Court Opinion

ID: 4967742
Source: CourtListenerOpinion
Date Created: 2021-09-24 16:25:05.754821+00
Date Added: 2024-06-11T08:16:19.491934
License: Public Domain

DISSENTING OPINION BY
Judge LEADBETTER.
Respectfully, I dissent. In concluding that Appellants have standing as intended third-party beneficiaries of the 1977 Closeout Agreement between the City and the Redevelopment Authority, I believe that the majority misconstrued the language of the contract and created intent, in the absence of intent. In addition, I believe that the majority erred 1) in concluding that the trial court erroneously considered extrinsic evidence in ascertaining intent; and 2) in rejecting the trial court’s factual determination that the parties to the Closeout Agreement did not intend to confer any benefit on Appellants or to include their property within the terms of the agreement.
In Guy v. Liederbach, 501 Pa. 47, 61, 459 A.2d 744, 751 (1988), our Supreme Court adopted Section 302 of the Restatement (Second) of Contracts (1979), which provides a limited exception to the strict rule that a third party’s rights must be expressly provided in the contract. Even though the Court carved out a limited exception to that strict rule, it has been noted that “Guy did not alter the requirement that in order for one to achieve third[-]party beneficiary status, that party must show that both parties to the contract so intended, and that such intent was within the parties’ contemplation at the time the contract was formed.” Kirschner v. K & L Gates, LLP, 46 A.3d 737, 762 (Pa.Super.2012) (citation omitted). Therefore, even under the exception, the keystone inquiry is the intent of the contracting parties.1
*320As an initial matter, I disagree with the majority’s interpretation of the Closeout Agreement. Contrary to its view, the agreement appears on its face to cover properties intended to be condemned and taken, and not those that became the subject of de facto taking claims after the agreement was executed. It certainly does not express an intent to benefit Appellants. Pursuant to the Closeout Agreement, the parties entered into a financial settlement of the Neighborhood Development Program whereby the Redevelopment Authority would “proceed with the necessary undertakings and actions to complete the disposition of said properties and the activities as set forth in Exhibits ‘A and B.’” Closeout Agreement, Reproduced Record (R.R.) Volume (Vol.) 3 at 1012. Exhibit A to the agreement consisted of “lands acquired under the said Program” and Exhibit B consisted of “activities approved to be undertaken as a part of the [program but] not yet completed by the [Authority].” Id. The Centennial Building was not listed in the exhibits.
In addition, I take exception to the majority’s reference to extrinsic evidence to ascertain intent while at the same time eschewing the trial court’s use of such evidence for the same purpose. Specifically, the majority cited the minutes from a July 15, 1977 Redevelopment Authority meeting and quoted Mr. Gamble, the Authority’s general counsel when the Closeout Agreement was signed. Although the majority concluded that those minutes confirmed its interpretation of the Closeout Agreement, they merely seem to indicate the City’s awareness of what it was undertaking in the agreement. Pursuant to those minutes, Gamble, in pertinent part, stated as follows:
(3) The financial Statement evidences the capacity to pay for the expenses set forth; if the funds are inadequate, the City agrees to liquidate any deficit that may arise. If there is an excess in monies, the City gets the excess. (A probability over a period of time.)
(4) If there are any expenses which are disputed, contingent, unliquidated or unidentified, the City will also bear these costs.
Exhibit D-39, R.R. Vol. 4 at 1297-98.
Next, although the majority acknowledged that the Closeout Agreement was a form contract drafted by HUD, it failed to take that factor into consideration in ascertaining the contracting parties’ intent. It merely noted that the testimony of Attorney Gamble and former City Councilman Flannery was incompetent to illuminate what HUD meant in paragraph four. The federal government, however, was not a party to the agreement. What must be analyzed is the intent of the parties to the contract. Kirschner, 46 A.3d at 762. Where, as here, the contract at issue was essentially a contract of adhesion, the totality of circumstances should have determined the parties’ intent. Ario v. Reliance Ins. Co., 981 A.2d 950, 963 (Pa.mwlth.2009). In other words, “boilerplate contract clauses are not dispositive of a claim to be a third-party beneficiary of a contract or series of contracts.” Id. at 963. That brings us to the majority’s determination that the trial court erred in considering extrinsic evidence which, I suggest, helped to exemplify the totality of circumstances relevant to ascertaining the *321contracting parties’ intent when entering into a contract of adhesion.
It is well established that, in the event that the contracting parties’ intent is not clear from the face of the agreement, the court must examine extrinsic evidence in order to determine intent. Drummond v. Univ. of Pa., 651 A.2d 572, 580 (Pa.Cmwlth.1994). Such a determination is a question of fact and the trial court’s interpretation is controlling, if supported by substantial evidence. Id. Although I would conclude that the Closeout Agreement appears on its face to cover properties intended to be condemned and taken and not those that became subject to de facto taking claims after the agreement was executed, I would further conclude that the trial court did not err in considering testimonial evidence in ascertaining the contracting parties’ intent at the time of formation.
Here, the trial judge credited the testimony of Mr. Gamble and Mr. Flannery, the latter of whom served as a City councilman from 1970-1977. Mr. Gamble testified that the only properties that were contemplated for purchase under the agreement were those included as disposition parcels; the Centennial Building was not included as a disposition parcel. March 10, 2011 Hearing, Notes of Testimony (N.T.) at 10-13; R.R. Vol. 2 at 636-39. Mr. Flannery testified that he would not have voted to approve the agreement had there been any consideration to purchase the Centennial Building. Id. at 75-77; R.R. at 701-03. Both Gamble and Flan-nery testified that neither Appellants nor de facto claimants generally were intended to be covered under the terms of the agreement and the court credited this testimony. Id. at 11-13, 24, 47, 75-77; R.R. Vol. 2 at 637-39, 650, 673, 701-03; Trial Court Opinion at 14. Accordingly, looking beyond the language of the contract, the circumstances surrounding its execution and the credited testimony support the trial court’s factual determination that the parties to the Closeout Agreement did not intend to confer any benefit on Appellants or to include their property within the terms of the agreement.
Moreover, I do not believe that the trial court’s determination in this regard is undermined, as the majority suggests, by the Clara Thomas case. In that case, the City agreed to pay damages to Clara Thomas one month after the 1977 Closeout Agreement even though her property similarly was not listed as a disposition parcel in Exhibit A to the agreement. (Her property was also removed from the redevelopment plan in 1978.) In distinguishing the instant case, the court noted that Thomas filed her de facto taking claim before the agreement and that the City was aware of that claim when it executed the agreement. Observing that Appellants did not file their petition for appointment of viewers until October 1978, fifteen months after the agreement, the court reasoned that the City and the Authority could not have been aware of Appellants’ claim for a de facto taking at the time the agreement was finalized. More importantly, the City may have had any number of reasons for settling the Clara Thomas claim and, therefore, that subsequent settlement cannot necessarily be construed as evidence of the parties’ intent at the time the agreement was signed.
Finally, I believe that the majority disregarded the governmental status of the contracting parties, which requires a stricter analysis of third-party beneficiary status. See Clifton v. Suburban Cable TV Co., Inc., 434 Pa.Super. 139, 144, 642 A.2d 512, 515 (1994), cert. denied, 513 U.S. 1173, 115 S.Ct. 1152, 130 L.Ed.2d 1110 (1995) (holding that courts considering government contracts “must take a more narrow *322view of third-party beneficiary status ... and apply a more stringent test to determine whether a third party qualifies for beneficiary status.”)
Accordingly, I would affirm.
President Judge PELLEGRINI and Judge SIMPSON join in this dissenting opinion.

. As in other issues of contract interpretation, we must first look to the provisions of the contract in order to ascertain the parties’ intent. If the terms of the contract are clear, "the intention of the parties must be ascertained from the document itself.” Victoria Gardens Condo. Ass’n v. Kennett Twp. of Ches*320ter Cnty., 23 A.3d 1098, 1105 n. 12 (Pa.Cmwlth.), appeal denied, 611 Pa. 644, 24 A.3d 365 (2011). If not, "it is for the trier of fact to determine what the parties intended by resolving conflicts in the relevant parol evidence.” Drummond v. Univ. of Pa., 651 A.2d 572, 580 (Pa.Cmwlth. 1994).