Court Opinion

ID: 4102198
Source: CourtListenerOpinion
Date Created: 2016-11-23 21:13:55.887166+00
Date Added: 2024-06-11T09:20:57.498541
License: Public Domain

J-A24045-16

                            2016 PA Super 261
HUMERA KHAWAJA                                 IN THE SUPERIOR COURT OF
                                                     PENNSYLVANIA
                        Appellant

                   v.

RE/MAX CENTRAL

                        Appellee                   No. 3776 EDA 2015

            Appeal from the Order Entered November 20, 2015
             In the Court of Common Pleas of Lehigh County
                   Civil Division at No(s): 2015-C-1511

BEFORE: BOWES, J., OTT, J., and SOLANO, J.
OPINION BY SOLANO, J.:                        FILED NOVEMBER 23, 2016

     Appellant Humera Khawaja appeals         from an order entered on

November 20, 2015, that sustained the preliminary objections of Appellee

RE/MAX Central and dismissed Khawaja’s complaint.        We affirm in part,

reverse in part, and remand.

     According to her complaint,1 Khawaja is a licensed real estate agent

who entered into a one-year Agreement on January 19, 2015, to act as an

independent contractor with RE/MAX, a licensed real estate broker. Compl.

at 2 ¶ 8; Agreement (Compl., Ex. “A”). Pursuant to the Agreement, RE/MAX

would provide Khawaja with office space, administrative support, and other

1
  Because this case was decided on preliminary objections, we rely on the
facts as alleged in the complaint, including its exhibits. See Albert v. Erie
Ins. Exch., 65 A.3d 923, 928 (Pa. Super. 2013) (“In an appeal from an
order granting preliminary objections in the nature of a demurrer we accept
as true all well-pleaded material facts in the complaint, as well as all
reasonable inferences deducible therefrom”).
J-A24045-16

services.   Compl. at 3 ¶ 10.   In exchange, Khawaja worked on a “100%

commission concept,” in which 30% of Khawaja’s commissions would be

withheld by RE/MAX to pay for support and services up to a total of $17,163.

Compl. at 2-3 ¶¶ 4, 11; Agreement (Compl., Ex. “A”) ¶¶ 8,11. After that

amount was satisfied, Khawaja would receive 100% of any further

commissions she earned. Compl. at 2 ¶ 7.

      The applicable terms governing this arrangement are set forth in

Paragraphs 8(A) and 11(A) of the Agreement, which read:

      8. COMMISSIONS

      A.    All commissions payable to Contractor will be collected by
            RE/MAX and transmitted with 30% retained by RE/MAX
            and 70% to Contractor. Contractor is responsible for 1%
            Broker Service Fee. Commissions are earned at time of
            Agreement of Sale but not collected until settlement.
            Independent Contractor Agreement in force at the time of
            Agreement of Sale is how commission splits will be
            disbursed.
      ...

      11.   CONTRACTOR FEES
      ...

      A.    Contractor agrees to allow RE/MAX to withhold 30 percent
            (30%)     from   Contractor’s   commission     income   to
            compensate RE/MAX $17,163.00 (yearly amount) as a
            Fixed & Administrative Expense Fee during the term of this
            Agreement.     These Fixed Expenses are for an office
            expense of $831.25 per month and administrative fee of
            $599.00 per month. This monthly figure shall be for a
            one-year period according to the terms of the contract. All
            income in excess of the Fixed Expense Fee shall be paid to
            the Contractor for the duration of this one (1) year
            contract, subject to Paragraphs 12 [“Late Charges”] and
            14 [“Termination”] of this Agreement.

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Agreement (Compl., Ex. “A”) at 5-6 ¶¶ 8(A), 11(A).

      RE/MAX terminated its Agreement with Khawaja on April 22, 2015.

Compl. at 4 ¶ 20.2    At that time, Khawaja had several pending listings of

properties with RE/MAX. Id. at ¶ 21. Some of the listings had closed prior

to the filing of this lawsuit, and some listings remained open at the time the

suit was filed.   Trial Court Opinion, 3/1/16, at 1-2.    Paragraph 14 of the

Agreement governs payments to real estate agents for transactions pending

at the time the Agreement is terminated:

      14.   TERMINATION
      ...
      D.    Transactions Pending
            In the event the Contractor terminates and any
            transaction(s) pending require(s) further work normally
            rendered by the Contractor, RE/MAX may at its sole
            discretion make arrangements with the Contractor to
            perform the required work, or Broker may assign an agent
            to complete the transaction.        Direct out-of-pocket
            expenses incurred by RE/MAX and a twenty percent (20%)
            referral fee for the manager completing the work shall be
            deducted from terminated Contractor’s commission(s).

      E.    Commissions Received After Termination
            After notice by either party of intent to terminate this
            Agreement, should RE/MAX receive any sales commissions
            as a result of transactions initiated by Contractor, subject
            to Sub-paragraph “D” above, they shall be applied, in
            total, first to the payment of late charges, then to interest,
            then to any outstanding balance owed RE/MAX, and, if
            any, the remainder shall be paid to the Contractor.

2
  Both parties agree that RE/MAX terminated the Agreement. See Compl. at
4 ¶ 20; Prelim. Objections at 2 ¶ 7. Although Khawaja claims she was
terminated without cause, and RE/MAX claims that she was terminated for
cause, that issue is not relevant here. See Trial Court Opinion, 3/1/16, at 2.

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Agreement (Compl., Ex. “A”) at 9 ¶14(D)-(E). Khawaja alleges that RE/MAX

received commissions after she was terminated and, in violation of the

Agreement, failed to pay those commissions to Khawaja. Compl. at 4-5 ¶¶

21, 23, 27-28.

      On May 11, 2015, Khawaja commenced this action to recover the

unpaid commissions.     Her complaint alleged breach of contract and unjust

enrichment.3 On May 22, 2015 and June 2, 2015, RE/MAX issued checks to

Khawaja for commissions to which it agreed Khawaja was entitled under the

Agreement.       It withheld from the commissions the 20% “referral fee”

referenced in Paragraph 14(D) of the Agreement. See Prelim. Objections ¶¶

27-28 & Exs. “A,” “B.” On June 9, 2015, RE/MAX filed preliminary objections

in the nature of a demurrer that asserted that Khawaja was entitled to no

additional payments.

      On July 10, 2015, the trial court entered an order directing the parties

“to establish and create any facts of record necessary to the disposition of

the Preliminary Objections” and scheduling argument on the preliminary

objections for September 4, 2015.       On the date scheduled for argument,

each party filed affidavits.   RE/MAX submitted an affidavit by its principal,

Thomas Skiffington, that was dated August 6, 2015, and stated that RE/MAX

had paid Khawaja “all commissions due and owing” under the Agreement for

3
  Her complaint also included a count requesting equitable relief. The trial
court dismissed that count, and Khawaja does not appeal that part of the
trial court’s decision.

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transactions that closed after her termination. Skiffington Aff., 8/6/15, ¶ 7.

He attached a spreadsheet showing deductions that RE/MAX made from

those commissions, including deduction of the 20% “referral fee.” Id. ¶¶ 8-

9 & Ex. “A.” Khawaja submitted her own affidavit listing properties for which

she claimed commissions still were due and owed to her and stating her

disagreement with Mr. Skiffington’s assertions. She claimed RE/MAX owes

her $26,982.86. Khawaja Aff., 9/4/15, ¶¶ 7-9 & Exs. “A” & “B.”

     The trial court sustained RE/MAX’s preliminary objections in an order

dated November 20, 2015. In its order, the trial court stated:

     Plaintiff is correct that Section 14D of the Independent
     Contractor Agreement does not apply in this instance because
     Plaintiff was terminated by RE/MAX Central; Plaintiff did not
     terminate the contract.       After a thorough reading of the
     Independent Contractor Agreement, we find Defendant RE/MAX
     Central’s generous interpretation of the contract to Plaintiff’s
     benefit. Plaintiff failed to set forth a cause of action indicating
     she is entitled to more.

Trial Court Order, 11/20/15, at 1-2 n.1. This appeal followed.

     In her brief, Khawaja raises the following four issues:

     1. Did The Lower Court Err By Granting [RE/MAX’s] Demurrer
        After Expressly Finding [RE/MAX’s] Sole Defense To
        [Khawaja]’s Complaint Was Unfounded?

     2. Did The Lower Court Err By Entering Final Judgment On
        [RE/MAX’s] Demurrer Where It Was Evident That The Claimed
        Deficiency Could Have Been Cured By Permitting An
        Amendment To [Khawaja]’s Complaint?

     3. Did The Lower Court Err By Dismissing [Khawaja]’s Unjust
        Enrichment Claim Because A Breach Of Contract Claim Was
        Asserted In The Alternative?

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      4. Did The Lower Court Err By Expressly Acknowledging That It
         Committed Error, But Then Disregarded It?

Khawaja’s Brief at 4.

      On March 16, 2016, the trial court filed an opinion pursuant to

Appellate Rule 1925. Focusing on Khawaja’s claim that she was entitled to

commissions due on listings that closed after she was terminated, the court

reviewed the competing affidavits and found that Khawaja did not include in

her submissions the closing dates for the properties to which she claimed

commissions and therefore had failed to provide “necessary elements for

determining the amounts due pursuant to Paragraph 8 of the Agreement.”

Trial Court Opinion, 3/16/16, at 4.    Accordingly, the court said, “the facts

asserted by [RE/MAX] “essentially remained unrefuted.” Id.

      The court then lamented its consideration of the affidavits, stating that

it was “in error” to receive them because preliminary objections should be

decided only on the pleadings.     Trial Court Opinion, 3/16/16, at 4.     “By

submitting affidavits,” the court said,” both counsel invited the consideration

of matters which would have been more properly addressed by a motion for

summary judgment.” Id. The court said that because defense counsel did

not object to consideration of the affidavits, RE/MAX had waived this error.

Id.

      The court then stated the following holding on the breach of contract

claim:

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            We conclude the following: Paragraph 8 of the Agreement
      is the only paragraph which applies to Plaintiff’s right of
      recovery. Therefore, to the extent that the complaint alleges
      contractual rights of recovery in excess of Paragraph 8, the
      demurrer is sustained. Our order should have allowed the case
      to proceed on Count I, and to that extent we were in error.
      However, we point out that the error was prompted by the
      Defendant’s complicity in submitting an affidavit and in failing to
      object to the court’s consideration of same.

Trial Court Opinion, 3/16/16, at 4-5. In later pages of its opinion, the court

said it had properly dismissed Khawaja’s claim for unjust enrichment

because Khawaja had pleaded an entitlement to the commissions under an

express contract and an unjust enrichment claim is incompatible with such a

contract claim. Id. at 5-6 (citing, e.g., Villoresi v. Femminella, 856 A.2d

78, 84 (Pa. Super. 2004)).

      Our standard of review is as follows:

      Our standard of review of an order of the trial court overruling or
      granting preliminary objections is to determine whether the trial
      court committed an error of law.          When considering the
      appropriateness of a ruling on preliminary objections, the
      appellate court must apply the same standard as the trial court.

      Preliminary objections in the nature of a demurrer test the legal
      sufficiency of the complaint.       When considering preliminary
      objections, all material facts set forth in the challenged pleadings
      are admitted as true, as well as all inferences reasonably
      deducible therefrom.      Preliminary objections which seek the
      dismissal of a cause of action should be sustained only in cases
      in which it is clear and free from doubt that the pleader will be
      unable to prove facts legally sufficient to establish the right to
      relief. If any doubt exists as to whether a demurrer should be
      sustained, it should be resolved in favor of overruling the
      preliminary objections.

                                     -7-
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Perelman v. Perelman, 125 A.3d 1259, 1263 (Pa. Super. 2015), appeal

denied, 141 A.3d 435 (Pa. 2016) (internal citations and quotation marks

omitted).

                             Breach of Contract

     With respect to her first issue, Khawaja contends that the trial court’s

order dismissing her breach of contract claim contains erroneous logic that

wrongly permits RE/MAX to withhold $26,982.86 of her earned commissions.

Khawaja’s Brief at 15-16. Khawaja claims that RE/MAX already has withheld

the full $17,163 in expense fees to which it is entitled under Paragraph

11(A) of the Agreement and that she therefore should be paid 100% of the

commissions earned on listings that closed after her termination, pursuant

Paragraph 14(E) of the Agreement.       RE/MAX responds that it has paid

Khawaja all of the commissions to which she is entitled and that any money

it has retained consists mainly of the 20% “referral fee” authorized under

Paragraph 14(D) of the Agreement. RE/MAX’s Brief at 10.

     The trial court’s November 20, 2015 order held that Paragraph 14(D)

did not permit RE/MAX to withhold referral fees because Paragraph 14(D)

applies only to cases in which the real estate agent — here, plaintiff Khawaja

— terminates the Agreement, and not to terminations by RE/MAX. As the

court emphasized, “Plaintiff did not terminate the contract.”     Trial Court

Order, 11/20/15, at 1 n.1.    But the trial court nevertheless held that the

case should be dismissed because RE/MAX’s “generous interpretation of the

                                    -8-
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contract [is] to Plaintiff’s benefit” and Khawaja failed to state a claim to

entitlement to more than RE/MAX had already paid her. Id. at 2 n.1. The

court did not further explain this reasoning, and in its Rule 1925 opinion, it

apparently stepped back from this second part of its order. The Rule 1925

opinion states that Paragraph 8 “is the only paragraph which applies to

[Khawaja’s] recovery,” thus apparently adhering to the court’s original view

that Paragraph 14(D) is inapplicable; then, the opinion adds that the court’s

failure to allow Khawaja to proceed on her breach of contract claim was “in

error.” Trial Court Opinion, 3/16/16, at 4.

      We interpret all of this to mean that the trial court concluded the

following:   RE/MAX’s defense based on Paragraph 14(D) is without merit;

Khawaja’s contract claim therefore is not subject to dismissal on the basis of

that Paragraph 14(D) defense; and, contrary to what the court initially said

in its November 20, 2015 order, Khawaja is entitled to proceed on her

contract claim for recovery of damages under the remainder of the

Agreement. With this understanding of the trial court’s decision, we agree,

and we therefore reverse and remand to correct the error in the November

20, 2015 order that was recognized by the trial court.

      First, we agree that Paragraph 14(D) of the Agreement does not give

RE/MAX a right to retain 20% of the commissions as a “referral fee.” The

paragraph reads:

      In the event the Contractor terminates and any
      transaction(s) pending require(s) work normally rendered by the

                                     -9-
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        Contractor, RE/MAX may at its sole discretion make
        arrangements with the Contractor to perform the required work,
        or Broker may assign an agent to complete the transaction.
        Direct out-of-pocket expenses incurred by RE/MAX and a twenty
        percent (20%) referral fee for the manager completing the work
        shall be deducted from terminated Contractor's commission(s).

Agreement (Compl., Ex. “A”) at 9 ¶ 14(D) (emphasis added). 4             When

interpreting a contract, “[t]o discern the parties’ intent, the court must give

effect to clear and unambiguous terms without reference to matters outside

the contract.”     Anchel v. Shea, 762 A.2d 346, 352 (Pa. Super. 2000)

(internal citations and quotation marks omitted).         By its plain terms,

Paragraph 14(D) applies only “[i]n the event the Contractor terminates” the

Agreement. The definition of “Contractor” is set forth at the very beginning

of the Agreement:

        THIS AGREEMENT made and entered into this 19th day of
        January, 2015, and effective date February 1, 2015 by and
        between RE/MAX Central (hereinafter called “RE/MAX”) . . . and
        Humera Khawaja (hereinafter called “CONTRACTOR”) . . . .

Agreement (Compl., Ex. “A”) at 1. Clearly, then, the reference in Paragraph

14(D) to “the Contractor” is to Khawaja, and the paragraph applies only if

Khawaja terminates the Agreement.              The parties agree that RE/MAX

terminated the Agreement, not Khawaja.             Compl. at 4 ¶ 20; Prelim.

Objections, at 2 ¶ 7.       Therefore, Paragraph 14(D) is inapplicable, and

RE/MAX has no right to claim a “referral fee” under it.

4
    We have found no reported decisions interpreting this provision.

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     RE/MAX argues that this interpretation is incorrect because the

sentence setting forth its right to a referral fee (the final sentence of

Paragraph 14(D)) states that “a twenty percent (20%) referral fee for the

manager     completing the   work    shall be    deducted     from terminated

Contractor's commission(s).” Agreement (Compl., Ex. “A”) at 9 ¶ 14(D)

(emphasis    added).     RE/MAX     contends    that   the   phrase   “terminated

Contractor” refers to any terminated contractor, regardless of whether the

Agreement was terminated by the contractor or by RE/MAX. RE/MAX’s Brief

at 10-11. We disagree.

     We interpret provisions of a contract in light of the context in which

they appear. Reilly v. City Deposit Bank & Trust Co., 185 A. 620, 623

(Pa. 1936) (in interpreting contracts, that sense of words used should be

adopted which best harmonizes with context and promotes in the fullest

manner the objects of the parties). Paragraph 14(D) is a single paragraph

addressing what happens to pending transactions when a real estate agent

terminates the Agreement. It authorizes RE/MAX to arrange for the agent to

continue working on the listing or to assign another agent to complete the

transaction, and it then provides for RE/MAX to be paid its expenses

resulting from the agent’s termination of the Agreement and for payment of

a referral fee relating to the hiring of a new manager to complete the

transaction. There is no indication in Paragraph 14(D) that the references in

its last sentence to payment of expenses and a referral fee have a broader

                                     - 11 -
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application than the rest of the paragraph, which relates only to terminations

by an agent (“the Contractor”).5       Indeed, the Agreement’s succeeding

paragraph, 14(E), lists the categories of payments (late charges, interest,

and outstanding balances) that are to be subtracted from commissions when

there is “notice by either party of intent to terminate this Agreement.”

See Agreement (Compl., Ex. “A”) at 9 ¶ 14(E) (emphasis added). Referral

fees are not in that list.

      Because Paragraph 14(D) provides no defense to Khawaja’s claim for

breach of contract, it provides no ground for dismissal of that claim. 6 The

trial court’s Rule 1925 opinion recognized this fact, stating that the court’s

dismissal was “in error.” Trial Court Opinion, 3/16/16, at 4. We agree, and

5
  RE/MAX contends that the “referral fee” provision merely “memorializes”
the idea that, once a second agent is assigned to complete the transaction,
that agent and the original agent will share compensation, and RE/MAX
suggests that the 20% fee is intended to allocate commissions between the
two agents. See RE/MAX’s Brief at 10. But a separate provision of the
Agreement, Paragraph 8(C), provides for shared commissions. It states:

      In the event that two or more Contractors participate in a
      transaction, the commission shall be divided between the
      participating contractors according to the agreement between
      them or by arbitration.

Because this provision already provides for allocation of the commissions,
Paragraph 14(D) has no role to play in that task.
6
   Although we agree that Paragraph 14(D) is inapplicable, we do not
necessarily agree with the trial court’s statement that “Paragraph 8 of the
Agreement is the only paragraph that applies to Plaintiff’s right of recovery.”
Trial Court Opinion, 3/16/16, at 4. As our opinion notes, several other
paragraphs of the Agreement may be implicated here, and we take no
position on whether or how they may apply.

                                    - 12 -
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we therefore reverse and remand for further proceedings on Counts I and III

of the complaint alleging breach of contract.

      Our disposition makes it unnecessary to reach Khawaja’s second and

fourth issues. Khawaja’s second issue relates to the trial court’s failure to

permit her to amend her complaint to add any averments necessary to make

her contract claim viable. Because we have held that the contract claim as

originally pleaded was viable and should have been permitted to proceed,

that issue is moot.

      Khawaja’s fourth issue relates to the trial court’s discussion of its

professed error in considering the parties affidavits in connection with the

preliminary objections.    The trial court was correct that it should have

resolved the preliminary objections without reference to the affidavits. See

Kilmer v. Sposito, --- A.3d ----, 2016 PA Super 141, at *2 (Pa. Super.

2016). Consideration of materials extraneous to the complaint would have

been appropriate on a motion for summary judgment, but the trial court was

not presented with a summary judgment motion here.           Although the trial

court commented about deficiencies in in the proof provided by the

affidavits, see Trial Court Opinion, 3/16/16, at 4, the court did not base its

dismissal of the action on any of the extraneous information provided by the

parties. As we now reverse the dismissal on other grounds, the trial court’s

consideration of the affidavits provides no basis for any appellate action.

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                            Unjust Enrichment

      Khawaja’s remaining issue is whether the trial court erred in

dismissing her count alleging unjust enrichment. The trial court recognized

that a plaintiff may plead alternative theories of recovery in a complaint, but

it held that, because Khawaja acknowledged the undisputed fact that she

entered into a written Agreement with RE/MAX, there could be no basis for

an unjust enrichment claim.      We agree.     A cause of action for unjust

enrichment may arise only when there is no express contract between the

parties. Villoresi, 856 A.2d at 84. Here, in light of the written Agreement,

Khawaja’s claim of unjust enrichment cannot stand.

      Although Khawaja contends that the trial court misapplied this rule of

law, she presents no authority to support her assertion. A claim sounding in

breach of contract may be pleaded alternatively with a claim of unjust

enrichment if the claims are raised in separate counts of a complaint. Lugo

v. Farmers Pride, Inc., 967 A.2d 963, 970 (Pa. Super. 2009).         However,

the fact remains that “[a] cause of action for unjust enrichment arises only

when a transaction is not subject to a written or express contract,”

Northeast Fence & Iron Works, Inc. v. Murphy Quigley Co., 933 A.2d

664, 669 (Pa. Super. 2007). Khawaja argues that the trial court’s rejection

of her claim based on the Agreement meant that her unjust enrichment

claim should have been permitted to proceed.       Khawaja’s Brief at 22-23.

But because we have reversed the dismissal of Khawaja’s contract claim,

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this argument no longer has any force. Khawaja’s complaint alleged unjust

enrichment in her second count, which incorporated by reference the facts

pled in Count I, her breach of contract count. See Compl. at 6. Her unjust

enrichment count thus averred the existence and terms of the signed

Agreement. Because a claim for unjust enrichment cannot stand when there

is an express contract and because Khawaja’s allegations in this regard are

based on the terms of such a contract, we affirm the trial court’s dismissal of

Khawaja’s unjust enrichment claim.

      In sum, we reverse the trial court’s dismissal of Counts I and III of

Khawaja’s complaint, alleging breach of contract; reinstate those claims; and

remand for further proceedings with respect to them.       We affirm the trial

court’s dismissal of Count II of the complaint, alleging unjust enrichment.

      Case remanded. Panel jurisdiction relinquished.

      Judge Bowes joins the opinion.

      Judge Ott concurs in the result.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 11/23/2016

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