Court Opinion

ID: 6330917
Source: CourtListenerOpinion
Date Created: 2022-04-13 16:12:17.601745+00
Date Added: 2024-06-11T09:23:06.544721
License: Public Domain

J-A03035-22

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

    FIRSTRUST BANK                             :   IN THE SUPERIOR COURT OF
                                               :        PENNSYLVANIA
                                               :
                v.                             :
                                               :
                                               :
    WILKINSON ROOFING AND SIDING,              :
    INC. EQUITABLE PROPERTY                    :
    INVESTMENTS, I, LLC 20 WEST                :   No. 1108 EDA 2021
    PARK, LLC KENNETH S. BALAGUR               :
    KIMBERLY A. REITZ RICHARD                  :
    BALAGUR                                    :
                                               :
                                               :
    APPEAL OF: 20 WEST PARK, LLC               :
    AND RICHARD BALAGUR                        :

                   Appeal from the Order Entered May 6, 2021
                In the Court of Common Pleas of Chester County
                      Civil Division at No: 2019-02916-MJ

BEFORE: STABILE, J., DUBOW, J., and McCAFFERY, J.

CONCURRING/DISSENTING MEMORANDUM BY STABILE, J.:

                                                         FILED APRIL 11, 2022

       Respectfully, I dissent from the learned Majority’s conclusion to affirm

the trial court’s grant of summary judgment in favor of Appellee Firstrust Bank

(“Firstrust”) on the basis that the contractual provision at issue is

unambiguous.         The Majority affirms the trial court’s conclusion that this

provision may be interpreted as a matter of law to provide Firstrust a

mortgage lien of 45% of the sale proceeds in the New Hampshire Property1
____________________________________________

1For sake of consistency, references herein to the “New Hampshire Property”,
“Appellants”, “Appellee”, “20 West Park”, “Note”, “Guarantee”, “Mortgage”,
and “Loan Agreement” shall be as defined in the Majority’s memorandum.
J-A03035-22

after satisfaction of the two more senior Mascoma Bank liens. In my opinion,

the flaw in this analysis is that it does not recognize the ambiguity created by

reference to both a “lien” secured by a mortgage in real estate and a limited

liability company “member interest” in that real estate for purposes of

declaring Firstrust’s interest in the sale proceeds of the the New Hampshire

Property.   Because I believe the use of both terms to refer to Firstrust’s

interest in the sale proceeds renders the contractual provision ambiguous, I

would reverse the trial court’s grant of summary judgment and remand for an

evidentiary hearing for the trial court to consider extrinsic evidence in order

to make appropriate findings of fact as to the intent of the parties when

drafting this provision.   I further believe the Majority errs by considering

extrinsic evidence and by invoking the presumption against draftsmanship. I

concur, however, with the Majority’s rejection of Appellants’ last issue that the

contract fails for lack of consideration.

      I begin with a reproduction of the contractual provision at issue recited

in various of the loan documents, and in particular, the Mortgage, without a

detailed recitation of the background facts, as the Majority aptly has set forth

those details.

      Paragraph 2.1(e) of the Mortgage, repeated in other of the loan

documents, provides:

      The amount of this mortgage is $1,300,000.00. Notwithstanding
      that, upon the sale of the Property the Mortgagee agrees to
      release its lien and to limit its interest in the Property to
      45% of the proceeds received from the sale of the Property

                                       -2-
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      after the first lien to Mascoma Savings Bank in the original amount
      of $1,045,000.00 and second lien to Mascoma Savings Bank in the
      original amount of $300,000.00 (and a maximum amount of
      $450,000.00) are satisfied. The 45% represents Kenneth S.
      Balagur’s membership interest in [20 West Park], which is
      the owner of the [New Hampshire] Property.

(Emphasis added). In this action for declaratory judgment, Firstrust alleges

that based upon the foreclosure of its mortgage lien, it is entitled to 45% of

the proceeds of the sale of the New Hampshire Property following payment of

the two more senior Mascoma Bank liens.        Appellants, 20 West Park and

Richard Balagur (“Balagur”), disagree, and assert that Firstrust instead, is

limited to the 45% membership interest that Kenneth Balagur (“Ken Balagur”)

has in the sale proceeds of the New Hampshire Property after satisfaction of

the Mascoma Bank liens. The competing positions of the parties demonstrate

on their face that an ambiguity exists in this provision by reference to both a

“lien” and a “membership interest” in the sale proceeds. To understand why

reference to both the terms “lien” and “member interest” in the provision

create an ambiguity, it is necessary to explore briefly the difference between

a mortgage lien in real estate and a member interest in a limited liability

company that owns real estate.

      “It is well settled in Pennsylvania that a mortgage, although in form a

conveyance of title, is in reality only a security for payment of money or

performance of other collateral contract.” Winthrop v. Arthur W. Binns,

Inc., 50 A.2d 718, 719 (Pa. Super. 1947).           “Pennsylvania recognizes

mortgages as acting both as conveyances and as security interests or liens.”

                                     -3-
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Pines v. Farrell, 848 A.2d 94, 100 (Pa. 2004) (citation omitted).            “As

between the parties it is a conveyance so far as is necessary to enforce it as

a security.” Winthrop, 50 A.2d at 719. “Although the mortgagor remains

the real owner of the mortgaged property, the mortgagee is entitled to its

possession, to be held as security until his debt is paid.” Id. “A mortgage is

in essence a defeasible deed, requiring the grantee to reconvey the property

held as security to the grantor upon satisfaction of the underlying debt or the

fulfillment of established conditions.” Hahnemann Med. Coll. & Hosp. of

Philadelphia v. Com, 416 A.2d 604, 607 (Pa. Cmwlth. 1980) (citing

HanePayne’s Administrator v. Patterson’s Administrator, 77 Pa. 134,

137 (1874)). The term “lien” expresses a broad concept embracing a variety

of security devices both legal and equitable. Anderson Contracting Co. v.

Daugherty, 417 A. 2d 1227 (Pa. Super. 1979), appeal denied, 425 A.2d

329 (Pa. 1980). The word “lien” is of the same origin as the word “liable”,

and the right of “lien” expresses the liability of certain property for a certain

legal duty, or a right to resort to it in order to enforce the duty. Id. (citing

Wood’s Appeal, 30 Pa. 274, 277 (1858)). In more simple terms, a mortgage

may be defined as any obligation evidenced by a security document and

secured by a lien upon real property. See Bennett v. Seave, 554 A. 2d 886,

891 (Pa. 1989) (citing 41 P.S. § 101 (Act 6) and 35 P.S. § 1680.401c(a) (Act

91)). It is a specific lien against a particular piece of real property.    PNC

Bank, Nat. Ass’n v. Balsamo, 634 A.2d 645, 650 (Pa. Super. 1993), appeal

denied, 648 A.2d 790 (Pa. 1994).

                                      -4-
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       A member interest in a limited liability company is an entirely different

creature from a mortgage lien. To illustrate, a limited liability company in

Pennsylvania,2 is an entity distinct from its member or members and has

perpetual duration. 15 Pa.C.S.A. § 1818(a) and (c). It has the power to do

all things necessary or convenient to carry on its activities and affairs. 15

Pa.C.S.A. § 8819. It has the legal capacity of a natural person to act, see id.

cmt., and this of course would permit ownership of real estate. An LLC has

an “operating agreement” that governs the relations among members and
____________________________________________

2   Limited liability companies are governed in Pennsylvania under the
Pennsylvania Uniform Limited Liability Company Act of 2016 (the “LLC Act”).
15 Pa.C.S.A. §§ 8811 - 8898. 20 West Park, LLC, is a New Hampshire limited
liability company. The New Hampshire Revised Limited Liability Company Act,
§§ 304-C:1 et. seq, is substantially similar to Pennsylvania with regard to the
formation and the treatment of member interests. I recognize that this
litigation began in New Hampshire and that the Superior Court of New
Hampshire determined that this matter had to be litigated in Pennsylvania
based upon the forum selection clause in the Loan and Security Agreement
that provides that all disputes arising out of or under the loan documents shall
be litigated in Pennsylvania. The New Hampshire Court, however, only
determined the forum in which the parties had to litigate. The court did not
resolve any choice of law issues relating to interpretation of the loan
agreements. See New Hampshire Superior Court order, 2/27/19, at 3, 6. I
likewise do not attempt to resolve any such conflict of law issues, but merely
use Pennsylvania’s statute to illustrate the nature of a LLC member interest
which I believe for present purposes is sufficiently aligned with New
Hampshire’s law to demonstrate the point. In passing, I also note that the
Loan and Security Agreement provides that the agreement and all other loan
documents are to be governed by and construed in accordance with
Pennsylvania law.       Loan Documents are defined to include all other
documents, certificates and instruments executed and delivered by the
obligors in connection with, or for the benefit of, Firstrust. In contrast, the
Mortgage provides it shall be governed by the laws of the state of New
Hampshire. In addition to any potential conflict of law issues, it is possible
that conflicts between the applicable law provisions contained within these
documents also may have to be reconciled.

                                           -5-
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between members and the LLC, the rights and duties as a member or

manager, the activities and affairs of the LLC, the means for amending an

operating agreement, and the means and conditions for approving entity

transactions. 15 Pa.C.S.A. § 8815(a). A person becomes a member in an LLC

at the time of formation, or as provided for in the operating agreement. 15

Pa.C.S.A. § 8841(a), (b), and (d). As seems typical, Pennsylvania’s LLC Act

does not specify the manner in which member ownership in a limited liability

company is evidenced. Membership interests, however, are typically stated

in terms of percentage interests or membership units. Membership carries

with it both the rights of a member and a transferable interest, or in other

words,   both   a   non-economic     and   an   economic     interest.    See

15 Pa.C.S.A. § 8852(g).    A “transferable interest” is the right to receive

distributions. See 15 Pa.C.S.A. § 8812 (definition of “Transferable interest”).

A person may not transfer any rights in a limited liability company other than

a transferable interest. 15 Pa.C.S.A. § 8851(b). When a member transfers a

transferable interest, the member retains the rights, duties, and obligations

of a member other than the transferable interest. 15 Pa.C.S.A. § 8852(g).

Importantly, a member’s interest in a limited liability company is considered

personal property. 15 Pa.C.S.A. §§ 8841(f) and 8851(a). A judgment creditor

of a member cannot execute on a member’s transferable interest. Rather, a

judgment creditor must secure from a court a charging order against the

transferable interest of the judgment debtor member.        See 15 Pa.C.S.A.

§ 8853. The charging order then operates as a lien on the judgment debtor

                                     -6-
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member’s transferable interest and obligates the limited liability company to

pay to the judgment creditor any distributions that otherwise would be paid

to the judgment debtor member. Id. A member’s judgment creditor does

not have the right to foreclose upon the whole of a limited liability company’s

assets to satisfy the debt owed by a single member. More to the point, a

“member interest”, whether expressed as a percentage or in membership

“units”, represents ownership in the legal entity, the LLC, and not in the assets

owned by the LLC.      The value of a member’s interest in the LLC is not

measured by any single asset owned by the LLC, but is determined under the

LLC’s operating agreement and/or applicable law. The value of a member’s

interest also may vary depending upon, for instance, whether the LLC

continues to operate or is in liquidation. A member’s transferable interest or

economic interest in an LLC entitles the member to distributions of money

from the LLC. See 15 Pa.C.S.A. §§ 8812, 8844. However, a member’s right

to distributions may depend upon consideration of such things as the book

value of the company’s assets and liabilities and depreciation.         See 15

Pa.C.S.A. § 8845. In case of dissolution, return of contributions also has to

be considered. 15 Pa.C.S.A. § 8877.

      In simple terms, a mortgage lien encumbers real estate as collateral to

secure an underlying obligation. In contrast, a member interest in an LLC is

ownership treated as personalty measured by the percentage of or units held

by the member interest. The value of a member interest or ownership in an

LLC cannot be determined by simply calculating the member’s percentage

                                      -7-
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interest as against the company’s assets. Instead, the interest must take into

consideration other factors incident to valuing the LLC in order to determine

the value of a member interest. With respect to real estate, a member has

an indirect interest in the real estate through ownership in the LLC, but the

member has no direct ownership rights in the real estate solely as a result of

membership in the LLC. Undoubtedly, Firstrust understood these distinctions

when it insisted that Ken Balagur pledge all his assets in consideration of the

$1.3 million loan to his company. It realized that it could not directly lien the

New Hampshire Property through Ken Balagur’s member interest in 20 West

Park and that Ken Balagur could not pledge the New Hampshire Property. It

therefore, had to have 20 West Park agree to mortgage the the New

Hampshire Property so that in the event of foreclosure it could collect on Ken

Balagur’s membership interest in the proceeds.

      The difference between a “mortgage lien” and a “member interest” in

an LLC confirm the tension and ambiguity created by Paragraph 2.1(e) of the

Mortgage and related loan documents that reference both Firstrust’s mortgage

lien and Balagur’s 45% membership interest in 20 West Park to define what

portion of the sale proceeds of the New Hampshire Property are to be paid to

Firstrust upon foreclosure. It is a simple matter to determine what amount

Firstrust is entitled to collect on its mortgage lien under the second sentence

of Paragraph 2.1(e) if one need only consider a mortgage lien. Firstrust would

be entitled to collect on its mortgage lien 45% of the sale proceeds from

foreclosure on the New Hampshire Property after satisfaction of the two senior

                                      -8-
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Mascoma Bank liens. The relatively straightforward application of that second

sentence, however, is complicated by the third sentence that declares that the

45% interest referenced in the second sentence represents Ken Balagur’s 45%

membership interest in 20 West Park.

      Assuming for the moment that Section 2.1(e) is to be construed as a

lien but measured by an ownership interest, then calculation of Ken Balagur’s

member interest in the sale proceeds becomes more complicated. As Firstrust

concedes in its brief, the determination of Ken Balagur’s 45% membership

interest in the sale proceeds of the the New Hampshire Property would require

that someone (presumably an expert) provide an opinion as to the value of

that membership interest. See Firstrust’s Brief at 12. The importance of this

distinction also was noted by Firstrust to the trial court when it stated that the

document was not a pledge of a membership interest, that it was a mortgage,

and that there is a major difference between those two types of collateral.

See Majority Memorandum at n.14 (citing N.T., Hearing, 4/22/21, at 22-23.)

Within the record there also exists an illustration prepared by Richard Balagur

demonstrating that the difference in value to be paid to Firstrust as between

a 45% mortgage lien and a 45% mortgage lien limited to Ken Balagur’s equity

interest in the LLC is twofold. See Equity Distribution from 20 West Park, LLC

as of 12/31/14, Prepared by Richard Balagur. In coming to a value of Ken

Balagur’s membership interest in the LLC, the illustration takes into

consideration things such as subordinated debt, tenant security deposits, New

                                      -9-
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Hampshire business profits tax, and a bonus to Balagur.3 Therefore, I must

respectfully and strongly disagree with the Majority’s statement that “the

question of ‘membership interest’ versus ‘property interest’ is a distinction

without a difference as the sole asset of 20 West Park was the New Hampshire

Property.    Therefore, Kenneth Balagur’s interest solely derived from that

property.” Majority Memorandum at 18-19. This statement fails completely

to acknowledge the nature of ownership in an LLC (as the parties do), as

opposed to the simple concept of a mortgage lien that merely encumbers real

estate to secure an underlying obligation.

       It has been suggested by Firstrust, the court, and the Majority that

interpretation of Section 2.1(e) is somehow affected by the fact that it was 20

West Park, and not Ken Balagur, that granted the mortgage lien. Certainly,

the mortgage lien granted by 20 West Park is what gave Firstrust the right to

foreclose on the New Hampshire Property. I fail to see how this impacts the

distinction between a mortgage lien and a member interest when discussing

the value to be received by Firstrust. Although 20 West Park, as owner of the

the New Hampshire Property, executed the Mortgage, the operative provision

____________________________________________

3 I offer no opinion as to the correctness of this illustration in valuing Ken
Balagur’s membership interest. The exhibit merely demonstrates, as Firstrust
concedes, that the value of a mortgage lien and the value of a membership
interest are two different things. It does appear that the illustration is based
upon a liquidation value, as the record reflects that the New Hampshire
Property is the sole principal asset of the company.

                                          - 10 -
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regarding distribution of sale proceeds to Firstrust still is defined by Ken

Balagur’s 45% membership interest.4

       In Hutchinson v. Sunbeam Coal Corp., 519 A.2d 385 (Pa. 1986), our

Supreme Court set forth basic rules of contract interpretation pertinent to this

appeal.

       Determining the intention of the parties is a paramount
       consideration in the interpretation of any contract. The intent of
       the parties is to be ascertained from the document itself when the
       terms are clear and unambiguous. However, . . . where an
       ambiguity exists, parol evidence is admissible to explain or clarify
       or resolve the ambiguity, irrespective of whether the ambiguity is
       created by the language of the instrument or by extrinsic or
       collateral circumstances.

       We first analyze the contract . . . to determine whether an
       ambiguity exists requiring the use of extrinsic evidence. A
       contract is ambiguous if it is reasonably susceptible of different
       constructions and capable of being understood in more than one
       sense. The court, as a matter of law, determines the existence of
       an ambiguity and interprets the contract whereas the resolution
       of conflicting parol evidence relevant to what the parties intended
       by the ambiguous provision is for the trier of fact.

____________________________________________

4  Firstrust expresses concern in its brief that accepting Appellants’
interpretation would mean that the bank could take collateral subject to
dilution, i.e., 11%, since as the trial court noted, there is nothing in the loan
documents that restricts or comments on the ability of Ken Balagur to transfer
or encumber his membership interest. Firstrust’s Brief at 20; Trial Court
Opinion n.3. I would not construe Section 2.1(e) to permit such a result, since
the unambiguous language grants a 45% interest. The percentage was fixed
as of the time the loan documents were executed—not as of the time of any
potential foreclosure. The question remains whether that percentage pertains
to the priority of a mortgage lien or to Ken Balagur’s 45% member interest in
the remaining proceeds after all other required adjustments and distributions
are made first.

                                          - 11 -
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Id. at 389-90 (citations and quotation marks omitted).          Under these

aforementioned principles, I conclude that the second and third sentences to

Paragraph 2.1(e) of the Mortgage, and as contained in other of the loan

documents, indeed create an ambiguity. It is unclear whether 20 West Park

simply agreed to grant Firstrust a mortgage lien in the New Hampshire

Property based upon 45% of the sale proceeds which equate to Ken Balagur’s

45% membership interest in the company, or whether 20 West Park only

agreed to lien Ken Balagur’s 45% membership interest in the remaining

proceeds after sale of the the New Hampshire Property. Both interpretations

may be deemed reasonable considering the possible intent of the parties

under the loan documents. On the one hand, Firstrust could reasonably argue

its only interest in the sale proceeds was to secure 45% of those proceeds

regardless of any internal membership interest considerations. On the other

hand, Appellants 20 West Park and Ken Balagur could reasonably argue that

20 West Park had no interest in the loan extended by Firstrust to benefit Ken

Balagur and his company, Wilkinson Roofing and Siding, Inc., and that it would

reasonably make sense that the only proceeds Firstrust could lien would be

those that would be paid as against Ken Balagur’s membership interest. To

resolve this ambiguity extrinsic evidence had to be considered by the trial

court, thus creating triable issue of fact precluding the entry of summary

judgment.   The record is full of testimony and evidence to argue either

position.

                                    - 12 -
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      Although the trial court had ample testimony and evidence before it

when deciding the parties’ competing summary judgment motions, its decision

was not based upon any of that evidence. It was the trial court’s conclusion

that Section 2.1(e) could be interpreted as a matter of law, since it believed

the only reasonable interpretation was one whereby Firstrust agreed to limit

its mortgage lien in the the New Hampshire Property to a percentage equal to

that of Ken Balagur’s interest in 20 West Park.     Trial Court Memorandum,

5/6/21, at 5. Reading the third sentence as only describing a 45% interest in

sale proceeds, however, ignores any reference to Ken Balagur’s membership

interest as a modifier to the second sentence and the legal ramifications that

flow from membership status. If as the trial court contends, the third sentence

merely was intended to restate that Firstrust was entitled to 45% of the sale

proceeds after satisfaction of the two senior liens, then the third sentence is

rendered superfluous. This violates rules governing contract interpretation,

since all words in a contract are to be given meaning. “Courts do not assume

that a contract’s language was chosen carelessly, nor do they assume that the

parties were ignorant of the meaning of the language they employed.”

Murphy v. Duquesne Univ. Of The Holy Ghost, 777 A.2d 418, 429 (Pa.

2001) (citation omitted). A cardinal rule of contractual interpretation counsels

against rendering words or provisions meaningless. Pac. Emps. Ins. Co. v.

Glob. Reinsurance Corp. of Am., 693 F. 3d 417, 430 (3d Cir. 2012) (citing,

Morris v. Am. Liab. & Sur. Co., 185 A. 201, 202 (Pa. 1936)). Therefore, if

we are to give meaning to all words chosen by the parties, and if doing so

                                     - 13 -
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reveals ambiguity, extrinsic evidence must be considered to determine the

intent of the parties. The trial court simply chose to ignore the third sentence

modifier and further, chose to focus on what was not in the record, as opposed

to what was in the record regarding the parties’ intentions on this provision.

      The Majority similarly concludes that the third sentence does not create

an ambiguity because it merely explains why Firstrust’s recovery was limited

to “45% of the proceeds from the sale of the Property.” Rather than creating

an ambiguity, the Majority maintains the sentence is declaratory and explains

the understanding that Ken Balagur owned only 45% of the LLC that owned

the the New Hampshire Property. The Majority concludes that Firstrust was

precluded from attempting to recover more of the proceeds from the sale of

the New Hampshire Property than Ken Balagur would be entitled upon the

sale. Ken Balagur, however, was not entitled to receive 45% of the sale

proceeds. He only was entitled to receive his 45% interest in them after all

other company obligations were satisfied before surplus could be distributed

to the members. Read in context to the transaction as a whole, the Majority

further concludes the third sentence appears to have been included by Ken

Balagur to insulate the 55% interest of his partners [sic] from execution by

Firstrust.   Majority Memorandum at 17-18.      Respectfully, this part of the

Majority’s rationale in fact demonstrates why there is an ambiguity in these

provisions. It treats Ken Balagur’s 45% membership interest as equivalent to

a 45% mortgage lien. Construing Firstrust’s recovery to 45% of the sale

proceeds as measured by the percentage of Ken Balagur’s member interest

                                     - 14 -
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would not necessarily insulate the 55% interest of the other members.          A

recovery of 45% of the sale proceeds may well include amounts in excess of

Ken Balagur’s 45% membership interest after adjustments and could

distribute to Firstrust some part of the proceeds that belong to the other 55%

member(s).      Both Firstrust and Balagur agree that there is a difference in

value between a 45% mortgage lien and Ken Balagur’s 45% member interest

in the sale proceeds. See, supra.

       In reaching its conclusion that the trial court should be affirmed because

Section 2.1(e) of the Mortgage is clear, the Majority also strays into

considering extrinsic evidence to bolster this conclusion and to construe the

provision against 20 West Park, noting that the third sentence was included

at the direction of Ken Balagur.5 The Majority observes that although the loan

documents were drafted by Firstrust, the sentence in question was included

at the direction of Ken Balagur who reviewed and consented to its inclusion.

Majority Memorandum at 17. The Majority cites an email from Ken Balagur

and statements by counsel to find that Ken Balagur was the drafter of the

third sentence to conclude that the third sentence cannot be construed against

Firstrust. Id. (citing, State Farm Fire and Cas. Co. v. PECO, 54 A.3d 921,

928 (Pa. Super. 2012) (where the language of a contract is ambiguous, the

provision is to be construed against the drafter)). I believe the error here is

twofold.
____________________________________________

5The Majority must assume that in drafting this provision that Ken Balagur
was acting on behalf of 20 West Park.

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      First, if the terms of a contract are clear and unambiguous, the intent of

the parties is to be ascertained solely from the writing, without reference to

any external testimony or other evidence. Hutchison, supra. The trial court

did not consider extrinsic evidence. The Majority does so in order to buttress

its interpretation of Section 2.1(e).   This is error.   Second, the Majority

compounds this error by invoking the presumption against draftsmanship

without first requiring that the trial court consider extrinsic evidence to

ascertain the intent of the parties. In Burns Manufacturing Company, Inc.

v. Boehm, 356 A.2d 763 (Pa. 1976), the Court stated the following when the

chancellor in that case invoked the presumption against draftsmanship before

determining that no extrinsic evidence could explain the intent of the parties.

      The chancellor made no apparent attempt to construe the
      language of the addendum clause in light of the circumstances
      which surrounded its execution. Instead he appears to have relied
      on the apparent imprecision of the language as a sufficient basis
      to rule against appellan. This, in our view, is not a satisfactory
      approach to the construction of the facially ambiguous language
      contained in the addendum. While it is a well settled rule of
      construction that in cases of ambiguity, leases and grants should
      be construed most strongly against the drafter; it is equally clear
      that the rule is not intended as a talismanic solution to the
      construction of ambiguous language. Rules of construction serve
      the legitimate purpose of aiding courts in their quest to ascertain
      and give effect to the intention of parties to an instrument. They
      are not meant to be applied as a substitute for that quest. Where
      a document is found to be ambiguous, inquiry should
      always be made into the circumstances surrounding the
      execution of the document in an effort to clarify the
      meaning that the parties sought to express in the language
      which they chose. It is only when such an inquiry fails to
      clarify the ambiguity that the rule of construction relied
      upon by the chancellor should be used to conclude the

                                    - 16 -
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      matter against that party responsible for the ambiguity,
      the drafter of the document. Because, however, we are able
      to decide the issue on the theory of easement by implied
      reservation there is no need to engage in an analysis of the
      language of the addendum.

Id. at 767 n.3. (citations omitted) (emphasis added). I already stated my

view that if the Majority found the provision at issue to be clear, then it could

proceed no further to consider extrinsic evidence in order to bolster its

interpretation as a matter of law. The same concern holds true with respect

to the invocation of the presumption against draftsmanship. The presumption

has no place in interpretation if, as the Majority concludes, the provision is

clear and unambiguous. Even if the Majority would agree that the provision

is ambiguous, as I contend, it still improperly invokes the presumption against

draftsmanship because extrinsic evidence of the parties’ intent has not been

reviewed to determine if that evidence may clarify the meaning of the

provision. If, and only if, extrinsic evidence is not capable of ascertaining the

intent of the parties may the court then, as a last resort, invoke the

presumption against draftsmanship as an aid to interpretation. And of course,

the task of making those findings is for the trial court.

      Finally, I do concur in the Majority’s holding that it was not error for the

trial court to fail to consider that 20 West Park received no consideration for

the transaction. Firstrust argues, and the Majority agrees, that the issue of

consideration was not properly before the trial court, since this is a declaratory

judgment action as to the meaning of the contract and not an action to enforce

the Mortgage.    I agree, but wish to offer a more substantive reason for

                                     - 17 -
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rejecting this argument. The record reflects that on February 17, 2019 and

October 28, 2018, Richard Balagur and Kenneth Balagur, respectively,

representing 100% of the membership having a voting and controlling stake

in 20 West Park, amended the company’s operating agreement to memorialize

the basis upon which the company was willing to pledge as collateral Ken

Balagur’s 45% equity in the company to secure a bank loan related to his

other private investments. The approved amendment states:

      It is agreed that it in exchange for a waiver of the LOC credit
      guarantee fee currently paid to Kenneth Balagur and his
      agreement to waive interest payments if the LLC manager
      determines that to be advantageous, Kenneth Balagur may enter
      into an agreement where his 45% equity in 20 West Park, LLC is
      pledged as collateral to secure a bank loan related to his other
      private investments. This pledge of collateral may be evidenced
      or secured as required by the lending institution provided that as
      part of any recording of a lien, security filing or mortgage that
      within the public record there is clear wording that even if a
      mortgage reflects a security interest in the whole building that
      that the banks [sic] interest is limited to Kenneth Balagur’s equity
      position and that the balance of the buildings [sic] equity remains
      with the other financial owners of the LLC, excluding Kenneth
      Balagur’s equity.

20 West Park, LLC Operating Agreement Amendment, Trial Exhibit No. 39. It

is evident from this document alone that consideration was in fact given in

exchange for 20 West Park executing the loan documents, and in particular,

the Mortgage. It did so in order to facilitate the Firstrust loan to Ken Balagur

and his company. Apparently, Ken Balagur was willing to waive a LOC credit

guarantee fee and interest payments in exchange for 20 West Park agreeing

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J-A03035-22

to encumber his membership interest in favor of Firstrust extending the loan

to Ken Balagur’s company.

      For the foregoing reasons, I respectfully dissent from the Majority’s

decision to affirm the grant of summary judgment in favor of Firstrust.        I

concur in its disposition of Appellants’ last claim regarding the lack of

consideration for this transaction. Further, I would deny Appellants’ request

that summary judgment be entered in its favor, as factual questions remain

as to the intentions of the parties with respect to the contractual provision at

issue contained within the Mortgage and the other loan documents.

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