because we reverse the

trial court’s order sustaining Appellees’ preliminary objections, we need not

consider whether the trial court erred in issuing that order without first

granting Spuhler’s motion for leave to amend her complaint.

      Spuhler’s third and fourth issues challenge the trial court’s dismissal of

her breach of contract claim (Count I of Spuhler’s amended complaint) as to

all Appellees. In sustaining the Appellees’ demurrers on this count, the trial

court reasoned that Spuhler had failed to state a claim for breach of contract

because, “[a]s a general rule, there is no common[-]law cause of action

against an employer for termination of an at-will employment relationship.”

T.C.O. at 5 (citation omitted). The court further reasoned that, because the

contracts at issue unambiguously provided that either party could terminate

the employment relationship at any time, with or without cause, “it cannot

be claimed that the [Appellees] breached a duty imposed by the contract.”

Id. at 6.

      A cause of action for breach of contract must be established by
      pleading (1) the existence of a contract, including its essential
      terms, (2) a breach of a duty imposed by the contract and (3)
      resultant damages. See Gen. State Auth. v. Coleman Cable
      & Wire Co., 365 A.2d 1347, 1349 (Pa. Cmwlth. 1976). While

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      not every term of a contract must be stated in complete detail,
      every element must be specifically pleaded.

CoreStates Bank, N.A. v. Cutillo, 723 A.2d 1053, 1058 (Pa. Super. 1999)

(citations modified).

      In her amended complaint, Spuhler averred that Dobbie breached the

career contract when, inter alia, he “sought to take control of the client base

that Spuhler had spent decades developing.”         See Spuhler’s Amended

Complaint, 8/22/2013, at 9. Spuhler maintained that Appellees “materially

breached the contracts by refusing to allow Spuhler to affiliate with another

of its general agents, and thereby continue to service her existing clients

and draw commissions from their accounts[] and sell additional Mass Mutual

products to new clients.” Id. Spuhler also alleged that Appellees breached

the career contract when they required her to “return her key to the office,

remove all files and materials from [Dobbie’s] office, and set up her own

private office from which she         could continue to   serve as a Mass

Mutual/uFinancial agent.”    Id. at 6.   Finally, Spuhler pleaded that, as a

result of Appellees’ breaches, she was deprived of “hundreds of thousands of

dollars in commissions.” Id. at 10.

      Because Spuhler pleaded the essential terms of the agreement, a

breach, and damages, she set forth a legally sufficient claim for breach of

contract.    Although the agreement provided that either party could

terminate the contract, with or without cause, it also imposed additional

rights and duties, some of which survived the termination of Spuhler’s

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employment as an insurance sales agent.       See e.g., id. Exh. A at ¶ 5

(providing for the payment of vested renewal commissions after termination

of the career contract).   A fair reading of Spuhler’s amended complaint

reveals breach of contract allegations that extend beyond the assertion that

Dobbie wrongfully terminated Spuhler’s career contract.       The trial court

erred in reading Spuhler’s amended complaint so narrowly that it concluded

otherwise.

     Spuhler’s fifth issue challenges the trial court’s dismissal of her claim

for unjust enrichment, which she asserted against all defendants.         “To

sustain a claim of unjust enrichment, a claimant must show that the party

against whom recovery is sought either wrongfully secured or passively

received a benefit that it would be unconscionable for her to retain.”

Torchia v. Torchia, 499 A.2d 581, 582 (Pa. Super. 1985).          A claim for

unjust enrichment arises from a quasi-contract. “A quasi-contract imposes a

duty, not as a result of any agreement, whether express or implied, but in

spite of the absence of an agreement, when one party receives unjust

enrichment at the expense of another.”         AmeriPro Search, Inc. v.

Fleming Steel Co., 787 A.2d 988, 991 (Pa. Super. 2001).

     The elements of unjust enrichment are benefits conferred on
     defendant by plaintiff, appreciation of such benefits by
     defendant, and acceptance and retention of such benefits under
     such circumstances that it would be inequitable for defendant to
     retain the benefit without payment of value.       Whether the
     doctrine applies depends on the unique factual circumstances of
     each case. In determining if the doctrine applies, we focus not
     on the intention of the parties, but rather on whether the
     defendant has been unjustly enriched.

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     Moreover, the most significant element of the doctrine is
     whether the enrichment of the defendant is unjust.

Stoeckinger v. Presidential Fin. Corp. of Delaware Valley, 948 A.2d
828, 833 (Pa. Super. 2008) (emphasis in original).

     Instantly, Spuhler’s amended complaint alleged that Dobbie was

unjustly enriched by his “hijacking” of Spuhler’s clients and commission

streams.    See Spuhler’s Amended Complaint, 8/22/2013, at 8, 13.

According to Spuhler, “Dobbie appreciated the benefit of his acquisition of

[her] clients and commission streams,” which Spuhler estimated to be worth

“hundreds of thousands of dollars.” Id. at 10, 13. Nevertheless, the trial

court held that Spuhler had failed to state a viable claim for unjust

enrichment because “it is manifest that the relationship between [Spuhler]

and Dobbie was governed by a written contract.”      T.C.O. at 9.   The court

cited Wilson Area School District v. Skepton, for the well established

proposition that “the doctrine of unjust enrichment is inapplicable when the

relationship between parties is founded upon a written agreement or express

contract. . . .” 895 A.2d 1250 (Pa. 2006).

     Spuhler argues that the Pennsylvania Rules of Civil Procedure

specifically authorize a party to allege separate claims in the alternative.

See Spuhler’s Brief at 36 (citing Pa.R.C.P. 1020(c)).      Although Spuhler

concedes that a plaintiff may not recover for both unjust enrichment and

breach of contract, she nevertheless maintains that such claims may be

pleaded in the alternative. Id. at 38. We agree.

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       Spuhler was free to plead unjust enrichment as an alternative theory

of liability.   Such a claim provides a basis for recovery if Spuhler’s career

contract with Dobbie is found to be unenforceable, or in the event that the

issue of Spuhler’s right to continuing commissions following her termination

falls outside of the scope of the contract.

       This court has previously rejected the argument that a cause of action

for breach of contract cannot be pleaded in the alternative with a claim for

unjust enrichment because the former is predicated upon the existence of an

express contract while the latter is predicated upon the non-existence of an

express contract. See Lugo v. Farmers Pride, Inc., 967 A.2d 963, 969-70

(Pa. Super. 2009) (holding that “appellee’s argument confuses the bar

against recovering under both causes of action with a notion that pleading

both causes of actions is also prohibited”).          Indeed, we have held that a

subcontractor can recover based upon unjust enrichment when it performed

work outside of the scope of the parties’ contractual provisions.                 See

Ruthrauff, Inc. v. Ravin, Inc., 914 A.2d 880 (Pa. Super. 2006) (noting

that the plaintiff asserted a “claim for unjust enrichment for work it

performed       outside   any    promises      made   in   the   written   contractual

documents”).       Accordingly, the trial court erred in sustaining Appellees’

preliminary     objection   to   Count    VI    and   dismissing   Spuhler’s   unjust

enrichment claims.

       In her final issue, Spuhler argues that the trial court committed

reversible error in dismissing her tort claims based upon the gist of the

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action doctrine. The trial court—finding that Spuhler merely had reframed

her ordinary breach of contract claims into tort claims—dismissed Counts III

through V, and VII of Spuhler’s amended complaint, wherein she asserted

claims for tortious interference with business relations, conversion, civil

conspiracy, and breach of fiduciary duty against both Dobbie and the Mass

Mutual defendants. Specifically, the trial court reasoned that, because all of

Spuhler’s tort claims arose out of her employment contract, they were

barred by the gist of the action doctrine. See T.C.O. at 8.

      “The gist of the action doctrine bars a plaintiff from re-casting ordinary

breach of contract claims into tort claims.” Mirizio v. Joseph, 4 A.3d 1073,

1079 (Pa. Super. 2010) (citation omitted).       This court has explained the

doctrine as follows:

      Although they derive from a common origin, distinct differences
      between civil actions for tort and contract breach have
      developed at common law. Tort actions lie for breaches of
      duties imposed by law as a matter of social policy, while contract
      actions lie only for breaches of duties imposed by mutual
      consensus agreements between particular individuals. . . . To
      permit a promisee to sue his promisor in tort for breaches of
      contract inter se would erode the usual rules of contractual
      recovery and inject confusion into our well-settled forms of
      actions.

Id. (quoting eToll, Inc. v. Elias/Savion Advertising, Inc., 811 A.2d 10,

14 (Pa. Super. 2002)). The gist of the action doctrine does not preclude an

action in tort simply because it resulted from a breach of a contract. “To be

construed as in tort, however, the wrong ascribed to defendant must be the

gist of the action, the contract being collateral.” Id. at 1080.

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      The important difference between contract and tort actions is
      that the latter lie from the breach of duties imposed as a matter
      of social policy while the former lie for the breach of duties
      imposed by mutual consensus. In other words, a claim should
      be limited to a contract claim when the parties’ obligations are
      defined by the terms of the contracts, and not by the larger
      social policies embodied by the law of torts.

Id. (citation omitted).

      Recently, our Supreme Court approved of the above articulation of the

gist of the action doctrine.

      If the facts of a particular claim establish that the duty breached
      is one created by the parties by the terms of their contract—i.e.,
      a specific promise to do something that a party would not
      ordinarily have been obligated to do but for the existence of the
      contract—then the claim is to be viewed as one for breach of
      contract. If, however, the facts establish that the claim involves
      the defendant’s violation of a broader social duty owed to all
      individuals, which is imposed by the law of torts and, hence,
      exists regardless of the contract, then it must be regarded as a
      tort. See Ash v. Cont’l Ins. Co., 932 A.2d 877, 885 (Pa. 2007)
      (holding that action against insurer for bad[-]faith conduct
      pursuant to 42 Pa.C.S. § 8371 is for breach of a duty “imposed
      by law as a matter of social policy, rather than one imposed by
      mutual consensus”; thus, action is in tort); see also W. Page
      Keeton, Prosser & Keeton on Torts 656 (5th ed. 1984)
      (reviewing extant case law, and noting the division therein
      between actions in tort and contract based on the nature of the
      obligation involved, observing that “[t]ort obligations are in
      general obligations that are imposed by law on policy
      considerations to avoid some kind of loss to others . . . [which
      are] independent of promises made and therefore apart from
      any manifested intention of parties to a contract, or other
      bargaining transaction”). Although this duty-based demarcation
      was first recognized by our Court over a century and a half ago,
      it remains sound, as evidenced by the fact that it is currently
      employed by the high Courts of the majority of our sister
      jurisdictions to differentiate between tort and contract actions.
      We, therefore, reaffirm its applicability as the touchstone
      standard for ascertaining the true gist or gravamen of a claim
      pled by a plaintiff in a civil complaint.

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                                  ****

     [T]he mere existence of a contract between two parties does
     not, ipso facto, classify a claim by a contracting party for injury
     or loss suffered as the result of actions of the other party in
     performing the contract as one for breach of contract.

Bruno v. Erie Ins. Co., 106 A.3d 48, 68-69 (Pa. 2014) (some citations

omitted, others modified; footnotes omitted).

     Viewing the facts contained in Spuhler’s amended complaint as true—

as our standard of review requires—the gist of the action doctrine does not

bar Spuhler’s tort claims. As set forth above, Spuhler’s amended complaint

alleged that, prior to informing her that she was being terminated as a

uFinancial insurance sales agent, Dobbie sent letters to Spuhler’s clients

telling them that Spuhler was no longer affiliated with uFinancial, and that

Spuhler’s existing accounts would be reassigned to another agent.          See

Spuhler’s Amended Complaint, 8/22/2013, at 7. Spuhler also alleged that

Dobbie prevented her from accessing her client files.     Id. at 8.   Finally,

Spuhler alleged that she was unable to obtain a broker contract with another

Mass Mutual agent, because MMLIS, at Dobbie’s direction, had assigned

Spuhler a “do not rehire” designation in its database.     Id.   As a result,

Spuhler was unable to collect any renewal commissions on her existing

policies, and the insurance portfolio that she had built throughout her

decades-long career was substantially devalued. Id.

     Spuhler asserted claims for tortious interference with business

relations, conversion, civil conspiracy, and breach of fiduciary duty based

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upon the above facts.          These are not claims for breach of contract

masquerading as tort claims. As in Bruno, supra, the gist of the action on

these averments lies in tort, and the contract is collateral to the matters

alleged. Compare Mirizio, 4 A.3d at 1079-80. It was not Spuhler’s career

contract per se that created a duty not to deprive Spuhler of possession of

her property or to interfere with her prospective business relations; it is the

law itself that imposes those duties.             See Bruno, 106 A.3d at 70.

Accordingly,   the   trial   court   erred   in   granting   Appellees’   preliminary

objections as to Counts III through V and Count VII. The gist of the action

doctrine did not warrant the dismissal of Spuhler’s tort claims.

      For the foregoing reasons, we reverse the order granting appellees’

preliminary objections and dismissing Spuhler’s amended complaint.

      Order reversed. Case remanded. Jurisdiction relinquished.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 10/1/2015

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