Court Opinion

ID: 4571971
Source: CourtListenerOpinion
Date Created: 2020-10-01 16:28:04.915343+00
Date Added: 2024-06-11T08:47:06.711540
License: Public Domain

J-A18008-20

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

 PRECISION KIDD ACQUISITION, LLC   :       IN THE SUPERIOR COURT OF
                                   :            PENNSYLVANIA
                  Appellant        :
                                   :
                                   :
            v.                     :
                                   :
                                   :
 JOSEPH J. PASS, IN HIS CAPACITY   :       No. 1025 WDA 2019
 AS REPRESENTATIVE OF THE          :
 SHAREHOLDERS AS PROVIDED IN       :
 THE AGREEMENT AND PLAN OF         :
 MERGER DATED AS OF JANUARY 5,     :
 2015, BY AND AMONG PRECISION      :
 KIDD ACQUISITION, LLC, PRECISION :
 KIDD MERGER SUB, INC.,            :
 PRECISION KIDD STEEL CO., INC.,   :
 AND JOSEPH J. PASS, SOLELY IN HIS :
 CAPACITY AS REPRESENTATIVE OF     :
 THE SHAREHOLDERS AS PROVIDED      :
 IN SAID AGREEMENT                 :

             Appeal from the Judgment Entered July 11, 2019
    In the Court of Common Pleas of Allegheny County Civil Division at
                          No(s): GD-16-018687

 PRECISION KIDD ACQUISITION, LLC   :       IN THE SUPERIOR COURT OF
                                   :            PENNSYLVANIA
                                   :
            v.                     :
                                   :
                                   :
 JOSEPH J. PASS, IN HIS CAPACITY   :
 AS REPRESENTATIVE OF THE          :
 SHAREHOLDERS AS PROVIDED IN       :       No. 1170 WDA 2019
 THE AGREEMENT AND PLAN OF         :
 MERGER DATED AS OF JANUARY 5,     :
 2015, BY AND AMONG PRECISION      :
 KIDD ACQUISITION, LLC, PRECISION :
 KIDD MERGER SUB, INC.,            :
 PRECISION KIDD STEEL CO. INC.,    :
 AND JOSEPH J. PASS, SOLELY IN HIS :
 CAPACITY AS REPRESENTATIVE OF     :
J-A18008-20

    THE SHAREHOLDERS AS PROVIDED                 :
    IN SAID AGREEMENT                            :
                                                 :
                                                 :
    APPEAL OF: JOSEPH J. PASS                    :

               Appeal from the Judgment Entered July 11, 2019
      In the Court of Common Pleas of Allegheny County Civil Division at
                            No(s): GD 16-018687

BEFORE: BENDER, P.J.E., DUBOW, J., and NICHOLS, J.

MEMORANDUM BY BENDER, P.J.E.:                        FILED OCTOBER 1, 2020

       Appellant, Precision Kidd Acquisition, LLC (“PKA”), appeals and Appellee,

Joseph J. Pass, in his capacity as representative of the shareholders as

provided in the agreement and plan of merger dated as of January 5, 2015,

by and among Precision Kidd Acquisition, LLC, Precision Kidd Merger Sub, Inc.,

Precision Kidd Steel Co., Inc., and Joseph J. Pass, solely in his capacity as

representative of the shareholders as provided in said agreement, cross-

appeals from the July 11, 2019 judgment entered in favor of PKA following a

non-jury trial.1 After review, we vacate and remand for further proceedings.
____________________________________________

1 Both parties purport to appeal from the trial court’s June 17, 2019 order
granting in part and denying in part PKA’s post-trial motion. An order denying
post-trial motions is interlocutory and generally not appealable. See Levitt
v. Patrick, 976 A.2d 581, 584 n.2 (Pa. Super. 2009) (stating that appeal
properly lies from the entry of judgment, not from an order denying post-trial
motions); Fanning v. Davne, 795 A.2d 388, 391 (Pa. Super. 2002) (“An
appeal from an order denying post-trial motions is interlocutory. An appeal
to this Court can only lie from judgments entered subsequent to the trial
court’s disposition of post-verdict motions, not from the order denying post-
trial motions.”) (citations omitted). However, since judgment was entered on
July 11, 2019, we consider the appeal as taken from the entry of judgment.
See Johnston the Florist, Inc. v. TEDCO Const. Corp., 657 A.2d 511, 514-

                                           -2-
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       The trial court summarized the factual background of this case as

follows:
       The Precision Kidd Steel Co.–Snap-On Relationship

       Precision Kidd Steel Co., Inc. (hereinafter “the Company”) is a
       Pennsylvania corporation in the business of manufacturing and
       shaping steel. Snap-On Logistics Company (hereinafter “Snap-
       On”) was the Company’s first or second largest customer from
       2010 through 2013. During those years, Snap-On accounted for
       between $2.8 and $2.9 million — or on average, 10.5% — of the
       Company’s annual sales.

       The Company’s relationship with Snap-On was governed by a non-
       exclusive Strategic Supplier Letter (hereinafter the “Snap-On
       Letter”), under which the Company agreed that if Snap-On
       ordered products from the Company, Snap-On would pay for the
       products at a price to be agreed upon on an annual basis.
       However, nothing in the Snap-On Letter required Snap-On to buy
       anything from the Company. The Snap-On Letter was for a one-
       year term with annual renewals, and either party could terminate
       the relationship in the following ways: 120 days before renewal;
       immediately, if the other party is acquired; or for convenience, at
       any time for any reason upon 120 days[’] notice.

       On January 3, 2014, Snap-On sent a letter to the Company’s then-
       president, Dom Lea (hereinafter “Mr. Lea”), stating they would be
       terminating the Snap-On Letter agreement effective May 31,
       2014. Despite this, Snap-On continues to be a customer of the
       Company through individual purchase orders, and the Company
       has retained approximately 20% of Snap-On’s business.

       The Sale of the Company

       In late 2013, the Company’s majority shareholders decided to sell
       the Company. The Company engaged LM+Co. Capital, a New
       York-based investment bank, and its representative, Rick
       Zytkowicz (collectively “Zytkowicz”), to find buyers. Zytkowicz
       contacted Plaintiff Precision Kidd Acquisition, LLC (hereinafter
       “PKA”), who expressed interest in purchasing the Company.
____________________________________________

15 (Pa. Super. 1995) (stating that appellate courts may “regard as done that
which ought to have been done”) (citations omitted). We have amended the
caption accordingly.

                                           -3-
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     Defendant Joseph J. Pass (hereinafter “Mr. Pass”) is a Pittsburgh-
     based attorney who acted as a representative of the Company’s
     shareholders in connection with the sale. Mr. Pass is the sole
     named defendant in this case, because the terms of the Merger
     Agreement required that, in the event of a breach, the
     shareholders, by their representative, would indemnify … PKA.

     In February 2014, LM+Co. Capital provided … PKA with the
     Company’s “teaser” document, which provided an overview of the
     business. While the teaser did not name the Company, it
     specifically stated that the Company had “long-standing and loyal
     customers,” and boasted “100%-[a]nnual customer retention
     related to material accounts over the past five years.” Jiorgio
     Nicolo Vergani (hereinafter “Mr. Vergani”) — the sole member of
     V&A Capital, of which … PKA is an affiliate — testified that such a
     “long-standing” customer base was important to him as a
     potential investor as it is an “indication of the solidity of products
     and services of the business … and it is also typically a prediction
     of the future.”

     After receiving the teaser, … PKA executed a nondisclosure
     agreement, and LM+Co. Capital provided … PKA with a
     Confidential Information Memorandum (hereinafter “CIM”), which
     included more in-depth information about the Company. The CIM
     emphasized the Company’s longstanding and loyal customer
     base:

        The average customer relationship spans over ten years,
        with a number of accounts exceeding 25 years. [The
        Company’s] customer relationships continue to grow in size
        and scope and management does not believe any of these
        relationships are vulnerable to attrition. [The Company] has
        not lost a material account in the past few years.

     Joint Exhibit 4, at 8 and 24. The CIM included a list of the
     Company’s top customers, with the amount of revenue from each
     customer for each year from 2010 to 2012. “Customer A” on said
     list, ranked by total net revenue, was Snap-On. Mr. Vergani
     testified that the CIM “and this particular customer base and
     solidity of it was one of the key factors” that encouraged … PKA to
     proceed with the transaction.

     In March 2014, … PKA submitted a formal indication of interest,
     proposing to eventually purchase either the assets or the equity
     of the Company for between $10 and $12 million. Thereafter, …
     PKA was invited to Pittsburgh for an April 9, 2014[] meeting with

                                     -4-
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       the Company’s representatives, and a management presentation
       given by [Mr.] Lea. The April 2014 management presentation also
       specifically represented that the Company’s highest grossing sales
       were to hand tool manufacturers, and identified Snap-On at the
       top of a list of representative customers in that industry. Mr. Lea
       testified that no one from … PKA asked anyone from the Company
       about whether any customers had cancelled any contracts.
       However, Mr. Vergani testified that one of the first questions he
       typically asks at these types of meetings is whether any material
       customers were going to or had recently cancelled their
       agreements, and he has no reason to believe he did not ask that
       question at the April 2014 management presentation.

       Shortly after the management presentation, the Company gave …
       PKA access to its digital data room, which housed its important
       financial and legal documents. Notably, … PKA had access to
       documents indicating that the Company suffered significant losses
       through November 30, 2014 — approximately five weeks before
       the closing for the sale of the Company. While … PKA reviewed
       the Snap-On Letter through its access to the data room, … PKA
       was never made aware of Snap-On’s January 3, 2014[] letter
       terminating the Snap-On Letter agreement, which was[] not made
       a part of the data room.

       On August 1, 2014, … PKA and the Company executed a letter of
       intent (hereinafter “LOI”), providing a detailed framework for the
       deal, which was to involve a purchase of the outstanding stock of
       the company by … PKA in exchange for $11.5 million — a price
       that was based on the Company’s EBITDA,[2] and which was
       eventually lowered to $11.4 million due to certain outstanding
       environmental issues. After the execution of the LOI, … PKA again
       met with Mr. Lea in Pittsburgh on August 12, 2014. The agenda
       for that meeting, drafted by … PKA and provided to [Mr.] Lea,
       specifically asked whether there had been “[a]ny loss or gain of
       significant customers and/or issues with suppliers.” [] PKA alleges
       that neither [Mr.] Lea, nor anyone else from the Company,
       informed … PKA at the August 2014 meeting that Snap-On had
       cancelled its Contract or otherwise materially changed its
       relationship with the Company.

____________________________________________

2“EBITDA” stands for “earnings before interest, taxes, depreciation, and
amortization.” See, e.g., PKA’s Brief at 11 n.2.

                                           -5-
J-A18008-20

     [] PKA alleges that it was precluded from contacting the
     Company’s customers until December 30, 2014 — one week
     before the transaction was to close. During that week, … PKA did
     attempt to contact customers it had identified as having a possible
     reason to discontinue its relationship if the transaction proceeded.
     However, … PKA did not attempt to contact Snap-On, as,
     according to Mr. Vergani, the Company had not given … PKA any
     reason to doubt the stability of that relationship. [] PKA was not
     able to obtain a response from any of the Company’s customers
     prior to closing, but insisted on, and received, additional
     assurances in writing from the Company that the Company’s
     relationships with those customers were intact. Notably, [Mr.
     Pass] argues that the Company offered to extend the closing
     deadline to give … PKA more time to conduct these interviews, but
     … PKA declined this offer, and elected to proceed with the closing
     as planned.

     [] PKA insists that prior to closing on January 5, 2015, no one
     informed … PKA that Snap-On cancel[l]ed or otherwise altered its
     contractual and business relationship with the Company.
     Moreover, Mr. Lea and Mr. Pass both testified they had no
     recollection of ever telling … PKA that Snap-On had cancel[l]ed its
     contract.

     The Merger Agreement and Disclosures

     The Merger Agreement (hereinafter the “Agreement”), which
     memorialized … PKA’s acquisition of the Company, was … signed
     by both parties on January 5, 2015. Article III of the Merger
     Agreement contained certain representations and warranties of
     the Company, among which was the following:

        Section 3.08 Absence of Certain Changes, Events and
        Conditions. Except as set forth on Section 3.08 of the
        Disclosure Schedule, since the Balance Sheet Date, and
        other than in the ordinary course of business consistent with
        past practice, there has not been, with respect to the
        Company, any:

           (a) event, occurrence or development that has had,
           or could reasonably be expected to have, individually
           or in the aggregate, a Material Adverse Effect;

           …

                                    -6-
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           (n) acceleration, termination, material modification
           to or cancellation of any Material Contract (including,
           but not limited to, any Material Contract) to which
           the Company is a party or by which it is bound[.]

     Joint Exhibit 25, at 27-28. “Material Adverse Effect” is defined as:

        [A]ny event, occurrence, fact, condition or change that is,
        or would reasonably be expected to become, individually or
        in the aggregate, materially adverse to (a) the business,
        results of operations, condition (financial or otherwise) or
        assets of the Company, or (b) the ability of the Company to
        consummate the transactions contemplated hereby on a
        timely basis; provided, however, that “Material Adverse
        Effect” shall not include any event, occurrence, fact,
        condition or change, directly or indirectly, arising out of or
        attributable to: (i) general economic or political conditions;
        (ii) conditions generally affecting the industries in which the
        Company operates; (iii) any changes in financial or
        securities markets in general; (iv) acts of war (whether or
        not declared), armed hostilities or terrorism, or the
        escalation or worsening thereof; (v) any action required or
        permitted by this Agreement, except pursuant to Section
        3.03 and Section 5.07; (vi) any changes in applicable Laws
        or accounting rules, including GAAP; or (vii) the public
        announcement, pendency or completion of the transactions
        contemplated by this Agreement.

     [Id.] at 9.

     Section 3.08 of the referenced Disclosure Schedule does not
     reveal any information relating to Snap-On or its relationship with
     the Company. [] PKA alleges that the change in relationship with
     Snap-On constituted a Material Adverse Effect, and that the Snap-
     On contract was a “Material Contract” under Section 3.08(n) as it
     was material to the Company’s business, even if it was not a
     “Material Customer” listed in the Merger Agreement’s disclosure
     schedules.

     Moreover, Article III of the Merger Agreement also contained the
     following representation and warranty by the Company:

        Section 3.15 Customers and Suppliers.

        (a) Section 3.15(a) of the Disclosure Schedules sets forth
        (i) each, customer who has paid aggregate consideration to,

                                     -7-
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        the Company for goods or services rendered in an amount
        greater than or equal to $250,000 for each of the two (2)
        most recent fiscal years (collectively, the “Material
        Customers”); and (ii) the amount of consideration paid by
        each Material Customer during such periods. The Company
        has not received any written notice or, to the Company’s
        Knowledge an oral indication, that any of its Material
        Customers has ceased, or intends to cease after the Closing,
        to use its goods or services or to otherwise terminate or
        materially reduce its relationship with the Company.

     Joint Exhibit 25, at 33.    Section 3.15(a) of the referenced
     Disclosure Schedule lists Snap-On as one of the Company’s
     Material Customers, with 2013 gross sales of $2,819,471.52, and
     2014 sales through September 30, 2014 of $1,336,701.54.
     Section 5.05(a)(i) of the Merger Agreement also required the
     Company to notify PKA of any “fact, circumstance, event or action”
     that could either have had a Material Adverse Effect on the
     Company, or which could have resulted in one of the Company’s
     above representations and warranties not being true and correct.

     Finally, Article VIII of the Merger Agreement also addressed PKA’s
     contractual right to rely on the Company’s representations and
     warranties:

        Section   8.08     Effect    of   Investigation.          The
        representations, warranties and covenants of the
        Indemnifying Party, and the Indemnified Party’s right to
        indemnification with respect thereto, shall not be affected or
        deemed waived by reason of any investigation made by or
        on behalf of the Indemnified Party (including by any of its
        Representatives) or by reason of the fact that the
        Indemnified Party or any of its Representatives knew or
        should have known that any such representation or
        warranty is, was or might be inaccurate or by reason of the
        Indemnified Party’s waiver of any condition set forth in
        Section 7.02 or Section 7.03, as the case may be.

     Joint Exhibit 25, at 61.

     The Purchase Price

     The Agreement sets forth the following definitions that lead to the
     final purchase price:

        “Base Merger Consideration” means $11,400,000.

                                    -8-
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        “Closing Cash Merger Consideration” means (i) the Base
        Merger Consideration, plus (ii) the amount of the Bad Debt
        Reserve, plus (iii) the amount, if any, by which the
        Estimated Closing Net Working Capital exceeds the Target
        Net Working Capital Amount, plus (iv) the amount of
        Estimated Cash of the Company as of the open of business
        on the Closing Date, minus (v) the amount, if any, by which
        the Estimated Closing Net Working Capital is less than the
        Target Net Working Capital Amount, minus (vi) the
        Indemnification Escrow Amount, minus (vi) the Adjustment
        Escrow     Amount,    minus      (viii) the    Shareholder
        Representative Expense Amount, minus (ix) the outstanding
        Estimated Indebtedness of the Company as of the open of
        business on the Closing Date, minus (x) the amount of
        unpaid Estimated Transaction Expenses of the Company as
        of the open of business on the Closing Date; minus (xi) the
        Underfunded Pension Liability Amount, and minus (xii) the
        Subordinated Note Amount.

        “Final Cash Merger Consideration” means (i) the Base
        Merger Consideration, plus (ii) the amount of the Bad Debt
        Reserve, plus (iii) the amount, if any, by which the Closing
        Net Working Capital as finally determined pursuant to
        Section 2.16 exceeds the Target Net Working Capital
        Amount, plus (iv) the amount of Cash of the Company as of
        the open of business on the Closing Date as finally
        determined pursuant to Section 2.16, minus (v) the
        amount, if any, by which the Closing Net Working Capital as
        finally determined pursuant to Section 2.16 is less than the
        Target Net Working Capital Amount, minus (vi) the
        Indemnification Escrow Amount, minus (vii) the Adjustment
        Escrow      Amount,     minus    (viii)   the   Shareholder
        Representative Expense Amount, minus (ix) the outstanding
        Indebtedness of the Company as of the open of business on
        the Closing Date as finally determined pursuant to Section
        2.16, minus (x) the amount of unpaid Transaction Expenses
        of the Company as of the open of business on the Closing
        Date as finally determined pursuant to Section 2.16; minus
        (xi) the Underfunded Pension Liability Amount, and minus
        (xii) the Subordinated Note Amount.

        “Indemnification Escrow Amount” means $1,000,000.

     Joint Exhibit 25, at 2-3, 7-8.

                                      -9-
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      After the Closing

      After the transaction closed on January 5, 2015, … PKA’s Board of
      Directors held a post-closing meeting on January 29, 2015. At the
      post-closing meeting, … PKA learned of the cancellation of the
      Snap-On Letter for the first time. [] PKA then filed the instant
      litigation.

Trial Court Opinion (TCO), 10/2/18, at 2-10 (most internal citations omitted).

      With respect to the instant litigation initiated by PKA, the trial court

explained that:
      [PKA] filed an action for breach of contract and contractual
      indemnification regarding the merger of its wholly-owned
      subsidiary with [the Company]. [Mr. Pass] is the representative
      of the shareholders of that former [C]ompany. [PKA] alleged that
      [the selling shareholders] failed to disclose prior to the merger
      that Snap-[O]n…, one of the target [C]ompany’s largest
      customers, had in fact terminated its contract in the prior year,
      arguably making the [C]ompany less profitable and therefore less
      valuable. [PKA] sought indemnification for damages pursuant to
      the terms of the Merger Agreement.

      Following a non-jury trial lasting several days, as well as extensive
      post–trial filings and argument by the parties, this court entered
      an Opinion and Non–Jury Verdict…[,] dated September 27, 2018,
      finding a breach of the Merger Agreement and awarding [PKA]
      $36,000 in damages. [PKA] timely filed a Motion for Post-Trial
      Relief pursuant to Pa.R.C.P. 227.1, which was granted in part and
      denied in part by this [c]ourt on June 17, 2019. Essentially, this
      [c]ourt granted the post-trial motion regarding the addition of
      attorneys’ fees to the verdict, awarding $384,309.42 in attorneys’
      fees. The balance of the [p]ost–[t]rial [m]otion was denied.

Rule 1925(a) Opinion (RO), 12/30/19, at 1-2.

      On July 11, 2019, PKA filed a praecipe for entry of judgment against Mr.

Pass in the amount of $420,309.42. On that same day, PKA filed a timely

notice of appeal.   Subsequently, on July 25, 2019, Mr. Pass filed a timely

notice of cross appeal. The trial court instructed each party to file a Pa.R.A.P.

                                     - 10 -
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1925(b) concise statement of errors complained of on appeal, and both parties

timely complied.

                                 PKA’s Appeal

      We address PKA’s appeal first. PKA raises the following issues for our

review:
      1. After finding that the selling shareholders breached the parties’
      merger agreement by failing to disclose the loss of one of the
      target [C]ompany’s key customers prior to closing, did the [t]rial
      [c]ourt err in failing to award damages in the amount of the
      difference between the amount the purchaser paid for the
      company, and the actual value of the [C]ompany without the key
      customer?

      2. Did the [t]rial [c]ourt err or abuse its discretion in disregarding
      the purchaser’s two proposed damages analyses when (a) the
      [t]rial [c]ourt’s opinion suggested that it did not recall the first
      analysis, and (b) the [t]rial [c]ourt’s alleged reasons for
      disregarding the second analysis are demonstrably inaccurate?

      3. Did the [t]rial [c]ourt err in holding that the purchaser failed to
      establish its damages “with reasonable certainty” under applicable
      law when both the purchaser and the selling shareholders
      presented multiple, alternate, and detailed damages analyses
      supported by evidence, detailed financial statements, and expert
      testimony?

      4. After finding that the selling shareholders breached the parties’
      merger agreement by failing to disclose the prior loss of one of
      the target [C]ompany’s key customers, which accounted for
      almost $3,000,000 (or roughly 10.5%) of the [C]ompany’s annual
      sales, did the [t]rial [c]ourt err or abuse its discretion in awarding
      the purchaser only $36,000 in damages based upon the terms of
      a contract that had not been breached, and to which neither the
      selling shareholders nor the purchaser were parties?

PKA’s Brief at 5-6.

      Initially, we acknowledge:
      When reviewing the verdict from a bench trial, we must review
      the evidence of record in the light most favorable to the verdict

                                     - 11 -
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       winner to determine whether competent evidence supports the
       trial court’s findings and whether it erred in reaching its
       conclusions of law. We afford the same weight to the trial court’s
       findings of fact as we do a jury’s verdict. We will only reverse if
       the trial court’s findings of fact are unsupported by competent
       evidence or if it erred as a matter of law.

Newman Dev. Grp. of Pottstown, LLC v. Genuardi’s Family Mkt., Inc.,

98 A.3d 645, 652 (Pa. Super. 2014) (en banc) (internal citations omitted).3
____________________________________________

3 Although Delaware substantive law applies to this matter, see RO at 4-5,
“[w]henever Pennsylvania is the chosen forum state for a civil action, our
state’s procedural rules, i.e., the Pennsylvania Rules of Civil Procedure,
govern, no matter what substantive law our courts must apply in resolving the
underlying legal issues.” ADP, Inc. v. Morrow Motors Inc., 969 A.2d 1244,
1246 n.2 (Pa. Super. 2009) (determining that, as a result, our summary
judgment scope and standard of review applied to the matter before it)
(citations omitted); see also Murray v. Janssen Pharmaceuticals, Inc.,
180 A.3d 1235, 1252 (Pa. Super. 2018) (“[P]rocedural law is the set of rules
which prescribe the steps by which the parties may have their respective
rights and duties judicially enforced, whereas substantive law is the portion of
the law which creates the rights and duties of the parties to a judicial
proceeding.”) (original brackets, quotation marks, and citation omitted); see
also Pa.R.C.P. 1038(a) (“[T]he trial of an action by a judge sitting without a
jury shall be conducted as nearly as may be as a trial by jury is conducted and
the parties shall have like rights and privileges….”). Further, both parties
agree that Pennsylvania’s scope and standard of review apply in this case.
PKA’s Brief at 3-4 (stating that Pennsylvania law governs questions of
procedure including standards of review) (citation omitted); Mr. Pass’s Brief
at 1-3 (setting forth Pennsylvania law in its Counter Statement of Scope and
Standard of Review section of his brief). Therefore, we apply our scope and
standard of review.

      However, as we will be applying Delaware substantive law, we note at
the outset that litigants may cite to unreported Delaware decisions. See
Del.Sup.Ct.R. 14(b)(vi)(B)(2) (providing guidance on citing to unreported
decisions). “Delaware permits the citation of unpublished decisions of the
Delaware courts as precedent.” Lowinger v. Oberhelman, 924 F.3d 360,
366 (7th Cir. 2019) (citing New Castle Cnty. v. Goodman, 461 A.2d 1012,
1013 (Del. 1983) (“[L]itigants before this Court may cite Orders as
precedent….”), and Issa v. Delaware State Univ., 268 F. Supp. 3d 624, 631

                                          - 12 -
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       All of PKA’s issues challenge the trial court’s award of $36,000 in

damages. Therefore, before delving into each issue, we set forth the trial

court’s rationale for its damages award:
       PKA argues the proper measure of damages in this case is the
       difference in value between the Company as represented by [the
       selling shareholders] and the actual value of the Company upon
       its purchase. [] PKA specifically argues it would have paid less for
       the Company if [the selling shareholders] disclosed Snap-On’s
       change in contract with the Company. [PKA] claims it suffered
       $2.1 million in damages as a result of [the selling shareholders’]
       omission.

       Conversely, [Mr. Pass] argues that the proper measure of
       damages is not the difference between what [PKA] paid and what
       it received; rather, the proper measure is the difference between
       the value of the Company at the time of the transaction and what
       [PKA] paid. [Mr. Pass] further argues [PKA] purchased the
       Company for less than its fair market value and received the
       benefit of the bargain despite the omission and loss of business
       from Snap-On. [Mr. Pass] also submits three alternative lost[-
       ]profits analyses for this [c]ourt’s consideration.

       A review of the record demonstrates [PKA] is entitled to
       $36,000.00 in damages. In a breach of contract case, the
       standard for proving damages is as follow[s]:

          A party seeking damages for breach of contract must be
          able to prove such damages with reasonable certainty.
          Damages in a breach of contract action must be proved with
          reasonable certainty. Otherwise, they are generally not
          recoverable.    The question of whether damages are
          speculative has nothing to do with the difficulty in
          calculating the amount, but deals with the more basic
          question of whether there are identifiable damages.

____________________________________________

n.1 (D. Del. 2017) (noting that Goodman remains good law despite a change
in the Delaware Supreme Court’s rule allowing citations to non-precedential
decisions)).

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J-A18008-20

       Printed Image of York, Inc. v. Mifflin Press, Ltd., 133 A.3d
       55, 59-60 (Pa. Super. 2016) (citations and quotations omitted).[4]

       At trial, [PKA’s] expert witness, Christopher Gregory, testified that
       the “principal concept of [his] damages analysis” was the value of
       the Company with the Snap-On Letter agreement in tact [sic] less
       the value of the Company without the Snap-On Letter agreement.
       The best indication of the value of the Company with the Snap-On
       Letter agreement, according to Mr. Gregory, is the $11.4 million
       purchase price for which [PKA] acquired the Company. Mr.
       Gregory explained that “the price paid in an arm’s length
       transaction, especially with the process that was as robust as an
       auction process[,] … is the Holy Grail of valuation indications.” Mr.
       Gregory employed the discounted cash flow analysis to determine
       [that] the value of the Company without the Snap-On Letter
       agreement was $9.3 million. Accordingly, Mr. Gregory concluded
       that the appropriate damages for [the selling shareholders’]
       breach was $2.1 million — $11.4 million minus $9.3 million.

       [Mr. Pass’s] expert witness, Thomas Pratt, testified that [PKA]
       acquired assets in excess of the purchase price. Mr. Pratt also
       testified [that] he performed several analyses to determine what
       damages might have been suffered as the result of the diminished
       sales to Snap-On. Mr. Pratt then provided this [c]ourt with three
       alternative lost[-]profits analyses[,] which yielded damages
       ranging from $36,000.00 to $109,000.00.

       For the following reasons, this [c]ourt finds Mr. Pratt’s testimony
       more credible and persuasive than Mr. Gregory’s testimony. First,
       Mr. Gregory overstated the amount of lost EBITDA associated with
       Snap-On’s change in contract with the Company by understating
       the amount of costs associated with the Snap-On business; Mr.
       Pratt correctly determined the Company lost approximately
       $109,000.00 in incremental profits from Snap-On in 2015.
       Second, Mr. Gregory’s valuation failed to consider the contractual
       rights of Snap-On pursuant to the Snap-On Letter. Third, Mr.
       Gregory failed to properly consider the large and complex size of
____________________________________________

4 Subsequently, in its Rule 1925(a) opinion, the trial court acknowledged that
“[its] [o]pinion incorrectly cited Pennsylvania law, although in only one
instance — the necessity of proving damages with reasonable certainty.” RO
at 4. However, the trial court observed that Delaware’s law on damages is
“the same[,]” and after citing to relevant Delaware cases, it concluded that
“using Delaware law does not change the [c]ourt’s analysis.” See id. at 4-5.

                                          - 14 -
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     the Company and its many other assets and liabilities. Fourth,
     Mr. Gregory failed to properly consider that Snap-On continues to
     be a single customer of [PKA’s] business despite the cancel[l]ation
     of the Snap-On Letter.

     Thus, [PKA] is unable to prove $2.1 million in damages with
     reasonable certainty where it solely relies on incredible expert
     testimony. This [c]ourt will not rewind the clock to determine
     what [PKA] would have paid for the Company based on Mr.
     Gregory’s overstated valuation. However, we recognize Snap-On
     was able to terminate the Snap-On Letter within 120 days of
     notice. Assuming [PKA] knew of the termination at the time of
     the transaction, [PKA] would be entitled to 120 days of profit[s]
     from its business with Snap-On. For these reasons, we award
     [PKA] … $36,000.00 in damages based on Mr. Pratt’s
     determination that the Company lost approximately $109,000.00
     in incremental profits from Snap-On in 2015.

TCO at 11-13 (internal citations omitted).

     Further, in its subsequent Rule 1925(a) opinion, the trial court added:
     As for the $36,000 verdict, during the trial[,] the [c]ourt heard
     testimony from two expert witnesses, both of whom discussed in
     detail various methods for calculating damages. [PKA’s] expert,
     Christopher Gregory, opined that [PKA’s] damages were
     $2,100,000, his calculation of the difference in value of the
     [C]ompany with and without the Snap-[O]n contract. The [c]ourt
     did not find this testimony credible. The defense expert, Thomas
     Pratt, likewise opined as to his calculation of damages, although
     he generally used a lost-profits analysis. The [c]ourt found this
     testimony credible, and a better measure of damages actually
     suffered by [PKA] as a result of the breach. Specifically, the
     [c]ourt agreed with Mr. Pratt’s analysis of $36,000 in lost profits…,
     as the [c]ourt found that Snap-[O]n was contractually bound to
     be a customer for only 120 days, and that $36,000 was a fair and
     reasonable estimate of lost profits suffered by [PKA] for those 120
     days.

RO at 3-4.

                                   Issue 1

                                    - 15 -
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      In PKA’s first issue, it argues that, “[a]s a matter of law, the [t]rial

[c]ourt applied an incorrect measure of damages to PKA’s acknowledged loss.”

PKA’s Brief at 19 (emphasis and footnote omitted). PKA states that “[t]he

basic elements for breach of contract in Delaware include the existence of a

contract, a breach of an obligation imposed by that contract, and ‘resultant

damage’ to the plaintiff.    This last element is key, as it means that the

damages claimed and awarded for a breach must have ‘flowed from the

defendant’s violation of the contract.’” Id. (citations omitted). PKA thereby

insists that:
      [T]he [t]rial [c]ourt’s award of 120 days of lost profits fails to meet
      this standard[,] as nothing the shareholders did caused PKA to
      lose 120 days of Snap-On profits. Rather, the shareholders’
      failure to disclose the loss of Snap-On caused PKA to overvalue
      the Company and to overpay for it. PKA’s expectation was to
      receive the Company and the warranted customer relationships,
      and its damages flow from the shareholders[’] failing to disclose
      the impairment of the Snap-On relationship. Thus, the damages
      “flowing” from the shareholders’ violation is not “lost profits,” but
      — as PKA has asserted all along — the amount by which PKA
      overpaid for the Company. Instead, the [t]rial [c]ourt illogically
      awarded damages that the Company would have been entitled to
      if Snap-On had breached the Snap-On Contract — but neither the
      Company nor Snap-On is a party to this case, nor is there any
      allegation that the Snap-On Contract was breached.

PKA’s Brief at 20 (footnote omitted; emphasis in original).

      In support of its argument, PKA cites to multiple Delaware cases,

purportedly encompassing similar factual scenarios, where the non-breaching

parties received damages constituting the difference between the amount the

purchaser paid for a company and that company’s actual value. See id. at

21-25. Additionally, PKA contends that, the lost-profits analysis based on the

                                      - 16 -
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120-day termination clause does not make sense, as “it is not the non-

disclosure of the particular contract cancellation itself that constituted the

breach of Section 3.15(a) of the Merger Agreement, but the non-disclosure of

the ‘material reduction’ of the decades-long Snap-On ‘relationship’ that the

contract represented.” Id. at 26-27. As such, PKA says that “it is the value

of the loss of this relationship, and the cash flow it represented, which is the

proper measure of damages here.” Id. at 27.

      As PKA points out, it is well-established in Delaware that:
      A claim for breach of contract … has three elements: “first, the
      existence of the contract, whether express or implied; second, the
      breach of an obligation imposed by that contract; and third, the
      resultant damage to the plaintiff.” VLIW Tech., LLC v. Hewlett–
      Packard Co., 840 A.2d 606, 612 (Del. 2003). “To satisfy the final
      element, a plaintiff must show both the existence of damages
      provable to a reasonable certainty, and that the damages flowed
      from the defendant’s violation of the contract.” eCommerce
      Indus., Inc. v. MWA Intelligence, Inc., 2013 WL 5621678, at
      *13 (Del. Ch. Sept. 30, 2013). “While courts will not award
      damages which require speculation as to the value of unknown
      future transactions, so long as the court has a basis for a
      responsible estimate of damages, and [the] plaintiff has suffered
      some harm, mathematical certainty is not required.” Thorpe v.
      CERBCO, Inc., 19 Del. J. Corp. L. 942, 963 (Del. Ch. Oct. 29,
      1993) (Allen, C.).

      “[T]he standard remedy for breach of contract is based upon the
      reasonable expectations of the parties ex ante.” Duncan v.
      Theratx, Inc., 775 A.2d 1019, 1022 (Del. 2001). “It is a basic
      principle of contract law that remedy for a breach should seek to
      give the non[-]breaching the party the benefit of its bargain by
      putting that party in the position it would have been but for the
      breach.” Genencor Int'l, Inc. v. Novo Nordisk A/S, 766 A.2d
      8, 11 (Del. 2000). “Expectation damages thus require the
      breaching promisor to compensate the promisee for the
      promisee’s reasonable expectation of the value of the breached

                                     - 17 -
J-A18008-20

      contract, and, hence, what the promisee lost.” Duncan, 775 A.2d
      at 1022.

In re El Paso Pipeline Partners, L.P. Derivative Litig., 2015 WL 1815846,

at *25 (Del. Ch. April 20, 2015). See also LaPoint v. AmerisourceBergen

Corp., 2007 WL 2565709, at *9 (Del. Ch. Sept. 4, 2007) (“To be entitled to

compensatory damages, plaintiffs must show that the injuries suffered are not

speculative or uncertain, and that the [c]ourt may make a reasonable estimate

as to an amount of damages. Yet such damages need not be demonstrated

with mathematical accuracy: [the] plaintiffs need only to lay a reasonable

foundation by which the [c]ourt may estimate their loss. On the other hand,

where the amount of damages may not be estimated with reasonable certainty

despite a showing of breach on the part of [the] defendant, the [c]ourt may

still award nominal damages.”) (footnotes omitted).

      Here, the trial court concluded that PKA did not show the existence of

damages provable to a reasonable certainty, as it found the testimony of PKA’s

expert — Mr. Gregory — not credible and less persuasive than the testimony

of Mr. Pass’s expert. TCO at 12-13. Consequently, the trial court stated that

it “will not rewind the clock to determine what [PKA] would have paid for the

Company based on Mr. Gregory’s overstated valuation.” Id. at 13. In other

words, because the trial court found Mr. Gregory’s determination of the value

of the Company with and without Snap-On to be inflated and flawed in multiple

respects, it declined to rely on his testimony to ascertain what PKA would have

paid for the Company had it known about the cancellation of the Snap-On

                                    - 18 -
J-A18008-20

Letter at the time of the transaction.5 As Mr. Pass persuasively discerns, “[a]

mere offer of a damage analysis is not the standard that must be met to

receive a damage award. Rather, the damage award must be competent and

must be believed.       A fact[-]finder, in this case, the [t]rial [c]ourt, is not

obligated to accept the testimony of any witness, and may believe all or none

of a witness[’s] testimony.” Mr. Pass’s Brief at 34-35. Further, as will be

discussed further infra, Mr. Pass’s expert — Mr. Pratt — opined that there was

no way to determine any decrease in value that went along with the Snap-On

relationship being lost.      See Issue 2, infra.   Therefore, as Mr. Pass aptly

states, “[i]n the absence of any other viable damage analysis, the [t]rial

[c]ourt concluded that the profit lost by PKA on the Snap-On relationship, for

____________________________________________

5 Thus, various cases cited by PKA prove distinguishable, as the courts in those
cases found the plaintiffs’ experts’ damages testimony credible. Cf. Cobalt
Operating, LLC v. James Crystal Enterprises, LLC, 2007 WL 2142926, at
*4 (Del. Ch. July 20, 2007) (awarding in damages the difference between the
actual value of a radio station at the time of the sale and the purchase price
where the purchaser “presented credible, and unrebutted, expert
evidence that, based on [the radio station’s] legitimate cash flow, [the radio
station] was worth substantially less at the time of the transaction than [the
purchaser] paid”) (emphasis added), and In re El Paso Pipeline Partners,
L.P., 2015 WL 1815846, at *2 (“The plaintiff’s expert demonstrated at trial
that El Paso MLP paid $171 million more for a 49% interest [in] Elba than it
would have if the General Partner had not breached the LP Agreement. The
General Partner is liable for that amount….”) (emphasis added), with
LaPoint, 2007 WL 2565709, at *10 (awarding only nominal damages where
the plaintiff failed to demonstrate that the defendant’s breach of a contract
led to damages that could be fixed to a reasonable degree of certainty, noting
that the defendant “had produced convincing evidence to suggest that even
had [it] acted in complete good faith, [the plaintiff’s former company] was
unlikely to achieve considerably greater success”).

                                          - 19 -
J-A18008-20

the 120 day notice period, was an appropriate measure of damages.” Id. at

49.6 Accordingly, given the valuation evidence before it, we conclude that the

trial court did not err in failing to award damages for the difference between

the amount PKA paid for the Company and its actual value.

                                         Issue 2

       In PKA’s second issue, it argues that “[t]he [t]rial [c]ourt erred or

abused its discretion in completely ignoring one of PKA’s damages analyses,

and in failing to consider the other.” PKA’s Brief at 27 (emphasis and footnote

omitted). It states that “PKA presented two damages valuations at trial based

upon the proper methodology under Delaware law: First, [Nirav] Amin offered

an EBITDA analysis, which calculated $1.625 million of damages.[7] Second,

Mr. Gregory offered a discounted-cash-flow analysis, which calculated $2.1

million of damages. The [t]rial [c]ourt’s failure to consider these analyses was

error.” Id.

                                  Mr. Amin’s Analysis

____________________________________________

6As Mr. Pass discerns, because the trial court found that PKA had not proffered
credible evidence on damages, the trial court could have entered a verdict for
only nominal damages. See Mr. Pass’s Brief at 35; see also LaPoint, supra.

7 Mr. Amin was an analyst at V&A Capital, an affiliate of PKA, at the time of
the at-issue deal. N.T. Trial, 2/5/18-2/7/18, at 177; see also id. at 22, 23
(Mr. Vergani’s, the owner of V&A Capital, testifying that “V[&]A is an affiliate
of [PKA] in that I am the owner of the majority of the shares of [PKA]”).
Essentially, V&A Capital acquired the Company. Id. at 248. Mr. Amin was
involved in that transaction from the beginning, gathering information and
doing “financial due diligence, market research, financial modeling and stuff.”
Id. at 192; see also id. at 177-78 (same).

                                          - 20 -
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      We begin by considering PKA’s argument that the trial court “failed to

even acknowledge, let alone consider, the alternative damages analysis

offered by … Mr. Amin.” PKA’s Brief at 28 (emphasis omitted). PKA explains

that, “[b]ecause PKA’s $11.4 million offer to purchase the Company was based

on the Company’s anticipated cash flow/EBITDA, Mr. Amin … used an EBITDA

analysis to calculate how much of that $11.4 million purchase price had

pertained to the undisclosed, lost Snap-On revenue.            This resulted in a

damages estimate of $1.625 million….” Id. (internal citations omitted). PKA

complains that, even though it raised below that the trial court should have

awarded damages based on Mr. Amin’s analysis in its post-trial motion and

Rule 1925(b) statement, none of the trial court’s opinions addressed this

issue. Id. Further, PKA claims that there is no “basis to assume that the

[t]rial [c]ourt simply found Mr. Amin to lack credibility[,]” and asserts that the

trial court’s opinions suggest that it forgot that Mr. Amin offered an alternative

analysis. Id. PKA argues that this lack of recognition was either legal error,

or at least an abuse of the court’s discretion. Id. at 29.

      We disagree.     Although PKA is correct that the trial court did not

specifically mention Mr. Amin’s analysis in either of its opinions, it is clear that

the trial court focused on the experts’ trial testimony regarding damages, and

weighed their analyses more heavily than the damages analysis of Mr. Amin,

a lay witness.   Indeed, Mr. Amin even admitted at trial that his damages

calculation is not as detailed or thorough as Mr. Gregory’s expert report. N.T.

at 266. Mr. Amin explained that his calculation constituted “kind of our initial

                                      - 21 -
J-A18008-20

estimate of the damages to provide us a framework of how the value of [the

Company] decreased … due to the loss of Snap-On. It is not … as detailed of

an analysis that an expert in this area whose job is calculating damages and

doing … other similar things would do.” Id. at 266-67. Similarly, Mr. Gregory

characterized Mr. Amin’s analysis as “more high level, more back of the

envelope, and [it] didn’t really get to the guts of the issue, which was how

much lost cash flow is there as a result of the materially lower performance of

Snap-On going forward.” Id. at 357. In addition to such promotion of Mr.

Gregory’s testimony over Mr. Amin’s at trial, “[t]he trial court, as the finder of

fact, is free to believe all, part or none of the evidence presented. Issues of

credibility and conflicts in evidence are for the trial court to resolve; this Court

is not permitted to reexamine the weight and credibility determination or

substitute our judgment for that of the fact finder.” Gamesa Energy USA,

LLC v. Ten Penn Center Associates, L.P., 181 A.3d 1188, 1192 (Pa. Super.

2018) (citations and internal quotation marks omitted).8 Accordingly, we see

no reason to grant PKA relief based on the trial court’s purported lack of

attention to Mr. Amin’s testimony.

                                Mr. Gregory’s Analysis

____________________________________________

8 Moreover, Mr. Pass persuasively argues that Mr. Amin’s analysis contains
many of the same flaws as Mr. Gregory’s analysis, discussed infra. Mr. Pass’s
Brief at 23-26. For instance, Mr. Pass points out that Mr. Amin’s analysis
“employs the same flawed ‘stand-alone’ business analysis that [Mr.] Gregory
employed, with no accounting for the risks of the single customer nature of
that business….” Id. at 26.

                                          - 22 -
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      With respect to Mr. Gregory’s analysis, PKA maintains that the trial

court’s “failure to credit [his] analysis was improper and demonstrably not

based on a credibility determination.” PKA’s Brief at 29 (emphasis omitted).

PKA advances:
      While actual credibility determinations are generally the
      prerogative of the factfinder (e.g., whether to believe a plaintiff
      when she claims a light was red, and not green), the [t]rial
      [c]ourt’s October 2018 [o]pinion reveals that its disregard of Mr.
      Gregory’s analysis was not actually based upon a credibility
      determination, but on four specific complaints about Mr. Gregory’s
      discounted-cash-flow analysis:

         For the following reasons, this [c]ourt finds Mr. Pratt’s
         testimony more credible and persuasive than Mr. Gregory’s
         testimony. First, Mr. Gregory overstated the amount of lost
         EBITDA associated with Snap-On’s change in contract with
         the Company by understating the amount of costs
         associated with the Snap-On business; Mr. Pratt correctly
         determined the Company lost approximately $109,000.00
         in incremental profits from Snap-On in 2015. Second, Mr.
         Gregory’s valuation failed to consider the contractual rights
         of Snap-On pursuant to the Snap-On Letter. Third, Mr.
         Gregory failed to properly consider the large and complex
         size of the Company and its many other assets and
         liabilities. Fourth, Mr. Gregory failed to properly consider
         that Snap-On continues to be a single customer of [PKA’s]
         business despite the cancel[l]ation of the Snap-On letter.

      [TCO at 12].

Id. at 29-30. PKA contends that “the first reason — even if true — did not

merit a complete disregard of Mr. Gregory’s methodology, and the remaining

three reasons are demonstrably false.” Id. at 30.

      Initially, PKA’s argument that the trial court did not disregard Mr.

Gregory’s analysis due to a credibility determination puzzles us. At trial, Mr.

Gregory and Mr. Pratt presented different theories on the proper measure of

                                    - 23 -
J-A18008-20

damages in this case, with Mr. Gregory, determining through a discounted-

cash-flow analysis, that PKA suffered $2.1 million in damages, and Mr. Pratt

using an alternative lost-profits calculation to opine that PKA suffered between

$36,000 and $109,000 in damages. Given these conflicting opinions, the trial

court had to make credibility determinations, as it could not believe both

experts and credit both of their estimations.       Accordingly, the trial court

determined, and stated numerous times, that it did not find Mr. Gregory’s

testimony credible.    See TCO at 12, 13; RO at 4, 5.          The four specific

complaints mentioned by the court supra provide its reasons for why it found

Mr. Gregory’s testimony less believable and persuasive than Mr. Pratt’s

testimony. Thus, it seems to us that PKA’s argument is more aptly construed

as challenging the trial court’s findings regarding credibility and weight of the

evidence, i.e., its choosing to believe Mr. Pratt over Mr. Gregory, instead of

that the trial court’s disregard of Mr. Gregory’s analysis was not based upon

a credibility determination.

      “[T]his Court has stated that we will respect a trial court’s findings with

regard to the credibility and weight of the evidence unless the appellant can

show that the court’s determination was manifestly erroneous, arbitrary and

capricious or flagrantly contrary to the evidence.” Gutteridge v. J3 Energy

Corp., Inc., 165 A.3d 908, 914 (Pa. Super. 2017) (en banc) (citation

omitted). Further, we reiterate that,
      [i]n a non-jury trial, the factfinder is free to believe all, part, or
      none of the evidence, and the Superior Court will not disturb the
      trial court’s credibility determinations. Assessments of credibility

                                     - 24 -
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     and conflicts in evidence are for the trial court to resolve; this
     Court is not permitted to reexamine the weight and credibility
     determinations or substitute our judgments for those of the
     factfinder. The test is not whether this Court would have reached
     the same result on the evidence presented, but rather, after due
     consideration of the evidence the trial court found credible,
     whether the trial court could have reasonably reached its
     conclusion.

Id. at 916 (internal citations and quotation marks omitted).

     To begin, we set forth Mr. Gregory’s following description of the

discounted-cash-flow methodology that he used to ascertain the difference

between the represented value and actual value of the Company:
     I started with what I call Step 1, or the calibration step. And I
     took advantage of the fact that we had a purchase price that had
     been negotiated between arm’s length third parties, and at the
     same time, we had a deal model that had forecasted cash flows
     that were prepared contemporaneous with the closing of the
     transaction.

     So I was able to use discounted cash flow methodologies to
     estimate the required rate of return or [what we] call the IRR, the
     internal rate of return[,] that was implied by that arm’s length
     purchase price on the one hand and the cash flows that were
     prepared at the time the purchase price was arrived at.

     So I calculated this discount, what I call the discount rate or IRR,
     to be 12.7 percent, so that calibrated discount rate is then
     appropriate to use in the ex-Snap-On, using your terminology, set
     of cash flows, which was the second step in my analysis.

     So I did a calibration, came up with the discount rate of 12.75
     percent and then in Step 2, I adjusted -- I forecasted new cash
     flows based on the materially reduced level of sales to Snap-[O]n.

     We spent quite a bit of time going through precisely how I did
     that. Once you have those new cash flows, you can apply the
     same discount rate that I developed in Step 1 to the new cash
     flows to arrive at the corrected purchase price or the value of the
     company ex[-]Snap-[O]n, and then the difference between what
     was paid and the value actually received, because of this reduced
     Snap-[O]n relationship, again, was my damages analysis.

                                    - 25 -
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N.T. at 305-06.

      At trial, Mr. Pass’s expert, Mr. Pratt, contested Mr. Gregory’s analysis on

numerous fronts, and Mr. Pratt’s “fundamental conclusion was that [Mr.

Gregory] significantly overstated … the financial damages that may have been

experienced by the buyers as a result of the termination of the Snap-[O]n

agreement.” Id. at 515. Aside from disagreeing with Mr. Gregory about the

amount of costs associated with the Snap-On business, see id. at 518-24, Mr.

Pratt assessed that Mr. Gregory used only one common valuation method to

look at the value of the Company, id. at 530-31, testified that he had not seen

any evidence that PKA performed any discounted-cash-flow analysis when it

evaluated the Company before buying it, id. at 516, 517-18, and attacked Mr.

Gregory’s competence by observing that Mr. Gregory had to correct his expert

report before trial due to a mismatch of the cash flows he used in his analysis,

id. at 529-30; see also id. at 410-11.

      Mr. Pratt also criticized Mr. Gregory’s analysis for treating the risk posed

by the Snap-On contract the same as the risk posed by a whole enterprise

with multiple contracts and customers through the IRR — or multiplier — he

used, see id. at 547-51, 622-23. Specifically, Mr. Pratt testified:
      [Mr. Pass’s counsel:] And when you’re valuing an enterprise and
      applying a multiplier, you apply that multiplier to the entire
      enterprise; is that correct?

      [Mr. Pratt:] It can be applied to enterprise value; it can be applied
      to invested capital. Again, you have to make sure that you’re
      matching multiples and incomes streams to get to an answer, but
      yes.

                                     - 26 -
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     [Mr. Pass’s counsel:] I guess my question simply was have you
     ever seen a valuation where parts of the business are valued
     based upon a multiplier and then they aggregate all those
     multipliers or multiple numbers to come to a valuation?

     [Mr. Pratt:] No.

     [Mr. Pass’s counsel:] All right. And when you value an enterprise,
     as you said, part of that multiplier is the risk associated with the
     enterprise?

     [Mr. Pratt:] Yes.

     [Mr. Pass’s counsel:] And if an enterprise has a broad group of
     customers who have been customers for a long time --

     [Mr. Pratt:] Uh-huh.

     [Mr. Pass’s counsel:] -- barring any unusual circumstances, that
     presents one sort of risk level; correct?

     [Mr. Pratt:] Yes.

     [Mr. Pass’s counsel:] And if an enterprise has a single customer,
     that represents another risks rating; correct?

     [Mr. Pratt:] Yes.

     [Mr. Pass’s counsel:] And if an enterprise has customers that have
     certain contracts where the price is set and there is a term set and
     there is a quantity set and you know exactly what this contract is
     going to … generate in terms of revenue and profit, that would
     represent one type of risk; correct?

     [Mr. Pratt:] Correct.

     [Mr. Pass’s counsel:] And then if you have contracts where the
     price is renewed or revised annually, and there is termination
     provisions for convenience, no obligation to purchase in addition,
     that would represent another category of risk?

     [Mr. Pratt:] Yes.

     [Mr. Pass’s counsel:] And that’s what we have here?

     [Mr. Pratt:] That’s correct.

     [Mr. Pass’s counsel:] Now, in this particular case, we have this
     enterprise valuation, and if we take one contract, which is the

                                    - 27 -
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     Snap-[O]n contract, out, and then perform a valuation based just
     on that exclusion, that’s what Mr. Gregory did; correct?

     [Mr. Pratt:] That’s what he attempted to do, yes. Yes.

     [Mr. Pass’s counsel:] Okay. So now if you take one contract out
     and it doesn’t have this requirement…, there is no obligation to
     buy anything under this contract, is the risk and is the way you
     would look at that the same as the way you would look at an
     enterprise with multiple parties, multiple contracts, multiple
     relationships?

     [Mr. Pratt:] No. I wouldn’t have them be comparable, no.

     [Mr. Pass’s counsel:] Would the risk of valuing a business with one
     contract such as the Snap-[O]n contract be higher than the risk
     associated with the value of the full enterprise?

     [Mr. Pratt:] Yes.

     [Mr. Pass’s counsel:] And if the risk is higher, what does that do
     to the price?

     [Mr. Pratt:] The risk is higher, that drives the price down.

     [Mr. Pass’s counsel:] Okay. So if I were hypothetically to say, []I
     want you to value a business that has the assets that this business
     has or enough of those assets to serve just one customer, Snap-
     On, and that’s their only customer, and the revenue are what they
     were up through 2013, are you going to put the same kind of
     value on that that you would put on a total enterprise?

     [Mr. Pratt:] No.

     [Mr. Pass’s counsel:] And isn’t that what Mr. Gregory did?

     [Mr. Pratt:] Actually, I think he did even more than that. Because
     he ends up with a disproportionate … value related to Snap-[O]n
     compared to Snap-[O]n’s contribution to the business.

     [Mr. Pass’s counsel:] So not only were the revenue numbers or
     the profit numbers wrong, but also he treated this contract the
     same as this whole enterprise in terms of risk and the value of
     that contract?

     [Mr. Pratt:] Yes.

Id. at 548-51.

                                    - 28 -
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        Furthermore, Mr. Pratt testified that Mr. Gregory’s analysis incorrectly

represented that PKA purchased the Company for $11.4 million, instead of

$7.4 million. See id. at 515-16, 529, 538-39.9 Mr. Pratt stated that the value

of the Company at the time of the transaction exceeded the net actual

purchase price of $7.4 million. Id. at 538-40.10 As a result, Mr. Pratt reached

____________________________________________

9   In Mr. Pratt’s expert report, he explained:
        The Gregory Report erroneously assumes that the Buyer paid
        $11.4 million for the Company at closing. Although $11.4 million
        was the Base Merger Consideration amount indicated in the
        Agreement, the Base Merger Consideration was reduced by $4.0
        million for an Underfunded Pension Liability Amount. Therefore,
        the net actual purchase price for the Company’s invested capital
        was $7.4 million ($11.4 million-$4.0 million).

Joint Exhibit 42, at 4 (footnote omitted).

10In Mr. Pratt’s report, pursuant to the three common approaches used in
determining fair market value (i.e., the income approach, the market
approach, and the asset approach), he further detailed:
        Given the net asset value of approximately $9.3 million, and the
        indicated values under the income and market approaches of
        $10.6 million and $9.3 million to $10.1 million, respectively, the
        fair market value of the Company as of the transaction date would
        have ranged between approximately $9.3 million and $10.6
        million.

        The net actual amount paid by the Buyers of $7.4 million was
        already less than the fair market value of the Company according
        to our analysis. Therefore, the Buyers received the benefit of their
        bargain in spite of the Omission and the loss of business from
        Snap-On from the Termination.

Joint Exhibit 42, at 7-8.

                                          - 29 -
J-A18008-20

a different conclusion about the actual damages suffered as a result of the

diminished Snap-On relationship, stating:
       [T]he items that we considered were that because the assets were
       greater than the purchase price, and the assets didn’t change with
       or without the Snap-On relationship, that there was no way to
       determine any decrease in value that went along with that Snap-
       On relationship being lost, because the assets are always an
       undergirding or sanity check on value.

       So the asset values didn’t change either way, and so then [we]
       went to look for, okay, well, if there is no change in value that’s
       indicated, fair market value, what other methods would be used
       or could be used to evaluate the loss.

       In that case, we just looked at the simple lost[-]profits calculation.

Id. at 539-40; see also id. at 608 (Mr. Pratt’s testifying that the purchase

price that PKA paid for the Company “is less than the tangible assets so …

there can be no significant intangible value to those customer relationships,

given the price that was paid in this case”).11

____________________________________________

11  Given the numerous errors pointed out by Mr. Pratt with Mr. Gregory’s
method, including the amount PKA actually paid for the Company, we reject
PKA’s argument that the trial court should have “simply substituted Mr. Pratt’s
final incremental profits number into Mr. Gregory’s analysis — or even simply
have relied on Mr. Pratt’s own discounted-cash-flow analysis….” PKA’s Brief
at 30-31. We further observe that, when asked if Mr. Pratt thought Mr.
Gregory’s discounted-cash-flow methodology was fine other than the cost
input, Mr. Pratt responded, “It is not my approach; it was his. I was just
correcting and reflecting adjustments or corrections to his analysis.” N.T. at
592-93. See also id. at 609 (Mr. Pratt’s criticizing Mr. Gregory’s analysis as
it implies that “all of the value is related to the customer relationships[,]”
which Mr. Pratt said cannot be true given “the amount of the tangible assets
of the business”).

                                          - 30 -
J-A18008-20

       Based on the foregoing, we determine that the record supports the trial

court’s findings with regard to the credibility and weight of the evidence.12

PKA has not shown that the court’s findings were “manifestly erroneous,

arbitrary and capricious or flagrantly contrary to the evidence.” Gutteridge,

165 A.3d at 914. Mr. Pass presented evidence that Mr. Gregory’s analysis

understated the costs associated with Snap-On’s business, did not properly

consider Snap-On’s contractual rights in valuing the business, did not properly

account for the Company’s large size and assets, and did not properly

contemplate how pricing is affecting the Company’s ability to obtain work from

Snap-On following the acquisition. Further, there is support in the record for

the $36,000 in damages ultimately awarded by the trial court. See N.T. at

539-42 (Mr. Pratt’s endorsing a lost-profits calculation yielding $36,000 in

damages); see also Joint Exhibit 42. Accordingly, the trial court’s failure to

credit Mr. Gregory’s analysis was not improper.

                                         Issue 3

       In PKA’s third issue, it argues that the trial court “erred in holding that

PKA failed to establish its damages ‘with reasonable certainty’ when PKA
____________________________________________

12 In addition to the above-stated evidence, we note that Mr. Gregory was
unaware that Snap-On could terminate the agreement the day after the
merger, see N.T. at 352-53, and he did not know that pricing competition had
become fierce and that the Company lost (and continued to lose) Snap-On’s
business because the Company’s pricing was undercut. Id. at 354-55; see
also id. at 218-22 (Mr. Amin’s acknowledging that companies have to price
their products so they can make a profit and sell them, and that after the
acquisition, the Company submitted a bid for $2.28 million worth of work to
Snap-On, and did not get the work because its pricing was higher than its
competitor on at least $1.5 million dollars of that work).

                                          - 31 -
J-A18008-20

presented two alternate, detailed damages analyses.”         PKA’s Brief at 35

(emphasis and footnote omitted). Quoting Thorpe, 19 Del. J. Corp. L. at 963,

PKA explains that, “[w]hile courts will not award damages which require

speculation as to the value of unknown future transactions, so long as the

court has a basis for a responsible estimate of damages, and [the] plaintiff

has suffered some harm, mathematical certainty is not required.” PKA’s Brief

at 35-36. PKA contends that its “two alternate damages analyses — which

were supported by financial statistics, documentation, detailed calculations,

and testimony — more than meet this standard.” Id. at 37. In addition, it

says that Mr. Pratt “used similar valuation methodologies in his own expert

report, showing that PKA’s valuations were far from speculative[,]” and, as

such, the trial court “had at least five competing valuations of the Company

without Snap-On — from both parties — that could have served as a basis to

award PKA the proper measure of damage….”            Id. (emphasis omitted).

According to PKA, the trial court inexplicably “abandoned valuation completely

and resorted to the wrong measure of damages[,]” and therefore the trial

court’s finding that PKA failed to prove its damages with ‘reasonable certainty’

was error. Id.

      No relief is due. As Mr. Pass aptly asserts:
      Based upon all of the evidence and testimony, the [t]rial [c]ourt
      held:

         Thus, [PKA] is unable to prove $2.1 million in damages with
         reasonable certainty where it solely relies on incredible
         expert testimony.

      [TCO at 13].

                                     - 32 -
J-A18008-20

      Perhaps due to the use of the [t]rial [c]ourt’s phrase “reasonable
      certainty[,”] PKA confuses the burden of proving damages with
      “reasonable certainty” with the overarching burden of proving by
      credible evidence the damages claimed. PKA bears the burden of
      proof and the burden of persuasion with respect to its damage
      claims. As the [t]rial [c]ourt said, if the only evidence offered to
      support its damage claim is the “incredible” testimony of a witness
      - a witness that the [t]rial [c]ourt specifically found not to be
      credible [-] that burden of proof is not met.

      PKA[] is attempting to use the phrase “reasonable certainty” to
      bootstrap an argument that the evidence was sufficiently specific
      to pass the “reasonable certainty” test. However, as noted above,
      the phrase was not used as PKA would have this Court believe.
      Rather, the phrase was used to communicate that PKA had failed
      entirely in its burden of proof, because its expert was not believed.
      The [t]rial [c]ourt did not find that Mr. Gregory’s testimony
      was not precise enough. Instead, the [t]rial [c]ourt found
      that [Mr.] Gregory’s testimony was simply not believable.

Mr. Pass’s Brief at 22-23 (some emphasis added; some emphasis omitted).

We agree. Further, to the extent PKA complains that the trial court should

have used one of Mr. Pratt’s valuations, we reiterate that Mr. Pratt did not

recommend using such valuations to measure damages, but instead endorsed

applying a lost-profits calculation. See Issue 2, supra. Therefore, no relief

is due.

                                    Issue 4

      In PKA’s fourth and final issue, it argues that “the amount of damages

awarded was grossly inadequate, does not make sense based on the [t]rial

[c]ourt’s other factual findings, and does not have a reasonable relationship

to the loss suffered by PKA.’”     PKA’s Brief at 38 (emphasis and footnote

omitted). Quoting Kiser v. Schulte, 648 A.2d 1, 4 (Pa. 1994), PKA asserts

that “[a] damages award will be set aside as inadequate ‘where it clearly

                                     - 33 -
J-A18008-20

appears from uncontradicted evidence that the amount of the verdict bears

no reasonable relation to the loss suffered by the plaintiff.’” PKA’s Brief at 38.

PKA argues that “[t]he intentional (or negligent) concealment of the loss of a

$3 million-per-year customer, which constituted more than 10% of the

Company’s revenue over an extensive period of time, is clearly worth

significantly more than $36,000.     The [t]rial [c]ourt’s low award therefore

bears no ‘reasonable relation’ to PKA’s loss, and should be overturned.” Id.

at 40.

         This argument lacks merit. PKA’s reliance on Kiser is misplaced. In

that case, “the uncontroverted testimony of the             [a]ppellee’s expert

established that the net economic loss resulting from [the decedent’s] death

ranged from $232,400 to $756,081.43. The defense did not present any other

experts or any other evidence to the contrary on the question of damages.”

Kiser, 648 A.2d at 6 (footnote omitted). Nevertheless, the jury awarded the

appellee only $25,000 in damages. Id. at 3. Our Supreme Court vacated the

jury’s verdict and remanded for a new trial on damages, as it could “find no

basis for this award in any of the evidence produced at trial.” Id. at 5. In

doing so, the Court determined that “the jury totally disregarded the only

evidence presented on the question of damages and settled on a somewhat

capricious and inadequate amount of $25,000. The jury verdict here simply

does not bear any rational relationship to the uncontroverted testimony

presented by [the appellee’s expert].” Id. at 6 (footnote omitted).

                                     - 34 -
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         The circumstances of Kiser are clearly distinguishable from the matter

at hand.      Here, the parties presented competing evidence on the issue of

damages.       Even more, Mr. Pass’s expert specifically submitted a damages

analysis ascertaining that PKA suffered $36,000 in damages due to the selling

shareholders’ breach. Therefore, unlike in Kiser, the evidence produced at

trial provided a basis for the trial court’s award. Thus, this argument also

fails.

                                  Mr. Pass’s Appeal

         We now turn to Mr. Pass’s cross-appeal challenging the trial court’s

award of attorneys’ fees and costs to PKA in the amount of $384,309.42. He

raises the following issue for our review:
         Was the [t]rial [c]ourt correct in awarding attorney[s’] fees and
         costs under the terms of the [m]erger [a]greement and the
         findings of the [t]rial [c]ourt?

Mr. Pass’s Brief at 4.

         We apply the following standard of review:
         Our standard of review of an award of attorney[s’] fees is well
         settled: we will not disturb a trial court’s determinations absent
         an abuse of discretion. A trial court has abused its discretion if it
         failed to follow proper legal procedures or misapplied the law.

Kessock v. Conestoga Title Insurance Co., 194 A.3d 1046, 1059 (Pa.

Super. 2018) (citation omitted).13

                            Reasonableness of Fee Award

____________________________________________

13 Mr. Pass failed to include a statement of the standard of review for this
claim in his brief, so we apply the standard set forth by PKA. Mr. Pass’s Brief
at 1-3.

                                          - 35 -
J-A18008-20

       Mr. Pass advances three sub-arguments in support of his claim that PKA

is not entitled to an award of attorneys’ fees and costs in the amount of

$384,309.42. First, he complains that “the fees awarded were unreasonable

in light of the outcome.”       Mr. Pass’s Brief at 49 (emphasis omitted).    The

Delaware Supreme Court has explained:
       Delaware law dictates that, in fee shifting cases, a judge
       determine[s] whether the fees requested are reasonable. To
       assess a fee’s reasonableness, case law directs a judge to consider
       the factors set forth in the Delaware Lawyers’ Rules of Professional
       Conduct, which, include:

          (1) the time and labor required, the novelty and difficulty of
          the questions involved, and the skill requisite to perform the
          legal service properly;

          (2) the likelihood, if apparent to the client, that the
          acceptance of the particular employment will preclude other
          employment by the lawyer;

          (3) the fee customarily charged in the locality for similar
          legal services;

          (4) the amount involved and the results obtained;

          (5) the time limitations imposed by the client or by the
          circumstances;

          (6) the nature and length of the professional relationship
          with the client;

          (7) the experience, reputation, and ability of the lawyer or
          lawyers performing the services; and

          (8) whether the fee is fixed or contingent.

Mahani v. Edix Media Group, Inc., 935 A.2d 242, 245-46 (Del. 2007)

(footnotes omitted).14
____________________________________________

14Both parties agree that Delaware law applies to evaluating the trial court’s
fee award.

                                          - 36 -
J-A18008-20

      Though Mr. Pass does not dispute the quality of PKA’s representation,

the time and labor required, and the hourly rates of PKA’s counsel, he argues

that, when weighing these factors, particularly the ‘results obtained’ factor,

“the scale tips in favor of an award of significantly less than the fees and

expenses sought in this matter.” Mr. Pass’s Brief at 51, 53. Mr. Pass observes

that, in Mahani, the Delaware Supreme Court upheld an award of

$103,454.50 in attorneys’ fees and $6,184.28 in expenses where the plaintiff

had received an award of $16,500.06 in damages on a $45,000 claim. Id. at

51 (citing Mahani, 935 A.2d at 245). However, Mr. Pass points out that, in

Mahani, the trial court “found that the defendant’s ‘refusal to cooperate at

every stage of the proceedings outweighed [the plaintiff’s] limited trial success

and contributed significantly to the excessive number of hours [the plaintiff]

spent litigating the case.’”    Id. (quoting Mahani, 935 A.2d at 243).        In

comparing Mahani to the case at bar, Mr. Pass discerns that the award in

Mahani represented more than 36% of the amount claimed whereas PKA was

awarded about 2% of the amount it claimed to be due. Id. at 52. Moreover,

he adds that his conduct in this matter did not involve contemptuous behavior.

Id.

      Here, after recognizing that “the parties have generally stipulated to the

reasonableness of the bills regarding time spent, the complexity of the issues,

etc.,” the trial court rationalized:
      [Mr. Pass’s] primary issue is with … the results achieved.

      [Mr. Pass] argues that because the verdict of $36,000 was
      significantly below the $2,100,000 sought by [PKA], the result

                                       - 37 -
J-A18008-20

      achieved was not one that would warrant the award of significant
      attorneys’ fees. However, this case was about more than merely
      the amount of damages to be awarded, as [Mr. Pass’s] posture at
      trial was that there was no breach. [PKA] sought to have this
      [c]ourt find one or more breaches of contract, and the [c]ourt so
      found.

      We therefore reject any contention that [PKA’s] trial success was
      limited. In any event, the amount of trial success would not limit
      our discretion. “The reasonableness of attorneys’ fees and other
      expenses in a contractual fee shifting case should be assessed by
      reference to legal services purchased by those fees, not by
      reference to the degree of success achieved in the litigation.”
      Mahani[, 935 A.2d] at 248. To the extent that [Mr. Pass] argues
      that the attorneys’ fees are excessive in relation to the actual
      verdict, the Mahani [C]ourt allowed an award of $103,454.50 in
      attorneys’ fees and $6,184.28 in costs, on a $16,500.06
      compensatory damage award. Id. The fact is that it is undisputed
      that [the selling shareholders] breached the Merger Agreement,
      which resulted in significant legal costs to [PKA]. This [c]ourt finds
      [PKA] should be reimbursed for all reasonable costs resulting from
      the [selling shareholders’] breach, and the [c]ourt finds attorneys’
      fees of $384,309.42 to be reasonable under the circumstances.

RO at 7-8. We ascertain no abuse of discretion. Further, we note that the

Mahani Court stated that “there is no law that stipulates that the amount of

the prevailing party’s attorneys’ fees and other expenses awarded pursuant

to a contractual fee provision must be less than or in proportion to the amount

of its award for damages.” Mahani, 935 A.2d at 248 n.23. Thus, we decline

to disturb the trial court’s award on this basis.

                     Costs Related to Expert Witness Fees

      Second, Mr. Pass argues that, because the trial court found PKA’s expert

testimony to be unhelpful in determining the case, PKA should not be awarded

expert witness fees. Mr. Pass’s Brief at 53-54. He explains that “it is apparent

that Delaware law permits a court to consider the helpfulness of expert

                                     - 38 -
J-A18008-20

testimony in deciding the reasonableness of a request for expert witness fees.”

Id. at 54.

      In the case sub judice, the trial court explained why it included expert

witness fees in its award as follows:
      [Mr. Pass] does not argue that the fee was excessive in terms of
      what a typical expert would have charged, or the amount of time
      spent by the expert. The court’s reliance on an expert’s opinion
      is not a prerequisite to an award for the costs of that expert, so
      long as the testimony is helpful. Arbitrium (Cayman Islands)
      Handels AG v. Johnson, 705 A.2d 225 (Del. Ch. 1997). See
      also Weinberger v. UOP Inc[.], 517 A.2d 653[, 657] (Del. Ch.
      1986), where the court held it was “not unmindful of the fact that
      the discounted cash flow analysis advanced by [the] plaintiffs’
      expert was not adopted by this [c]ourt either at the original trial
      or on remand. [H]owever, reliance upon the expert is not a
      prerequisite to the award of fees.” Again, it was [Mr. Pass’s]
      breach of the Merger Agreement that resulted in the instant
      litigation, which required the retention of the expert witness.
      Therefore, [PKA] is entitled to be reimbursed for that expense.

RO at 10.

      Mr. Pass has not convinced us that the trial court abused its discretion

in this regard. He cites to Barrows v. Bowen, 1994 WL 514868 (Del. Ch.

Sept. 7, 1994), explaining that the court in that case declined to award expert

witness fees where it found the expert testimony not helpful to the resolution

of the case. Mr. Pass’s Brief at 53. However, the expert in that case was to

evaluate the mental capacity of an elderly person, and the court explained

that it “did not give weight” to that expert’s opinion as the expert “had never

met with” the elderly person, and “derived her conclusions after assessing a

mere portion of the evidence” that was before the court. Barrows, 1994 WL

514868, at *3. The Barrows Court explicitly stated that it “did not find [the

                                    - 39 -
J-A18008-20

expert’s] opinion helpful in assessing [the elderly person’s] mental condition

or on the legal questions of any consequent incapacity to contract.            [The

expert] had no exposure to [the elderly person].”         Id. What is more, the

Barrows Court opined that “[t]he evaluation of the mental capacity of an

elderly person can be difficult, as the court knows from many litigations over

testamentary capacity. [The expert], in my opinion, did not provide evidence

that substantially advance[s] that inquiry in this instance.” Id. Conversely,

in the case at bar, the trial court did not specifically find Mr. Gregory’s

testimony unhelpful, but instead “gave more weight to the testimony of the

defense expert, Mr. Pratt, rather than [PKA’s] expert, Mr. Gregory.” RO at 5;

see also TCO 12 (stating that it “finds Mr. Pratt’s testimony more credible

and persuasive than Mr. Gregory’s testimony”). Moreover, as the trial court

mentioned, it did not have to rely on Mr. Gregory’s opinion in order to award

expert witness fees to PKA. See also Weinberger, supra. Accordingly, Mr.

Pass has not demonstrated that the trial court abused its discretion on this

basis.

                                Indemnity Provision

         Finally, Mr. Pass argues that “[t]he indemnity provision of the acquisition

agreement precludes recovery of attorneys’ fees and costs where the

aggregate recovery was less than $100,000.” Mr. Pass’s Brief at 54 (emphasis

omitted). To address this claim, we set forth the relevant provisions of the

agreement, which provide the following:

                                        - 40 -
J-A18008-20

      Section 8.02 Indemnification By Shareholders. Subject to the
      other terms and conditions of this Article VIII, the Shareholders,
      severally and not jointly (in accordance with their Pro Rata
      Shares), shall indemnify and defend each of Parent and its
      Affiliates (including the Surviving Corporation) and their
      respective    Representatives      (collectively,  the    “Parent
      Indemnitees”) against, and shall hold each of them harmless
      from and against, and shall pay and reimburse each of them for,
      any and all Losses incurred or sustained by, or imposed upon, the
      Parent Indemnitees based upon, arising out of, with respect to or
      by reason of:

         (a) any inaccuracy in or breach of any of the representations
         or warranties of the Company contained in this Agreement
         or in any certificate or instrument delivered by or on behalf
         of the Company pursuant to this Agreement as of the date
         such representation or warranty was made or as if such
         representation or warranty was made on and as of the
         Closing Date (except for representations and warranties
         that expressly relate to a specified date, the inaccuracy in
         or breach of which will be determined with reference to such
         specified date);

         (b) any breach or non-fulfillment of any covenant,
         agreement or obligation to be performed by the Company
         pursuant to this Agreement;

                                     ***

      Section 8.04 Certain Limitations. The indemnification provided
      for in Section 8.02 and Section 8.03 shall be subject to the
      following limitations:

         (a)      (i) Shareholders shall not be liable to the Parent
         Indemnitees for indemnification under Section 8.02(a)
         until the aggregate amount of all Losses in respect of
         indemnification under Section 8.02(a) exceeds $100,000
         (the “Basket”), in which event the Shareholders shall be
         required to pay or be liable for all such Losses in excess of
         $50,000. (ii) The aggregate amount of all Losses for which
         Shareholders shall be liable pursuant to Section 8.02(a)
         and Section 6.03 shall not exceed $2,250,000 (the “Cap”).

Joint Exhibit 25, at 55, 56.

      The agreement defines “Losses” as:

                                    - 41 -
J-A18008-20

      “Losses” means losses, damages, liabilities, deficiencies, Actions,
      judgments, interest, awards, penalties, fines, costs or expenses
      of whatever kind, including reasonable attorneys’ fees and the
      cost of enforcing any right to indemnification hereunder and the
      cost of pursuing any insurance providers; provided, however, that
      “Losses” shall not include punitive damages, except to the extent
      actually awarded to a Governmental Authority or other third party,
      or any consequential damages, except to the extent awarded, paid
      or incurred in connection with a claim by a Governmental
      Authority or other third party.

Id. at 9 (emphasis in original).

      We further observe that “[t]he interpretation of the terms of a contract

is a question of law for which our standard of review is de novo, and our scope

of review is plenary.”   Kessock, 194 A.3d at 1059 (citation omitted).        In

addition, Delaware’s Supreme Court has explained:
      Delaware law adheres to the objective theory of contracts, i.e., a
      contract’s construction should be that which would be understood
      by an objective, reasonable third party. When interpreting a
      contract, this Court will give priority to the parties’ intentions as
      reflected in the four corners of the agreement, construing the
      agreement as a whole and giving effect to all its provisions.
      Contract terms themselves will be controlling when they establish
      the parties’ common meaning so that a reasonable person in the
      position of either party would have no expectations inconsistent
      with the contract language. Under standard rules of contract
      interpretation, a court must determine the intent of the parties
      from the language of the contract.

Salamone v. Gorman, 106 A.3d 354, 367-68 (Del. 2014) (internal quotation

marks and footnotes omitted).

      Here, the trial court concluded that PKA’s losses “are in excess of

$100,000 for purposes of Section 8.04.        [PKA’s] losses are the $36,000

verdict, plus the $384,309.42 in fees and costs.” RO at 9. Mr. Pass contests

this determination, asserting that, under the definition of “Losses,” “the

                                     - 42 -
J-A18008-20

attorney[s’] fees and costs are recoverable only for ‘… enforcing any right to

indemnification…[.]’” See Mr. Pass’s Brief at 57 (emphasis in original). He

thereby contends:
      [W]hen evaluating the claim for attorney[s’] fees, the question is
      whether PKA has a ‘right to indemnification[.’] The answer is –
      no. As noted above, the indemnification provision itself states
      that “… the shareholders shall not be liable … for indemnification…”
      unless certain conditions are met, including the condition that the
      indemnification loss exceeds $100,000, and even then, there is no
      liability for the first $50,000 of any indemnification loss.

      In this case, PKA was awarded $36,000, an amount not sufficient
      to make the shareholders liable for indemnification. Simply
      stated, if there is no liability for indemnification, there is no
      corresponding right to indemnification. If there is no right to
      indemnification, there can be no award for attorney[s’] fees and
      costs, which under the express terms of the [a]cquisition
      [a]greement, are only to be awarded for enforcing a “right to
      indemnification[.”]

Id. (emphasis in original).

      We reject this argument. The plain language of Section 804(a)(i) states

that the selling shareholders shall not be liable for indemnification pursuant to

Section 8.02(a) until the aggregate amount of all Losses exceeds $100,000.

The definition of Losses specifically includes expenses of whatever kind,

including reasonable attorneys’ fees and the cost of enforcing any right to

indemnification.   As PKA indicates, Mr. Pass “engages in significant verbal

gymnastics to create ambiguity where none exists.” PKA’s Reply Brief at 24.

We agree with PKA, and determine that PKA’s losses are in excess of $100,000

for purposes of Section 8.04(a)(i).

                                      - 43 -
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       Nevertheless, the trial court recognized in its Rule 1925(a) opinion that

Mr. Pass “may exclude the first $50,000 of losses in accordance with Section

8.04(a)[,]” and therefore noted that PKA’s “[j]udgment on the [v]erdict should

be revised to reflect this.” RO at 9.15 We agree with the trial court that, if

Section 8.04(a)(i) applies, it should subtract $50,000 from PKA’s award.

However, PKA contends that Section 8.04(a)(i) should not apply to reduce its

recovery because the trial court found that the selling shareholders committed

a breach of affirmative obligations and covenants under Section 5.05(a) of the

Merger Agreement, which PKA says is not subject to Section 8.04(a)(i)’s

limitations because it falls under Section 8.02(b), not Section 8.02(a). See

generally PKA’s Reply Brief at 21-23.16 Though PKA raised this argument

below, it does not appear to us that the trial court ever addressed it. See

PKA’s Memorandum Regarding Reasonableness of Attorneys’ Fees and Costs,

3/29/19, at 11-12. Consequently, we vacate the trial court’s judgment, and

____________________________________________

15 We note that the trial court “did not write an explanation” for its award of
attorneys’ fees and costs until its Rule 1925(a) opinion. See RO at 6.

16 See also PKA’s Reply Brief at 23 (asserting that the trial court “found that
one of the breaches was under Section 5.05(a) of the Merger Agreement,
which constituted a breach of a covenant and affirmative obligation, not a
mere representation or warranty. As a result, the shareholders’ obligation to
indemnify falls under Section 8.02(b) of the Merger Agreement, which is not
subject to the limitations of Section 8.04(a)(i)…”) (emphasis in original); see
also TCO at 8-9, 10 (finding that the Company and the selling shareholders
are liable for breaching Section 5.05(a) of the Merger Agreement, which
“required the Company to notify PKA of any ‘fact, circumstance, event, or
action’ that could either have had a Material Adverse Effect on the Company,
or which could have resulted in one of the Company’s above representations
and warranties not being true and correct”) (citation omitted).

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remand for it to ascertain whether Section 8.04(a)(i)’s limitations apply given

the breaches made by the selling shareholders. If it finds Section 8.04(a)(i)’s

limitations indeed apply, the trial court should reduce PKA’s judgment by

$50,000, in light of that provision’s requirements.

      Judgment vacated. Case remanded. Jurisdiction relinquished.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 10/1/2020

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