Court Opinion

ID: 3007086
Source: CourtListenerOpinion
Date Created: 2015-10-05 18:14:50.241022+00
Date Added: 2024-06-11T08:17:26.127526
License: Public Domain

J-A16030-15

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

FIRST SURETY FINANCIAL, LLC                    IN THE SUPERIOR COURT OF
                                                     PENNSYLVANIA
                    v.

TAYLOR ASSOCIATES LP, TAYLOR
GEN/PAR, LLC AND ZAMIAS SERVICES

                    v.

A.R. POPPLE, INC., AND ANTHONY
POPPLE, INDIVIDUALLY

APPEAL OF: TAYLOR ASSOCIATES LP,
                                                    No. 3233 EDA 2014
TAYLOR GEN/PAR, LLC

               Appeal from the Order Entered October 7, 2014
           In the Court of Common Pleas of Philadelphia County
          Civil Division at No(s): October Term, 2010 No. 002749

BEFORE: LAZARUS, OLSON and PLATT,* JJ.

MEMORANDUM BY OLSON, J.:                         FILED OCTOBER 05, 2015

      Appellants, Taylor Associates, LP and Taylor Gen/Par, LLC, appeal from

the order entered on October 7, 2014. We affirm.

      The trial court provided us with a thorough summary of its findings of

fact, which the trial court made at the conclusion of a seven-day bench trial.

As the trial court explained:

        Plaintiff First Surety [Financial, LLC (hereinafter “Plaintiff
        First Surety”)] is a private specialty lender that provides
        construction industry financing to contractors and
        subcontractors. [Defendant, and current Appellant, Taylor
        Associates, LP (hereinafter “Appellant Taylor Associates”)] is
        a limited partnership formed for the purpose of building a
        shopping center which would come to be known as Taylor
        Commons.        Defendant[, and current Appellant,] Taylor
        Gen/Par, LLC, [(hereinafter “Appellant Taylor Gen/Par”)] is

*Retired Senior Judge assigned to the Superior Court.
J-A16030-15

       a limited liability company and the general partner of
       [Appellant Taylor Associates (hereinafter, collectively,
       “Appellants”)].

       Defendant Zamias Services, Inc. [(hereinafter “Defendant
       Zamias”)] is an agent of [Appellant Taylor Associates] and
       acted as the construction manager for [Appellant Taylor
       Associates]. [Defendant Zamias] was responsible for the
       overall management, development and leasing on behalf of
       [Appellant Taylor Associates]. [Defendant Zamias] was also
       responsible for handling contractor payment requisitions,
       which included the provision of payment advice to
       [Appellant Taylor Associates], payment to contractors,
       project funding, and recommending the approval of change
       orders. Samuel Zamias, Stephen Zamias, George Zamias,
       and Damian Zamias are managing members of [Appellant
       Taylor Gen/Par]. The managing members have the ability
       to make decisions and bind [Appellant Taylor Gen/Par].

       Additional Defendant, A.R. Popple, Inc. [(hereinafter
       (“Popple”)], is the contractor hired by [Appellant Taylor
       Associates] to perform the site work on the Taylor
       Commons project.

       In October [] 2007, [Appellant Taylor Associates] and
       Popple entered into a Construction Contract under which
       Popple was to perform site improvement work for the Taylor
       Commons project. Popple’s duties under the Construction
       Contract included excavation, grading, and the installation
       of sanitary sewer systems and other piping and utility work.
       In exchange for the site improvement work, Popple was to
       receive a lump sum price of $6,388,721.00.

       From 2007 through June 5, 2009, [Plaintiff First Surety]
       provided construction financing to Popple for the Taylor
       Commons project. Popple entered into a Loan Agreement
       with [Plaintiff First Surety] under which [Plaintiff First
       Surety] authorized Popple to borrow up to $750,000.00
       This Loan functioned as a line of credit. In April [] 2008,
       [Plaintiff First Surety] increased the loan threshold to $1.1
       million. In August 2008, the threshold was again increased,
       this time to $1.8 million.       In September [] 2008, the
       threshold was increased to $2.1 million.

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       In order to secure the funds loaned to Popple under the
       Loan Agreement, Popple executed a Note and Security
       Agreement.     In the note, [Plaintiff First Surety] could
       increase the amount and term of the Loan to protect the
       security set forth in the Security Agreement. In order to
       obtain funding from [Plaintiff First Surety], Popple had to
       make written requests for funds as needed. Popple also
       had to accompany such requests with backup information to
       support the request. . . .

       On October 12, 2007, [Plaintiff First Surety], Popple, and
       [Appellant Taylor Associates] entered into an Assignment
       Agreement. Subject to certain conditions, the Assignment
       Agreement provides that payments under the Construction
       Contract were to be made directly to [Plaintiff First Surety].
       The Assignment [Agreement] states:

          (1) Assignment – [Popple] assigns, transfers, sells and
          conveys to [Plaintiff First Surety] all of its entire right,
          title and interest in and to payments due under the
          Construction Contract including, the right to receive
          payment directly from [Appellant Taylor Associates],
          provided [Popple] is not then in default under said
          contract or has otherwise committed acts or omitted
          obligations that give rise to suspension or termination of
          payments from [Appellant Taylor Associates] to
          [Popple]. In such event, this assignment shall no longer
          be binding on [Appellant Taylor Associates].

          (2) Payment – Until and unless the Loan is paid in full,
          [Appellant Taylor Associates] shall deliver to [Plaintiff
          First Surety][fn.1] any and all monies due to or to become
          to due to [Popple] under the Construction Contract. All
          such payments shall be sent by [Appellant Taylor
          Associates] to [Plaintiff First Surety] at its office located
          at the address stated above and shall be addressed to
          the attention of Gregory LeFevre.                 Under no
          circumstances,        is   said      payments       to     be
          deposited/negotiated by [Popple] without written
          authorization from [Plaintiff First Surety].

              [fn.1] The [Assignment] Agreement actually states
              that delivery be to “Assignor” who is Popple. This is
              a typographical error, as the [Assignment]

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              Agreement would be meaningless if the “Assignor”
              was going to get the money it was assigning.

       In essence, [the] Assignment Agreement created a three-
       party relationship where [Plaintiff First Surety] would, at the
       written request of Popple and after review, disburse cash
       advances to Popple. These cash advances were to be used
       to pay costs associated with the Taylor Commons project
       under the Construction Contract. As Popple performed the
       work, Popple would submit applications for payment to
       [Appellant Taylor Associates]. Thereafter, [Appellant Taylor
       Associates would] pay the amount requested by Popple
       directly to [Plaintiff First Surety].

       In the Spring of 2008, a huge “mine void” was discovered
       underground where the parking lot for Taylor Commons was
       to be located.     The mine void created a dangerously
       unstable area susceptible to collapsing. The discovery of
       the mine void prompted [Appellant Taylor Associates] to
       provide additional funding to Popple. On November 5,
       2008, [Defendant Zamias], under the authority and
       direction of [Appellant Taylor Associates], issued a
       [$175,000.00] check to Popple.        The check was to
       reimburse Popple and Popple’s subcontractor(s) for the
       work they completed as part of the significant change order
       for mine remediation. On December 12, 2008, [Appellant
       Taylor Associates] provided two more checks in the amount
       of [$12,500.00] each, bringing the total amount to
       [$200,000.00].

       Between August 19, 2009 and April 2, 2010, [Appellant
       Taylor Associates] issued ten more payments directly to
       Popple.    The total amount of these ten checks was
       $490,385.54. Additionally, [Appellant Taylor Associates]
       issued [15] more checks. These checks were paid either to
       Popple and a subcontractor jointly[,] or directly to one of
       Popple’s subcontractors.    The total amount of these
       payments was $692,394.33.

       In total, [Appellant Taylor Associates] issued [28] payments
       to parties other than [Plaintiff First Surety (hereinafter
       “Misdirected Payments”)], which totaled $1,372,779.87.
       [Plaintiff First Surety] did not have specific knowledge of the

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       Misdirected Payments because [Plaintiff First Surety] was
       still receiving sporadic payments from Popple.

       [Appellant Taylor Associates] first advised [Plaintiff First
       Surety] that they intended to make payments directly to
       one of Popple’s subcontractors in January [] 2009. John
       Spory, a representative of [Defendant Zamias,] informed
       [Plaintiff First Surety] that the subcontractor, Newport
       Aggregate, had threatened to file a [mechanics’] lien claim
       for the value of its unpaid work on the Taylor Commons
       project.    [Plaintiff First Surety] granted permission to
       [Defendant Zamias], on behalf of [Appellant Taylor
       Associates], to make a payment of $35,380.01 to Newport
       Aggregate. [Appellant Taylor Associates] then issued the
       balance of the payment to [Plaintiff First Surety]. Aside
       from the payment to Newport Aggregate, [Plaintiff First
       Surety] was never aware of or notified of any of the other
       payments      made     directly  to   Popple  or   Popple’s
       subcontractors.

       [Plaintiff First Surety’s] loan to Popple was never paid in
       full. The parties stipulated that the principal owed at the
       end of 2009 was $788,548.79, plus interest and fees,
       totaling $2,328,335.34. . . .

       [On October 21, 2010, Plaintiff First Surety filed a complaint
       against Appellants. The complaint claimed that: Appellants
       breached the Assignment Agreement when they “fail[ed] to
       make [the] payments [it] owed [to Popple,] for [Popple’s]
       work[,] directly to [Plaintiff First Surety]” (and, instead,
       paid Popple or Popple’s subcontractors directly); and,
       Appellants tortiously interfered with Plaintiff First Surety’s
       contractual relationship with Popple, by “agreeing to by-
       pass [Plaintiff First Surety] when making payments for
       [Popple’s] work.”      Plaintiff First Surety’s Complaint,
       10/21/10, at ¶¶ 47 and 52.] . . .

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         On December 7, 2010, [Appellants] filed a joinder complaint
         against [Popple1]. . . .   [Appellants] alleged breach of
         contract against [Popple].

         On September 21, 2012, [Plaintiff First Surety]          filed a
         motion to bifurcate [Appellants’] joinder claims        against
         Popple from [Plaintiff First Surety’s] claims           against
         [Appellants]. On October 4, 2012, [the trial court]     granted
         [Plaintiff First Surety’s] motion to bifurcate.

         A bench [trial] was conducted on October 22, 2012, October
         23, 2012, October 25, 2012, October 26, 2012, []
         November 6, 2012[, November 7, 2012, and November 27,
         2012]. . . . On July 18, 2014, [the trial court entered the
         following order:

              AND NOW, this 18th day of July, 2014, after a non-jury
              trial of this matter, and in accord with the Findings of
              Fact and Conclusions of Law issued simultaneously, it is
              ORDERED as follows:

              1. A finding is entered in favor of [Plaintiff First Surety]
              and against [Appellants] in the amount of $788,584.79,
              plus prejudgment interest of six percent per annum from
              December 31, 2009 of $215,046.10, for a total of
              $1,003,594.89.

              2. A finding is entered in favor of [Defendant Zamias],
              against [Plaintiff First Surety].

         Trial Court Order, 7/18/14, at 1.]

         [Appellants] timely filed a motion for post-trial relief. . . .
         On October 7, 2014, [the trial court denied Appellants’ post-
         trial motion].

         [Appellants] timely filed a notice of appeal on November 6,
         2014.

____________________________________________

1
  Within the joinder complaint, Appellants also named Anthony Popple,
individually, as an additional defendant.

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Trial Court Opinion, 12/31/14, at 1-2 and 5-8 (some internal capitalization,

footnotes, and emphasis omitted).

     Now on appeal, Appellants raise the following claims:

        1. Whether the trial court erred in failing to find the Loan
        Agreement and the Assignment Agreement, which formed
        the basis of [Plaintiff First Surety’s] claims against
        [Appellants], are illegal and, therefore, unenforceable
        pursuant to the criminal usury provisions of the
        Pennsylvania Crimes Code, [18 Pa.C.S.A. § 911(b) and
        (h)(1)(iv)]?

        2. Whether the trial court erred in interpreting the plain
        language of the Assignment Agreement and the
        Construction Contract in failing to find [Popple’s] default on
        the Construction Contract relieved [Appellants] of their
        obligation to make payments to [Plaintiff First Surety] under
        the Assignment Agreement?

        3. Whether the trial court erred in bifurcating [Appellants’]
        claims and defenses relating to [Popple]?

        4. Whether the trial court erred in interpreting the plain
        language of the Assignment Agreement, the Loan
        Agreement, and the Note by determining [Appellants were]
        required to issue payments to [Plaintiff First Surety] under
        the Assignment Agreement beyond the original amount of
        the Loan Agreement?

        5. Assuming it was proper to find liability on [Plaintiff First
        Surety’s] breach of contract claim, whether the trial court
        erred in awarding damages that were not supported by the
        evidence and were impermissibly speculative?

        6. Assuming it was proper to find liability on [Plaintiff First
        Surety’s] breach of contract claim, whether the trial court
        erred in awarding damages for payments by [Appellants]
        after [Popple] defaulted on the Construction Contract and
        for payments after the original amount of the Loan
        Agreement was paid in full?

                                     -7-
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Appellants’ Brief at 5-6 (internal footnotes and some internal capitalization

omitted).

       We have reviewed the briefs of the parties, the relevant law, the

certified record, and the well-written opinions from the able trial judge, the

Honorable Albert John Snite, Jr.           We conclude that the claims raised in

Appellant’s brief are meritless and that Judge Snite’s opinions, filed on July

18, 2014 and December 31, 2014, meticulously and accurately explain why

Appellant’s claims fail.2 Therefore, we adopt the trial court’s opinions as our

____________________________________________

2
  With respect to Appellants’ first claim on appeal, Appellants claim that the
Loan Agreement between Plaintiff First Surety and Popple established an
interest rate that was illegal under 18 Pa.C.S.A. § 911(h)(1)(iv). Because of
this, Appellants claim, the Loan Agreement between Plaintiff First Surety and
Popple was “unenforceable.” Appellants’ Brief at 23. Further, Appellants
claim, since the Assignment Agreement incorporated the Loan Agreement
and its illegal term, the Assignment Agreement is also unenforceable. Id.

The trial court concluded that Appellants’ claim failed because the loan was a
business loan, for a business purpose, and 18 Pa.C.S.A. § 911(h)(1)(iv) did
not apply to such loans. See Trial Court Opinion, 12/31/14, at 9. We note
that, even if 18 Pa.C.S.A. § 911(h)(1)(iv) were applicable to business loans,
Appellants’ claim would fail because Popple is a Pennsylvania corporation
and, under 15 Pa.C.S.A. § 1510(a), Popple cannot use “the taking of more
than the lawful rate of interest . . . as a defense to any action or proceeding
brought against it to . . . enforce payment of any obligation executed or
effected by” it. 15 Pa.C.S.A. § 1510(a); see also Appellants’ Complaint to
Join, 12/7/10, at ¶ 5 (“A.R. Popple, Inc., is a duly organized corporation
existing under the laws of the Commonwealth of Pennsylvania”). Further,
since Popple cannot use “the taking of more than the lawful rate of interest”
as a defense to its obligations, Appellants cannot do so either. See, e.g.,
All Purpose Fin. Corp. v. D’Andrea, 235 A.2d 808, 811 (Pa. 1967) (“An
individual who signs a note as an accommodation party to a corporation so
that corporation can obtain a loan is entitled to no more protection than the
corporate borrower whom he accommodates. He binds himself to perform in
(Footnote Continued Next Page)

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own. In any future filings with this or any other court addressing this ruling,

the filing party shall attach a copy of the trial court’s opinions.

      Order affirmed. Jurisdiction relinquished.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 10/5/2015

                       _______________________
(Footnote Continued)

accordance with the obligation of his principal, the corporation, which in such
cases is the borrower. Since the borrower cannot assert the defense of
usury, the accommodation party cannot”.) (internal quotations and citations
omitted).

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