Court Opinion

ID: 3155005
Source: CourtListenerOpinion
Date Created: 2015-11-16 20:20:16.213106+00
Date Added: 2024-06-11T12:47:22.518250
License: Public Domain

J-A16031-15

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

DONNA JOHNSTONE                                   IN THE SUPERIOR COURT OF
                                                        PENNSYLVANIA
                            Appellant

                       v.

ROBERT JOHNSTONE

                            Appellee                   No. 3186 EDA 2014

                Appeal from the Order Entered October 14, 2014
               In the Court of Common Pleas of Delaware County
                      Civil Division at No(s): 29110009184

BEFORE: LAZARUS, J., OLSON, J., and PLATT, J.*

MEMORANDUM BY LAZARUS, J.:                        FILED NOVEMBER 16, 2015

        Donna Johnstone (Wife) appeals from the following orders of the Court

of Common Pleas of Delaware County:            (1) the January 13, 2013 order,

granting the motion for summary judgment filed by Robert Johnstone

(Husband) and dismissing with prejudice Wife’s second amended complaint;

(2) the July 28, 2014 order granting Husband’s motion for summary

judgment on his counterclaim and entering judgment in favor of Husband;

(3) the July 28, 2014 order denying Wife’s motion for summary judgment on

Husband’s counterclaim; and (4) the October 14, 2014 order awarding

reasonable counsel fees, costs and expenses to Husband in the amount of

$189,699.58 because of Wife’s breach of the parties’ property settlement

____________________________________________

*
    Retired Senior Judge assigned to the Superior Court.
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agreements (PSAs). After careful review, we affirm each of the trial court’s

orders.

        The parties were married in 1994, and separated in 2006. On March

20, 2009, they signed a PSA, which contains the following relevant

provisions:

        10.   Warranty of Disclosure

        If a party has failed to disclose any asset, the fair market value
        of which exceeds twenty five thousand dollars ($25,000.00) as
        of the date of the execution of this Agreement by both parties,
        then, at the other party’s sole discretion, the undisclosed asset
        shall become the sole property of the other party or a cash
        payment equal to the fair market value as of the date of
        execution of this Agreement by both parties or as of the date of
        the discovery of the non-disclosure, whichever is greater, shall
        be made to the other party by the non-disclosing party.

        16.   Fees in the Event of Breach of Agreement

        In the event that either party breaches any provision of this
        Agreement and the other party retains counsel to assist in
        enforcing the terms thereof, the parties hereby agree that the
        breaching party will pay all attorneys fees, court costs and
        expenses which are incurred by the other party in enforcing the
        Agreement, whether enforcement is ultimately achieved by
        litigation or by amicable resolution. It is the specific agreement
        and intent of the parties that a breaching or wrongdoing party
        shall bear the obligation of any and all attorneys fees, court
        costs and expenses incurred by the other in protecting and
        enforcing his or her rights under this Agreement.

PSA, 3/20/09, at 28, 31.

        Shortly thereafter, on April 23, 2009, the parties signed a stipulation

setting forth conditions under which Wife agreed to sign joint tax returns for

2008.     Within weeks of executing the PSA, Wife became concerned that

Husband had failed to disclose certain assets.        As a result, the parties

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entered into a supplemental PSA, which they signed on November 23, 2009.

Under the supplemental PSA, Wife received an additional $200,000 and

increased alimony for one year totaling approximately $99,000.

     The supplemental PSA contains the following relevant provisions:

     1. Reaffirmation of the Agreement

     The parties hereby reaffirm the validity and enforceability of the
     Settlement Documents with the modifications hereinafter set
     forth.

     2. Advice of Counsel and other Professionals

     Wife represents and warrants that she had adequate time to
     consult with her counsel as well as her other advisors with
     regard to her rights and obligations related to the Divorce
     Action, the Settlement Documents and this Supplemental
     Property Settlement Agreement. Wife further represents and
     warrants that she is satisfied with the representation and advice
     from her counsel as well as her other advisors.

                                    ...

     Wife confirms that she is entering into this Supplemental
     Property Settlement Agreement freely and voluntarily. Wife
     confirms that her execution of this Supplemental Property
     Settlement Agreement is not the result of any duress, undue
     influence, collusion or improper or illegal agreement or
     agreements. Finally, Wife confirms that she has had adequate
     time to fully consider her rights and obligations under this
     Supplemental Property Settlement Agreement before executing
     it.

     3. Financial Disclosures

     Husband and Wife acknowledge and agree that they are aware
     of the nature, extent, and value of all assets, liabilities and
     income of the other party. Wife represents and warrants that
     she has additionally made certain independent investigations
     with regard to Husband’s income, business interests, assets and
     liabilities. Wife acknowledges that she is aware that, but for the
     Settlement Documents and this Supplemental Property
     Settlement Agreement, she would be entitled to additional

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     formal discovery including, but not limited to, review of
     documents, inspections, appraisals, interrogatories, depositions,
     and other discovery permitted by Rules of Civil Procedure or the
     Court in the Divorce Action.          Wife knowingly, voluntarily,
     expressly, and intelligently waived her right (if any) to any
     additional financial disclosure of the property, income or financial
     obligations of Husband beyond the disclosure heretofore
     provided. In addition, Wife specifically and knowingly waives her
     right to contest the validity of the Settlement Documents or this
     Supplemental Property Settlement Agreement on the grounds of
     any lack of a full and fair disclosure. Husband knowingly,
     voluntarily, expressly and intelligently waives his right (if any) to
     contest the validity of the Settlement Documents or this
     Supplemental Property Settlement Agreement on the grounds of
     any lack of a full and fair disclosure.

     4. Mutual General Releases

     a. Except as herein provided for and except as otherwise
        provided for in the Settlement Documents, Wife hereby
        remises, releases, and forever discharges Husband together
        with his successors and assigns from all claims, causes of
        action, damages, demands, suits, sums of money, accounts,
        costs and expenses of whatever kind and nature, known and
        unknown, whether in contract, tort or otherwise, whether
        statutory or common law, at law or in equity which Wife ever
        had against Husband including but not limited to the claims
        asserted in the Divorce Action.

Supplemental PSA, 11/23/09, at 2-5.

     On December 21, 2009, the court entered a divorce decree that

incorporated the original PSA and the supplemental PSA.         In 2010, while

Wife was reviewing an amended 2008 tax return that Husband requested

Wife to sign, she noticed there was significant interest income on an

undisclosed investment account. This led her to engage in internet research

that revealed Husband had other assets that he failed to disclose.

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        Wife commenced this action by filing a writ of summons on November

22, 2011.     She filed her second amended complaint on March 1, 2012,

asserting breach of contract and fraud in the inducement.      Relying on the

Warranty of Disclosure provision of the PSA, she asked the court to award

her “all interests held by [Husband] or the fair market value of said interests

in [ten enumerated] assets effective March 20, 2009 . . . together with all

income associated with each of these entities from the aforementioned

date.” Second Amended Complaint, 3/1/12, at 16. Wife also sought counsel

fees, costs and expenses.    In addition, she sought punitive damages with

respect to the fraud in the inducement claim.

        On September 4, 2013, Husband filed an answer and new matter

along with a counterclaim alleging a breach of a confidentiality agreement

and non-disclosure agreement entered into by the parties on October 16,

2006.

        On February 15, 2013, Husband sought to file an amended answer,

new matter and counterclaim alleging breach of contract and seeking

enforcement of the post nuptial agreement.       On April 11, 2013, the trial

court permitted the amendment over Wife’s objection, and, on April 16,

2013, Husband filed his amended answer, new matter and counterclaim to

Wife’s second amended complaint.

        Husband filed a motion for summary judgment on November 27, 2013,

to which Wife filed a response on December 19, 2013.          By order dated

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January 13, 2014, the court granted Husband’s motion and dismissed Wife’s

second amended complaint with prejudice.

       The court denied reconsideration, and on February 11, 2014, Wife filed

an appeal, which this Court quashed on April 16, 2014.1

       On May 22, 2014, Husband filed a supplement to his motion for

summary judgment and on June 30, 2014, Wife filed her own motion for

summary judgment.            On July 28, 2014, the court granted summary

judgment in favor of Husband and against Wife on the counterclaims. 2 The

court also scheduled a hearing on the issue of the counsel fees, costs and

expenses incurred by Husband in protecting and enforcing his rights under

the parties’ agreements.3 After holding a hearing on August 14, 2014, the

court issued an order on October 14, 2014, awarding Husband $189,699.58.

       Wife filed a timely notice of appeal on November 12, 2014, and on

January 14, 2015, the court issued an opinion pursuant to Pa.R.A.P.

1925(a).

____________________________________________

1
  The January 13, 2014 order was not a final order because it did not
address Husband’s counterclaims, which remained outstanding.     See
Pa.R.A.P. 341.
2
  By praecipe filed February 24, 2014, Husband withdrew his counterclaim
for breach of the parties’ confidentiality agreement. Accordingly, the court
granted relief on Husband’s counterclaims for breach of contract and
enforcement of the post-nuptial agreement.
3
  On July 28, 2014, the court issued a separate order denying Wife’s motion
for summary judgment on Husband’s counterclaim.

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      On appeal, Wife raises the following issues for our review:

      1. Whether a warranty of disclosure of all assets and liabilities in
         a marital property agreement, together with a penalty
         provision for failure to disclose such assets, is enforceable
         despite language in the same agreement relating to a waiver
         and release of marital claims and, if not, does it create an
         ambiguous agreement.

      2. Whether [Husband] is entitled to an award of counsel fees
         because [Wife] attempted to enforce the warranty and
         penalty provisions under the marital property settlement
         agreement.

Appellant’s Brief, at 4.

      Appellate courts review property settlement agreements under the law

of contracts.   In re Estate of Hoffman, 54 A.3d 903, 907 (Pa. Super.

2012).

      Because contract interpretation is a question of law, this Court is
      not bound by the trial court’s interpretation. Our standard of
      review over questions of law is de novo and to the extent
      necessary, the scope of our review is plenary as the appellate
      court may review the entire record in making its decision.
      However, we are bound by the trial court’s credibility
      determinations.

Ruby v. Abington Memorial Hosp., 50 A.3d 128, 132 (Pa. Super. 2012)

(citation omitted).

      As the trial court recognized:

      “In cases of a written contract, the intent of the parties is the
      writing itself. If left undefined, the words of a contract are to be
      given their ordinary meaning.” Kripp v. Kripp, 849 A.2d 1159,
      1163 (Pa. 2004). “When the terms of a contract are clear and
      unambiguous, the intent of the parties is to be ascertained from
      the document itself.” Id. See also: In re Estate of Hoffman,
      54 A.3d 903, 907 (Pa. Super. 2012) (the Pennsylvania Superior
      Court reviews property settlement agreements in divorce actions

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       “under the law of contracts, and therefore we must ascertain the
       intentions of the parties when interpreting the contractual
       agreement”); Crispo v. Crispo, 909 A.2d 308 (Pa. Super. 2006)
       ([w]hen construing agreements involving clear and unambiguous
       terms, a trial court need only examine the writing itself to give
       effect to the parties’ understanding”).

Trial Court Opinion, 1/14/15, at 16-17.

       On appeal, Wife asserts that the trial court erred by concluding that

under the supplemental PSA, she waived her right to sue on the warranty of

disclosure provision of the PSA.4 We disagree.

       Wife draws our attention to the portion of the Supplemental PSA,

entitled, “Reaffirmation of Agreement,” which states, “[t]he parties hereby

reaffirm the validity and enforceability of the Settlement Documents with the

modifications hereinafter set forth.” Supplemental PSA, at 2. Wife argues:
____________________________________________

4
    When reviewing an order granting summary judgment:

       [t]he standard of review is clear: we will reverse the order of
       the trial court only where the court committed an error of law or
       clearly abused its discretion. Atcovitz v. Gulph Mills Tennis
       Club, Inc., 812 A.2d 1218, 1221 (Pa. 2002). Further, summary
       judgment is appropriate only where the record clearly shows that
       there is no genuine issue of material fact and that the moving
       party is entitled to judgment as a matter of law. Id. at 1221.
       The reviewing court must view the record in the light most
       favorable to the nonmoving party and resolve all doubts as to
       the existence of a genuine issue of material fact against the
       moving party.      Id. Only when the facts are so clear that
       reasonable minds cannot differ can a trial court properly enter
       summary judgment. Id. at 1222.

Mountain Village v. Bd. Of Supervisors of Longswamp Tp., 874 A.2d 1,

5 (Pa. 2005).

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      Nowhere in the Supplemental Agreement was the warranty of
      disclosure or penalty provision removed or in any way amended.
      Accordingly, because the Original Agreement was ratified, it
      remained in full force and effect. The Supplemental Agreement
      also states, “Except as amended or modified by this
      Supplemental Property Settlement Agreement, the Property
      Settlement Agreement shall remain in full force and effect,”
      [Supplemental PSA, at 10] thereby reaffirming the warranty and
      penalty provisions in the Original Agreement.

Appellant’s Brief, at 18.

      Wife asserts that the trial court erred by reading the warranty and

penalty provisions out of the documents in violation of the rule that “terms

in one section of a contract . . . should never be interpreted in a manner

which nullifies other terms in the same agreement.”             Trombetta v.

Raymond James Financial Services, 907 A.2d 550 (Pa. Super. 2006)

(citation omitted).

      However,    in   the   instant   matter,   there   were   two    successive

agreements. Trombetta provides that “a contract can be modified with the

assent of both contracting parties if the modification is supported by

consideration.” Id. at 558 (citation omitted). Pursuant Sections 3 and 4 of

the Supplemental PSA, Wife relinquished her right to contest the validity of

the PSA and Supplemental PSA. In return for Wife’s general release of all

claims, Husband agreed to pay Wife an additional $299,000.            Accordingly,

there was a valid contract modification supported by consideration.

Trombetta, supra.

      Wife next asserts that the trial court erred in relying on Lugg v. Lugg,

64 A.3d 1109 (Pa. Super. 2013), in support of its order granting Husband’s

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motion for summary judgment. In Lugg, this Court rejected “the assertion

that economic disclosure cannot be waived because the party waiving

disclosure does not know the extent of what is being waived.” Id. at 1112.

Rather, “there is no prohibition against the waiver of economic disclosure.”

Id. at 1113.

      As the trial court noted:

      In the case sub judice, [Wife] attempted to distinguish Lugg [],
      with the contention that she is not attempting to void the
      Settlement documents, but to enforce the “Warranty of
      Disclosure,” a right that clear and express language of the
      Supplemental Property Settlement Agreement, nevertheless,
      unambiguously modified and wavied. [Wife] is currently seeking
      to fault the [c]ourt for employing Lugg as authority against her
      ex post facto. However, an examination of: (a) the wording of
      the Supplemental Property Settlement Agreement and the
      circumstances surrounding its execution; (b) the express
      intentions of the parties to release each other from further such
      claims and to end the divorce litigation between them; and (c)
      the bestowing of an additional $299,000.00, including future
      alimony payments, as consideration for [Wife] entering into that
      Agreement with its express waiver of further and/or future
      discovery into [Husband’s] assets; and (d) her release of future
      claims of failure by [Husband] to disclose its assets, rendered it
      entirely reasonable to conclude that such provisions were
      enforceable even without the guidance afforded by the case
      authority of Lugg[].

Trial Court Opinion, 1/14/15, at 17-18.

      The trial court’s conclusion that Wife waived economic disclosure and

relinquished the right to sue for a breach of the warranty of disclosure in the

original PSA is a correct interpretation of the contract and is supported in the

record. Accordingly, Wife has failed to establish a right to relief.

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        Recognizing that postnuptial agreements are subject to the rules of

contract interpretation, Wife argues “the existence of the warranty of

disclosure and penalty provisions in the Original Agreement as ratified by the

Supplemental Agreement creates an ambiguity in the Settlement Agreement

that must be resolved by a jury.” Appellant’s Brief, at 24. We find this issue

is waived because Wife failed to raise it in her statement of errors

complained of on appeal pursuant to Pa.R.A.P. 1925(b).5

____________________________________________

5
    Wife raised the following issues in her Rule 1925(b) statement:

        1. On January 13, 2014, the Honorable Court granted
           [Husband’s] motion for summary judgment citing Lugg v.
           Lugg, 64 A.3d 1109 (Pa. Super. 3013) and dismissed [Wife’s]
           Second Amended Complaint with prejudice.

        2. The Court erred in its application of Lugg v. Lugg, as that
           case involves an express waiver of disclosure and this case is
           predicated upon a warranty of disclosure.

        3. The Court erred if it found that an action filed to enforce an
           Agreement is, without more, a breach of the same agreement
           warranting an assessment of damages including attorneys’
           fees premised upon breach.

        4. Where the Court has overruled preliminary objections and
           held that [Wife] had stated a cause of action and [Husband’s]
           counterclaim is premised upon an appellate case not decided
           until 18 months after the underlying case is brought, the
           [t]rial [c]ourt erred in determining that the counterclaim was
           valid and awarding damages predicated upon the
           counterclaim.

        5. The [t]rial [c]ourt erred if it found that [Husband] sustained
           damages in defending an action to enforce an agreement and
           if it intended to rebate to [Husband] all of the consideration
           paid to [Wife] under the terms of the Supplemental
(Footnote Continued Next Page)

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      Rule 1925(b)(4)(ii) provides, in relevant part, that “[t]he [s]tatement

shall concisely identify each ruling or error that the appellant intends to

challenge with sufficient detail to identify all pertinent issues for the judge.”

Failure to raise an issue in a Rule 1925(b) statement will result in waiver.”

Commonwealth v. Castillo, 888 A.2d 775, 780 (Pa. 2005) (quoting

Commonwealth v. Lord, 719 A.2d 306, 309 (Pa. 1998).

      Accordingly, the issue is waived, and we are precluded from engaging

in appellate review of Wife’s claim regarding ambiguity.
                       _______________________
(Footnote Continued)

          Agreement between the parties where no actual damages
          were pled or proved.

      6. To the extent that the [t]rial [c]ourt entered judgment on
         Counts II and III of the Counterclaim premised upon a failure
         to answer amendments to the Motion for Summary Judgment,
         the Court erred in (a) permitting [Husband] to file multiple
         amended motions for summary judgment without leave of
         Court; (b) failing to strictly comply with Delaware County Rule
         1028 and (c) granting summary judgment on the bare
         allegation that in bringing a cause of action, [W]ife breached
         a contract her own action was intended to enforce.

      7. The Trial Court erred in awarding attorneys’ fees and costs
         where [Wife’s] claim was to enforce express warranties set
         forth in the agreements between the parties and the
         agreements do not contain provision stating that an action to
         enforce the agreements is, itself, a breach of the agreements.

      8. The grant of summary judgment in this case does not
         conform to the requirements of Pa.R.C.P. 1035.2 [“After the
         relevant pleadings are closed, but within such time as not to
         unreasonably delay trial, any party may move for summary
         judgment in whole or in part as a matter of law.”].

Concise Statement of [Errors] Complained of on Appeal, 12/8/14.

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     Wife’s final claim is that the trial court erred by concluding that

Husband was entitled to counsel fees. We review an award of counsel fees

and costs only for an abuse of discretion. See Busse v. Busse, 921 A.2d

1248, 1258 (Pa. Super. 2007). As previously noted, the PSA contains the

following provision entitled “Fees in the Event of Breach of Agreement”:

     It is the specific agreement and intent of the parties that a
     breaching or wrongdoing party shall bear the obligation of any
     and all attorneys fees, court costs and expenses incurred by the
     other in protecting and enforcing his or her rights under this
     Agreement.

PSA, 3/20/09, at 31.

     Read in conjunction with the “Mutual General Releases” provision of

the PSA, which provides in relevant part that “Wife discharges Husband . . .

from all claims . . . known and unknown,” the Court reasonably concluded

that “Wife had failed to comply with the terms of the Supplemental [PSA] by

suing [Husband] over a claim of undisclosed assets after she had expressly

and voluntarily waived her ability to do so in the future.”       Trial Court

Opinion, 1/14/15, at 25.

     The trial court also awarded counsel fees and costs based on the

Divorce Code, 23 Pa.C.S. §§ 3101-3904 (the Code). Section 3105(a) of the

Code provides:

     § 3105. Effect of agreement between parties

     (a) Enforcement. – A party to an agreement regarding matters
     within the jurisdiction of the court under this part, whether or
     not the agreement has been merged or incorporated into the
     decree, may utilize a remedy or sanction set forth in this part to

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       enforce the agreement to the same extent as though the
       agreement had been an order of the court except as provided to
       the contrary in the agreement.

23 Pa.C.S. § 3105(a).

       Section 3502 of the Code provides, in relevant part:

       § 3502. Equitable distribution of marital property

       Powers of the court. – If, at any time, a party has failed to
       comply with an order of equitable distribution, as provided for in
       this chapter or with the terms of an agreement as entered into
       between the parties, after hearing, the court may, in addition to
       any other remedy available under this part, in order to effect
       compliance with its order:

                                           ...

       (7)    award counsel fees and costs[.]

23 Pa.C.S. § 3502(e)(7).

       In Miller v. Miller, 983 A.2d 736 (Pa. Super. 2009), this Court held

that where a party incurs significant fees to enforce a provision regarding

the parties’ economic obligations, the court is empowered to award fees.

Accordingly, the trial court did not abuse its discretion in concluding that

Husband was entitled to fees and costs under the parties’ agreements and

the Divorce Code.6

       Orders affirmed.

____________________________________________

6
  We note that on appeal Wife does not challenge the specific amount of the
costs, fees and expenses awarded by the trial court. Her argument is limited
to whether the court abused its discretion in permitting the recovery of cost,
fees and expenses.

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Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 11/16/2015

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