Court Opinion

ID: 4313568
Source: CourtListenerOpinion
Date Created: 2018-09-19 18:27:49.950893+00
Date Added: 2024-06-11T14:44:51.506232
License: Public Domain

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

RONALD J. GULLA AND LAUREL M.          :   IN THE SUPERIOR COURT OF
GULLA, HUSBAND AND WIFE                :        PENNSYLVANIA
                                       :
                  Appellants           :
                                       :
                                       :
            v.                         :
                                       :
                                       :   No. 814 WDA 2017
HOWARD HANNA COMPANY,                  :
HOWARD HANNA REAL ESTATE               :
SERVICES, HOWARD HANNA                 :
COMMERCIAL REAL ESTATE                 :
SERVICES AND WILLIAM MATTHEWS          :

                     Appeal from the Order May 8, 2017
    In the Court of Common Pleas of Washington County Civil Division at
                           No(s): No. 2012-155

BEFORE: BOWES, J., OLSON, J., and KUNSELMAN, J.

MEMORANDUM BY BOWES, J.:                     FILED SEPTEMBER 19, 2018

     Ronald J. and Laurel M. Gulla, husband and wife, appeal from the May

8, 2017 order granting summary judgment in favor of Howard Hanna

Company, Howard Hanna Real Estate Services, Howard Hanna Commercial

Real Estate Services, and licensed real estate agent William Matthews

(collectively “Howard Hanna”), on their claim under the Unfair Trade

Practices and Consumer Protection Law (“UTPCPL”), 73 P.S. § 2-101 et seq.

After thorough review, we vacate the order granting summary judgment and

remand for further proceedings.

     We present the facts in the light most favorable to the Gullas, the non-

moving party, in accordance with our standard of review from the grant of
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summary judgment. The Gullas owned a 141-acre farm (the “Gulla Farm”)

in Hickory, Washington County, Pennsylvania.     In 2002, the Gullas leased

their oil and gas rights to Great Lakes Energy, the predecessor to Range

Resources Company (collectively “Range”).       Range drilled wells on their

property, which were described by Mark Hunneshagen, the district landman

for Range, as being “very, very, very good.”         Plaintiffs’ Response in

Opposition to Summary Judgment, 1/13/17, at Exhibit 9 (Deposition of Mark

Hunneshagen, 2/24/16, at 84).     However, in and around 2007, the Gullas

complained to Range that its drilling and associated operations had

contaminated their pond and property.

     The record also reveals that, in the spring of 2007, Range was

interested in purchasing a Washington County property for its field

operations office. Mr. Matthews, a licensed real estate agent associated with

Howard Hanna, was assisting Range in that endeavor.        According to Mr.

Matthews, he informed Mr. Hunneshagen of the availability of the Smith

Farm in Mt. Pleasant prior to May 2007. Mr. Hunneshagen was interested in

the property because he had been told by Range analysts that Range had an

oil and gas lease on the Smith Farm.      Id. at 83, 84, 172.   Mr. Matthews

accompanied Mr. Hunneshagen when he went to see the property.

However, the Smith Estate did not want to sell the farm to Range as other

members of the family owned and lived on adjacent properties.

     Shortly thereafter, in May 2007, Range representatives suggested to

the Gullas that Range buy the Gulla Farm for its field operations office.

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There were negotiations between the Gullas and Range for the purchase of

the Gulla Farm, but no signed sales agreement. Range proposed the idea of

a 1031 tax-free exchange1 of property, and specifically mentioned the Smith

Farm as a possible replacement property for the Gullas.        Range told the

Gullas that they would like them to use their broker, Howard Hanna, and

specifically Mr. Matthews, to facilitate such a transaction.

        On May 31, 2007, Mr. Gulla met with Mr. Matthews at a restaurant in

Cranberry, Butler County, to discuss Range’s purchase of the Gulla Farm and

a 1031 tax-free exchange. Mr. Matthews had a sales agreement with him,

which he hoped the Gullas would sign, and which mentioned the tax-free

exchange. Mr. Gulla advised Mr. Matthews that he would not sell unless an

adequate unencumbered replacement parcel was available, i.e., a property

with its mineral rights attached.2 They discussed the Smith Farm. Mr. Gulla

asked Mr. Matthews to do a title search to make sure that the mineral rights

of the Smith Farm were not encumbered, and Mr. Matthews assured him

that he would do so.

        On that day, the Gullas entered into an Exclusive Buyer Agency

Contract (“EBAC”) with Mr. Matthews and Howard Hanna, retaining Howard

____________________________________________

1   According to Mr. Matthews, the 1031 exchange was his idea.

2 Mr. Matthews does not dispute that Mr. Gulla expressed this requirement.
Plaintiffs’ Response in Opposition to Summary Judgment Exhibit 5
(Deposition of William Matthews, 5/20/14, at 262).

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Hanna and Mr. Matthews to represent them regarding any property that the

Gullas chose to buy during the term of the contract. The Gullas also agreed

to a dual agency, meaning that Howard Hanna could represent the seller of

the property that the Gullas might buy. Paragraph 6 of the EBAC, entitled

“OTHER,” contained additional typed disclosures and provisions peculiar to

the parties’ arrangement. Howard Hanna disclosed therein that Range “has

consulted with Howard Hanna to assist Ron Gulla to seek council [sic] (Legal

& Accounting) to facilitate a 1031 exchange if [Range] purchases 29 Gulla

Lane, Hickory PA 15340.”             EBAC, 5/31/07, at 1-2.              In addition, the

agreement recited that Range had agreed to pay Howard Hanna a “minimal

fee”   if,   through   Howard       Hanna’s   efforts,    the     1031    exchange   was

accomplished and Range purchased the Gulla property. Id. at 2. Howard

Hanna disclaimed any notion that it was “doing the 1031” transaction, and

defined its role as “assisting Ron Gulla obtain professional council [sic] to

facilitate   this   transaction.”      Id.      The      Gullas    acknowledged      their

understanding that “if a 1031 transaction is not done correctly[,] all tax

savings could be lost,” and that it was Mr. Gulla’s sole “responsibility to

make sure that the tax savings/1031 will apply.” Id. It was further clarified

therein that Howard Hanna would represent Ron Gulla in purchasing the

replacement property, but that Range was also employing Howard Hanna to

find other properties if it could not come to terms with the Gullas. Howard

Hanna represented that “up to this point,” it had not been involved in

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negotiating with Mr. Gulla for the Gulla Farm, but that its licensee, Mr.

Matthews, had answered Range’s real estate questions “and provided a

Pennsylvania Association of Realtors Sales Agreement for their offer to Ron

Gulla.”    Id.    At the end of paragraph 6, Mr. and Mrs. Gulla expressly

authorized Howard Hanna’s involvement in the negotiations with Range for

the purchase of the Gulla Farm, and agreed that Howard Hanna would serve

as a dual agent representing both Mr. Gulla and Range, with any fee to be

paid by Range. Id.

       The EBAC also contained the “Notices to Buyers,” which provided inter

alia, that Mr. Matthews could show or present the same properties to other

buyers, and defining conflict of interest as “when a Broker or Licensee has

financial or personal interest in the property where Broker or Licensee

cannot put Buyer’s interest before any other[,]” and in that event, requiring

Broker to notify Buyer in a timely manner. Id. at 3. The Buyer, herein the

Gullas, acknowledged that they had received the Pennsylvania State Real

Estate Commission Consumer Notice, 49 Pa. Code §35.336, which was

incorporated within the Notice.3          By its terms, the EBAC was the “entire

____________________________________________

3 The Consumer Notice defines a buyer agent as a licensee who works
exclusively for the buyer and acts in the buyer’s best interest, even if paid
by the seller. A dual agent works for both the buyer and seller, but cannot
take any action that is adverse or detrimental to either party. 49 Pa.Code §
35.336(c). The Notice provides further that all licensees owe consumers,
inter alia, the duty to deal honestly and in good faith and meet the practice
(Footnote Continued Next Page)

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agreement between Broker and Buyer[,]” Howard Hanna and the Gullas

respectively. Id. at 2.      There was no mention of the Smith Farm or any

particular properties in the EBAC.

      By email dated June 7, 2007, Mr. Matthews provided Mr. Gulla with

listings for thirty-three commercial properties for sale in Washington,

Westmoreland, and Allegheny counties.           Neither the Smith Farm nor any

other farm property was included.

      Three weeks after the execution of the EBAC, Mr. Matthews was still

entertaining the possibility that Range would purchase the Smith Farm

instead of the Gulla Farm. In a June 27, 2007 email to Mr. Hunneshagen,

Mr. Matthews suggested that Range offer $1.5 to $1.6 million dollars for the

Smith Farm.      He told Mr. Hunneshagen that although the Smiths did not

want Range as a neighbor before, he thought a higher offer “might make

them reconsider” since a $1.1 million offer had fallen through in the interim.

Exhibit 8 to Plaintiffs’ Response in Opposition to Motion for Summary

Judgment. Attached to that email was a flier that Mr. Matthews proposed to

forward to Howard Hanna agents asking them to prospect for a thirty to

100-acre property available for immediate purchase near the Gulla Farm.

Thus, as of the end of June 2007, Range had not committed to purchasing

(Footnote Continued) _______________________

standards required by the Real Estate Licensing and Registration Act
(“RELRA”), 63 P.S. § 455.101 et seq.

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the Gulla Farm, and Mr. Matthews was actively looking for a suitable

property for Range’s field operation in the event Range did not purchase the

Gulla Farm.4

       On July 26, 2007, Mr. Matthews accompanied the Gullas on their first

visit to the Smith Farm. At Mr. Matthews’ urging, they made an oral offer of

$900,000 for the property.          The Gullas maintain that, at that time, they

were willing to offer more to purchase the property, even as much as the

$1.3 million dollar list price.        Later that same day, they met with Mr.

Matthews and prepared a written offer to sell their farm to Range. The offer

was not contingent on the Gullas obtaining the Smith Farm or any other

replacement property or on the successful completion of a 1031 tax-free

exchange. After the offer had been conveyed to Range, Mr. Matthews told

the Gullas that their $900,000 verbal offer on the Smith Farm had been

rejected. In a July 28, 2007 email, Mr. Matthews sent the Gullas more than

four dozen listings for farms and acreage in Beaver, Butler, and Washington

counties, including the Smith Farm. Two days later, Mr. Matthews advised

the Gullas that Range had accepted their offer to sell the Gulla Farm for

____________________________________________

4 Mr. Matthews acknowledged in his deposition that, although he had a
buyer’s relationship with the Gullas, he “was more concerned in facilitating
the transaction between the buyer and the seller on the initial thing with
Range and Gulla. Then [his] focus was on buying a separate property for
Ron Gulla.”    Plaintiffs’ Response in Opposition to Summary Judgment,
Exhibit 5 (Deposition of William Matthews, 5/20/14, at 102).

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$1.52 million, resulting in a fully executed sales agreement for that

property.

     The Gullas advised Mr. Matthews that they wanted the Smith Farm. In

September, Mr. Matthews encouraged them to pursue that property, and on

September 19, 2007, they submitted a $1.1 million offer expressly including

all mineral rights.   After the presentation of that offer, Mr. Matthews

informed the Gullas that sixty-five acres of the 165-acre Smith Farm was

subject to an oil and gas lease with Range executed in 2006. He also told

the Gullas that he had not performed the title search they wanted on that

property.   The Smiths subsequently declined the Gullas’ $1.1 million offer

and, with the new information about the oil and gas lease encumbering the

Smith Farm, the Gullas abandoned any interest in that property. Thereafter,

the Gullas refused to close on the sale of the Gulla Farm. Range sued them

for specific performance of the sales agreement, and Range prevailed on

summary judgment.

     The Gullas commenced this action under the UTPCPL against Mr.

Matthews and Howard Hanna to recover damages for the broker and agent’s

deceit and misrepresentations regarding the suitability of the Smith Farm as

a replacement property. They alleged that the misrepresentations and non-

disclosures induced the Gullas to sell their farm to Range. They averred that

Mr. Matthews misrepresented that he had performed a title search on the

Smith Farm, when he had not, and they justifiably relied upon that

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representation.      Alternatively, Mr. Matthews intentionally, recklessly, and

wrongfully concealed that he had not performed a title search to convince

the Gullas to sell to Range and further Howard Hanna’s relationship with

Range. They alleged further that Mr. Matthews intentionally, recklessly, and

wrongfully concealed the fact that the Smith Farm was encumbered with an

oil and gas lease so that the Gullas would sell to Range.          Had he not

deceived them, the Gullas maintain that they would not have sold their farm

to Range.

       Howard Hanna moved for summary judgment on the UTPCPL action on

six grounds.5      The trial court determined that summary judgment was

appropriate based        on the parol evidence rule,     concluding that any

misrepresentations by Mr. Matthews prior to the EBAC merged into that

____________________________________________

5  In support of summary judgment, Howard Hanna also contended that
there was no evidence that Mr. Matthews or Range knew there was a gas
lease on part of the Smith Farm prior to the execution of the agreement of
sale for the Gulla Farm. In addition, Howard Hanna asserted that the Gullas
could not prove that they justifiably relied upon Mr. Matthews’ performance
of a title search on the Smith Farm, as they made two offers on that
property with no assurances from Mr. Matthews that he had performed one.
They characterized the allegations as sounding in negligence on the part of
Mr. Matthews for failing to make the sale of the Gulla Farm contingent on
their acquisition of the Smith Farm or other suitable property, a claim that
was time-barred.       Howard Hanna contended that collateral estoppel
operated to bar the Gullas from arguing that they relied on any
representation that the Smith Farm was unencumbered, and finally, that
there was no causal connection between the alleged misrepresentations and
the non-occurrence of the 1031 exchange for which they were seeking
damages.

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agreement, and hence, were inadmissible.6 The court held further that any

discussions or representations after the execution of the EBAC were

subsequent oral modifications that had to be in writing in order to be

enforceable. The Gullas timely appealed from the order granting summary

judgment, and raise three issues for our review:

       1. Whether the trial court committed an error of law and/or
          abused its discretion by refusing to liberally construe the
          Unfair Trade Practices and Consumer Protection Law, 73 P.S.
          § 2-101, et seq. “UTPCPL”) and dismissing the Gullas’
          cognizable statutory cause of action where the competent
          record evidence demonstrated that Matthews and Howard
          Hanna’s statements, assurances, writings and conduct were
          capable of being interpreted in a misleading way and created
          a likelihood of confusion or misunderstanding for the Gullas,
          which requires that the Gullas’ claim be submitted to a trier of
          fact?

       2. Whether the trial court committed an error of law and/or
          abused its discretion by misapplying the parol evidence rule
          to the Gullas’ independent statutory cause of action arising
          from Matthews and Howard Hanna’s violations of their
          fiduciary duties and the UTPCPL?

       3. Whether the trial [court] committed an error of law and/or
          abused its discretion by misapplying the parol evidence rule
          to bar the consideration of evidence relating to both subject
          matter not addressed in a contract and oral statements,
          assurances, writings, and conduct subsequent to the
          execution of a collateral agreement?

Appellants’ brief at 4.

____________________________________________

6 The trial court did not address whether summary judgment was proper on
any of the other five grounds asserted by Range. Nor do Appellees argue on
appeal that these other grounds offer additional or alternative bases to
affirm the grant of summary judgment.

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      At issue herein is the propriety of the trial court’s grant of summary

judgment in favor of Howard Hanna and Mr. Matthews based on the parol

evidence rule and the integration clause contained in the EBAC. The law is

well settled that

      [s]ummary judgment is appropriate where the record clearly
      demonstrates there is no genuine issue of material fact and the
      moving party is entitled to judgment as a matter of law. When
      considering a motion for summary judgment, the trial court must
      take all facts of record and reasonable inferences therefrom in a
      light most favorable to the non-moving party. Whether there
      are no genuine issues as to any material fact presents a question
      of law, and therefore, our standard of review is de novo and our
      scope of review plenary.

Estate of Agnew v. Ross, 152 A.3d 247, 259 (Pa. 2017) (internal citations

omitted). “This means we need not defer to the determinations made by the

lower tribunals.    To the extent that this Court must resolve a question of

law, we shall review the grant of summary judgment in the context of the

entire record.” Wells Fargo Bank, N.A. v. Joseph, 183 A.3d 1009, 1012

(Pa.Super. 2018) (quoting Summers v. Certainteed Corp., 997 A.2d
1152, 1159 (Pa. 2010) (internal citations and quotation marks omitted)).

      Preliminarily, we note that this is not an action seeking to void the sale

of the Gulla Farm to Range.     Rather, the Gullas seek to recover damages

under the UTPCPL from their licensed real estate agent and broker, Mr.

Matthews and Howard Hanna, for losses they sustained as a consequence of

Mr. Matthews’ misrepresentations regarding the existence of oil and gas

leases   on   the   Smith   Farm.      They   maintain    that,   but   for   the

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misrepresentations, they would not have sold their farm to Range.               Thus,

the focus herein is on the EBAC and Howard Hanna’s conduct vis-à-vis its

clients, the Gullas. Howard Hanna concedes that a cognizable claim under

the UTPCPL may be asserted against an agent in the context of a real estate

transaction, but maintains that no claim will lie herein because the parol

evidence      rule     operates     to    preclude     evidence     of   the   alleged

misrepresentation.

       The UTPCPL forbids unfair methods of competition and unfair or

deceptive acts or practices in the conduct of any trade or commerce.               73

P.S. § 201-3.        The statute proscribes twenty specific acts, id. at § 201-

2(4)(i)-(xx), and contains a catch-all provision that prohibits persons from

"[e]ngaging in any other fraudulent or deceptive conduct which creates a

likelihood of confusion or of misunderstanding.” Id. at § 201-2(4)(xxi). The

law, enacted in 1968, was amended in 1976 to add a private cause of action

for “[a]ny person who purchases or leases goods or services primarily for

personal, family or household purposes and thereby suffers an ascertainable

loss of money or property . . . .”             Id. at § 201-9.2.7    The UTPCPL is a

remedial statute that is to be liberally construed to effectuate its purpose of

preventing “‘unfair or deceptive’ business practices.”            Commonwealth by

____________________________________________

7 In private actions under the UTPCPL, the court has the discretion to award
up to three times the actual damages sustained, as well as costs and
attorney fees.

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Creamer v. Monumental Properties, Inc., 329 A.2d 812, 815 (Pa. 1974);

see also DeArmitt v. New York Life Ins. Co., 73 A.3d 578, 591

(Pa.Super. 2013) (reaffirming remedial goals of the statute to protect

consumers from unfair or deceptive practices).

       The trial court ruled that the Gullas were purchasers of real estate

brokerage services, and thus had standing to bring a private cause of action

under the UTPCPL to seek redress for fraudulent and deceptive conduct

allegedly perpetrated by Mr. Matthews and Howard Hanna.               In order to

maintain such a claim, however, “a plaintiff must show that he justifiably

relied on the defendant's wrongful conduct or representation and that he

suffered harm as a result of that reliance.” Yocca v. Pittsburgh Steelers

Sports, Inc., 854 A.2d 425, 438 (Pa. 2004) (citing Weinberg v. Sun Co.

Inc., 777 A.2d 442, 446 (Pa. 2001)). Reliance is not merely a simple causal

connection between the misrepresentation and the harm.            A plaintiff must

“show that he justifiably bought the product in the first place (or engaged in

some    other   detrimental   activity)   because   of   the   misrepresentation.”

Slemmer v. McGlaughlin Spray Foam Insulation, Inc., 955 F. Supp. 2d
452 (E.D. Pa. 2013).     However, justifiable reliance need not be proven if

there is a fiduciary relationship between the parties.             A confidential

relationship for purposes of the UTPCPL can be established by a showing of

either “overmastering influence” or of “weakness, dependence or trust.”

Basile v. H & R Block, Inc., 777 A.2d 95, 101 (Pa.Super. 2001); see also

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Yenchi v. Ameriprise Fin., Inc., 161 A.3d 811, 820 (Pa. 2017) (holding

that even where a fiduciary duty does not exist as a matter of law, fiduciary

duties may be found in “circumstances where the relative position of the

parties is such that the one has the power and means to take advantage of,

or exercise undue influence over, the other.”).

      The Gullas pled that their relationship with Howard Hanna and Mr.

Matthews was a fiduciary relationship. They also alleged that they justifiably

relied on Mr. Matthews’ misrepresentations regarding his performance of a

title search on the Smith Farm, and that it was free and clear of all oil and

gas encumbrances.      According to the Gullas, those misrepresentations

induced them to sell their farm to Range.     The Howard Hanna defendants

countered that evidence of the misrepresentations was barred by the parol

evidence rule, and hence, summary judgment was proper.

      The parol evidence rule is an evidentiary rule that precludes the

parties to a written contract that was intended to be their entire agreement

from introducing prior oral representations or negotiations concerning a

subject specifically dealt with in the written contract, in order to vary or

modify the contract terms. The prior oral representations are deemed to be

merged into the writing. The only exceptions to the rule are where fraud,

accident, or mistake are alleged and proven. See Bardwell v. The Willis

Co., 100 A.2d 102, 104 (Pa. 1953) (articulating the parol evidence rule).

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      The purpose of the rule is “to preserve the integrity of written

agreements by refusing to permit the contracting parties to attempt to alter

the import of their contract through the use of contemporaneous [or prior]

oral declarations.” Rose v. Food Fair Stores, Inc., 262 A.2d 851, 853 (Pa.

1970); see also Lenzi v. Hahnemann University, 664 A.2d 1375, 1379

(Pa.Super. 1995) (“The parol evidence rule seeks to preserve the integrity of

a written agreement by barring the contracting parties from trying to alter

the meaning of their agreement through use of contemporaneous oral

declarations.”).   “Where parties, without any fraud or mistake, have

deliberately put their engagements in writing, the law declares the writing to

be not only the best, but the only, evidence of their agreement.” Gianni v.

Russell & Co., 126 A. 791, 792 (Pa. 1924).

      Nonetheless, the parol evidence rule does not bar all evidence of prior

dealings between the parties. Any writing must be interpreted, and to the

extent that a contract is ambiguous, parol evidence is admissible to clarify

indefinite terms. Ins. Adjustment Bureau, Inc. v. Allstate Ins. Co., 905
A.2d 462, 468-69 (Pa. 2006).       Moreover, the parol evidence rule only

operates to bar evidence of prior oral or written agreements or negotiations

about subject matter covered in the contract.        As our Supreme Court

clarified in Yocca, supra at 436 (emphasis added), “[o]nce a writing is

determined to be the parties’ entire contract, the parol evidence rule applies

and evidence of any previous oral or written negotiations or agreements

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involving the same subject matter as the contract is almost always

inadmissible to explain or vary the terms of the contract.” See also Youndt

v. First Nat'l Bank, 868 A.2d 539, 545 (Pa.Super. 2005). The bottom line

is that prior inconsistent statements and negotiations between the parties

are inadmissible to vary the terms of the written contract.

       The EBAC contained an integration clause, which has been held to

“make the parol evidence rule particularly applicable.” Hart v. Arnold, 884
A.2d 316,    340-41   (Pa.Super.   2005)    (quoting   1726   Cherry   Street

Partnership by 1726 Cherry Street Corp. v. Bell Atlantic Properties,

Inc., 653 A.2d 663, 665 (Pa.Super. 1995)).         Where a written contract is

unambiguous, it “must be held to express all of the negotiations,

conversations, and agreements made prior to its execution, and neither oral

testimony, nor prior written agreements, or other writings, are admissible to

explain or vary the terms of the contract.” Id.

       In ruling on Range’s claim that the parol evidence rule precluded

evidence of the alleged misrepresentation, the trial court examined the

EBAC, the written contract between the Gullas and Howard Hanna. It noted

that the EBAC did not specifically discuss the Smith Farm or make the sale of

the Gulla Farm contingent upon the Gullas finding a suitable replacement

property.     Trial Court Opinion, 5/8/17, at unnumbered 4.      Moreover, the

EBAC contained an integration clause providing:

       This is the entire agreement between Broker and Buyer. Any
       verbal or written agreements that were made before are not a

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     part of this agreement.    Any changes or additions to this
     agreement must be in writing and signed by Broker and Buyer.

EBAC, 5/31/07, at 2.

     The trial court concluded that since the EBAC was the whole

agreement of the parties, the parol evidence rule applied and precluded

evidence of the parties’ prior oral negotiations or agreements.    Id. at

unnumbered 5.    The court rejected the Gullas’ argument that the parol

evidence rule was inapplicable because the subject of the evidence, the

Smith Farm, was not addressed in the EBAC. Instead, the court found that

the EBAC’s general discussion of replacement properties met the same

subject matter requirement for applying the rule and barring the evidence.

Id. at unnumbered 6.      Furthermore, to the extent that the Gullas were

relying upon oral representations made after the EBAC was executed, the

trial court concluded that these were oral modifications that had to be in

writing and signed by the parties to be admissible. A.D.P., Inc. v. Morrow

Motors, Inc., 969 A.2d 1244 (Pa.Super. 2009).       The court viewed Mr.

Matthews’ representation that he would perform a title search on the Smith

Farm as an amendment to the EBAC that was not placed in writing and

signed by the parties.   Furthermore, there was no evidence of conduct on

the part of Howard Hanna establishing an intent to waive the writing

requirement, and hence, no genuine issue of fact.     Trial Court Opinion,

5/8/17, at unnumbered 6.

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      The Gullas argue that they presented a cognizable claim under the

UTPCPL. Mr. Matthews held himself out as their agent. Mr. Gulla submitted

an affidavit to the effect that Mr. Matthews assured him through his conduct

and statements that the Smith Farm was free of oil and gas leases and that

he had performed the promised title search.       They contend that the trial

court erred in disregarding that sworn testimony in finding no genuine issue

of material fact that would preclude entry of summary judgment.

      The Gullas also contend that the trial court erred in applying the parol

evidence rule to preclude evidence of Mr. Matthews’ misleading and

deceptive conduct and representations. In support of their contention, they

direct our attention to Youndt, supra, holding parol evidence admissible in

fraud cases.

      Finally, the Gullas maintain that the written contract, the EBAC, is

collateral to the issue, as the statutory action herein is not based upon that

writing.   Furthermore, the subject matter of the misrepresentations is not

addressed in the EBAC, and the misrepresentations are not offered to

contradict the terms of that contract. Moreover, the misrepresentations and

deceitful conduct occurred subsequent to the EBAC, and did not purport to

vary the terms of the EBAC.        Finally, the Gullas argue that whether Mr.

Matthews’ words were intended to modify the earlier agreement is a

question of fact for the factfinder.

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       After a thorough review of the record, we conclude that the trial court

misapplied the parol evidence rule. The EBAC defined the exclusive buyer

agency relationship between Mr. Matthews, Howard Hanna, and the Gullas.

It also served as a disclosure of Howard Hanna’s relationship with Range,

and contained the Gullas’ consent to Howard Hanna acting in a dual agency

capacity if they should sell their property to Range. In addition, the EBAC

clarified the respective responsibilities of the parties should a 1031 tax-free

exchange become a possibility, placing the onus upon the Gullas to obtain

the legal and financial expertise necessary to obtain the tax benefits. The

agreement did not include details regarding the manner in which Howard

Hanna would perform its services, nor did it incorporate discussions about

the Gullas’ requirements for a suitable replacement property.          The Smith

Farm was not part of the written agreement between the parties, and the

search for replacement properties was not limited to the Smith Farm.

       Even assuming the parties discussed the Smith Farm as a possible

replacement property prior to or contemporaneously with the execution of

the EBAC, it was not the subject of the written agreement.             Mr. Gulla

discussed with Mr. Matthews that a replacement property would have to be

free   of   oil   and   gas   leases,   and   Mr.   Matthews   acknowledged   that

understanding.      Response in Opposition to Summary Judgment Exhibit 5

(Deposition of William Matthews, 5/20/14, at 62). He purportedly asked Mr.

Matthews to do a title search on the Smith Farm to check whether it met

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that requirement. According to Mr. Gulla, Mr. Matthews assured him that he

would conduct such a search.         These and similar discussions about the

suitability of possible replacement properties were not spelled out in the

EBAC.

        In order to make out a claim under the UTPCPL, the Gullas necessarily

have to introduce the substance of the misrepresentations Mr. Matthews

made about the Smith Farm. We find that the content of discussions relative

to the Smith Farm that occurred prior to or contemporaneously with the

execution of the EBAC were not offered by the Gullas to vary the terms of

that written contract.    Nor did they contradict the terms of the written

contract. We agree with the Gullas that, in this case, the EBAC was largely

collateral to the UTPCPL claim.

        We observe further that the parol evidence rule does not fit squarely

within the construct of the UTPCPL.         In Yocca, supra, our High Court

framed the parol evidence issue in terms of justifiable reliance. It concluded

that one asserting a claim under the UTPCPL “cannot justifiably rely on a

defendant’s representations that are in direct conflict with the terms of the

contract.”    Yocca, supra at 439 (finding that plaintiffs/buyers could not

justifiably rely upon representations in a brochure that contradicted the

terms    of   the   subsequent    written   contract).   When   we   view   the

representations through the lens of justifiable reliance rather than as parol

evidence, we find that the EBAC presents no impediment to the Gullas’

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ability to prove that they justifiably relied upon representations about the

Smith Farm. The proffered evidence simply does not contradict or refute the

written terms of the EBAC.

      Notably, the misrepresentations at the center of this UTPCPL claim

were alleged to have been made by Mr. Matthews after the execution of the

EBAC, and thus do not implicate the parol evidence rule. Consequently, the

trial court excluded evidence of Mr. Matthews’ later assurances that he had

performed a title search on the Smith Farm and that it was free of oil and

gas encumbrances as subsequent oral modifications of the EBAC that were

not placed in a writing.

      We do not find the alleged misrepresentations to be an oral

modification of any term in the EBAC as the EBAC did not address the Smith

Farm and it did not purport to delineate how Mr. Matthews would perform

his services on behalf of the Gullas.       The EBAC’s general reference to

replacement properties does not foreclose evidence of later discussions and

representations about the Smith Farm in particular. In short, Mr. Matthews’

subsequent representations about a particular property did not modify the

terms of the EBAC, and thus did not have to be in writing. Nor were they

offered by the Gullas for that purpose.        The evidence was offered to

substantiate allegedly deceitful practices on the part of Mr. Matthews that

violated the UTPCPL, upon which the Gullas justifiably relied in selling the

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Gulla Farm to Range, to their detriment.8           For these reasons, we find the

trial court erred in applying the parol evidence rule and the contractual

prohibition    against    subsequent      oral   modifications    to   grant   summary

judgment herein.

       Given our standard and scope of review, there is no prohibition against

this Court affirming the grant of summary judgment on one of the

alternative bases urged by Howard Hanna below.                   However, viewing the

record in the light most favorable to the Gullas, we find sufficient evidence of

misrepresentations and deceitful practices to create a genuine issue of

material fact, and preclude the entry of summary judgment on that basis.9

____________________________________________

8 The purported misrepresentations of Howard Hanna do not merge into the
integrated sales agreement between the Gullas and Range as the integration
clause in that contract only merged prior oral representations and
agreements between the parties to that contract. In pertinent part, the
sales agreement provided: “This Agreement contains the whole agreement
between Seller and Buyer, and there are no other terms, obligations,
covenants, representations, statements or conditions, oral or otherwise, of
any kind whatsoever concerning this sale.” See Standard Agreement for the
Sale of Real Estate, 7/30/07, at ¶28(A). Hence, we reject Howard Hanna’s
argument that its misrepresentations to the Gullas prior to the agreement of
sale for the Gulla Farm are inadmissible as violative of the parol evidence
rule.

9  Pa.R.C.P. 1035(b) provides that summary judgment will be granted only if
the pleadings, depositions, answers to interrogatories, and admissions on
file, together with the affidavits, if any, show that there is no genuine
issue as to any material fact and that the moving party is entitled to a
judgment as a matter of law. In his affidavit, Mr. Gulla attested that Mr.
Matthews either actively misrepresented or failed to disclose information
that he knew about the status of the mineral rights of the Smith Farm. Mr.
Matthews denied that he knew the Smith Farm was encumbered by the oil
(Footnote Continued Next Page)

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      There was sufficient evidence of a fiduciary relationship between

Howard Hanna and the Gullas or justifiable reliance by the Gullas upon the

misrepresentations of Mr. Matthews to present a genuine issue of material

fact for the factfinder.10 We find no merit in Howard Hanna’s contention that

the instant claim is merely a time-barred negligence claim against Mr.

Matthews and Howard Hanna for failing to make the sale of the Gulla Farm

contingent on their acquisition of the Smith Farm or other suitable property.

The UTPCPL presents a remedy for damages caused by deceit and

misrepresentations in the conduct of trade or commerce.            Moreover,

collateral estoppel is inapplicable as the issue in the prior action against

Range was not identical to the issue herein involving Mr. Matthews and

Howard Hanna.11

(Footnote Continued) _______________________

and gas lease.    In light of Mr. Matthews’ prior involvement with Mr.
Hunneshagen in Range’s possible purchase of the Smith Farm, and Mr.
Hunneshagen’s knowledge of the oil and gas lease on that property, one
might reasonably infer that Mr. Matthews learned about the lease.

10 In prior litigation between the Gullas and Range, summary judgment was
granted based on the fact that the parol evidence rule, together with the
integration clause in the sales agreement for the Gulla Farm, operated to
preclude the Gullas from offering evidence of Range’s prior oral
representations about the Smith Farm.

11 Range commenced an action against the Gullas for specific performance of
the sales agreement for the Gulla Farm. The Gullas defended by alleging
that misrepresentations by Range employees had induced them to enter the
contract. Summary judgment was granted in favor of Range based on the
parol evidence rule and the merger of any such representations into the fully
integrated sales agreement.

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       We find considerable merit, however, in Howard Hanna’s contention

that there is no causal connection between the alleged misrepresentations

and the non-occurrence of the 1031 tax-free exchange for which the Gullas

are seeking damages. Neither the sale of the Gulla Farm nor the purchase

of a replacement property was contingent upon qualifying for favorable 1031

tax-free exchange benefits.12         Nonetheless, since the Gullas have alleged

damages beyond the lost 1031 tax benefits, and resolution of that narrow

issue is not dispositive of damages generally, we decline to grant partial

summary judgment without the benefit of the trial court’s reasoning or

briefing by the parties regarding this issue.

       Order vacated. Case remanded. Jurisdiction relinquished.

       Judge Olson joins the memorandum.

       Judge Kunselman concurs in the result.

____________________________________________

12  The Gullas’ own evidence suggests that the Gulla Farm would not have
qualified for section 1031 tax benefits. The Gullas’ expert opined that the
exchange of a principal residence did not qualify for section 1031 tax
treatment; both the new and the old property must have been held for
investment or business use to qualify. Even if the Gullas could have treated
the portion of their property subject to the oil and gas lease with Range as
an investment property, a replacement property would also have to have
been held for investment purposes. The expert noted that the Gullas did not
want a replacement property that was encumbered by a lease, which was
the case with the Smith Farm. See Expert Report of Robert D. Hoag, CPA,
MST, CGMA, 11/11/16.

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Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 9/19/2018

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