Court Opinion

ID: 2805415
Source: CourtListenerOpinion
Date Created: 2015-06-03 19:14:49.07069+00
Date Added: 2024-06-11T11:29:56.027428
License: Public Domain

J. A11005/15

NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P. 65.37

NORTH EAST EDUCATIONAL                       :        IN THE SUPERIOR COURT OF
ASSOCIATES, INC., D/B/A                      :              PENNSYLVANIA
BRIDGEWAY ACADEMY,                           :
                                             :
                          Appellant          :
                                             :
                     v.                      :
                                             :           No. 1182 EDA 2014
KILLER INTERACTIVE, LLC, AND                 :
JASON PIJUT                                  :

              Appeal from the Judgment Entered June 18, 2014,
           in the Court of Common Pleas of Northhampton County
                   Civil Division at No. C48-CV2013-3583

BEFORE: FORD ELLIOTT, P.J.E., OLSON AND WECHT, JJ.

MEMORANDUM BY FORD ELLIOTT, P.J.E.:                          FILED JUNE 03, 2015

      Appellant brings this appeal from the judgment entered June 18, 2014,

which found in favor of appellees regarding appellant’s lawsuit against

appellees which sounded in breach of contract, fraud, unjust enrichment,

and which sought to pierce the corporate veil. Appellees were also partially

victorious on a counterclaim. Finding no error below, we affirm.

      Appellant, North East Educational Associates, Inc., doing business as

Bridgeway Academy (“Bridgeway”), is a company that markets programs

and   support   to   parents   who    wish       to   home   school   their   children.

Jessica Parnell (“Parnell”) is the president of North East Educational

Associates, Inc. Killer Interactive, LLC (“Killer”), is a company that creates
J. A11005/15

custom software and internet websites.         Jason Pijut (“Pijut”) is the chief

operating officer of Killer.

      On November 8, 2011, Bridgeway and Killer entered into a written

contract for Killer to design a custom internet website for Bridgeway. The

work was to be completed in six phases with the following completion dates:

Phase 1 -- January 1, 2012; Phase 2 -- April 2, 2012;1 Phase 3 -- April 20,

2012; Phase 4 -- April 20, 2012; Phase 5 -- August 1, 2012; and Phase 6 --

September 21, 2012.            Moreover, the parties viewed the completion of

Phase 2, the customer relationship management software, as the most

crucial piece of the new system.

      The written contract also contained the following termination terms:

             Termination can occur at any point during the
             project. The CLIENT reserves the right to terminate
             this Agreement upon thirty (30) days written notice
             to Killer for any cause. Killer shall, at its option,
             have the right to terminate this agreement with
             retention of all fees paid as of the date of
             termination, in the event that CLIENT breaches any
             of its obligations under this agreement.

             In the event of any termination or cancellation of this
             agreement by CLIENT, CLIENT shall be liable to Killer
             for only the pro rata portion of the fee, at the
             discretion of Killer up to a $1,000.00 cancellation fee
             and expenses set forth in this Agreement.

Agreement, Termination Clause.

1
  Appellant’s brief states April 20, 2012, as the completion date for Phase 2.
(Appellant’s brief at 12.) However, the agreement itself bears the date we
use.

                                        -2-
J. A11005/15

      Finally, the contract obligated Bridgeway to make an initial payment of

$8,600 to Killer, followed by nine additional monthly payments of $8,600,

for a total payment of $86,000.        (Agreement, Payment Schedule and

Timeline Clause.)

      At trial, the parties were in dispute as to Killer’s performance under

the contract.   According to Pijut, the website was live but had simply not

been activated, while Parnell testified that none of the six phases had been

completed. (Notes of testimony, 3/11/14 at 26-27, 72-74, 79; 130-131.)2

What the parties apparently did agree upon is the misrepresentation of Killer

employee Jonathan Koray Girton (“Girton”) to Bridgeway.

      Girton was Killer’s primary project developer for the Bridgeway

project. (Id. at 36, 248.) Indeed, it was Girton who initially “sold” Parnell

on hiring Killer, because Girton had “the vision.” (Id. at 125.) Ultimately,

Pijut discovered that Girton had fallen badly behind in the development of

the Bridgeway project, especially in regard to the critical Phase 2. (Id. at

79-80.) Pijut also discovered that Girton had actually created a sham search

engine program as part of Phase 2 in order to deceive Parnell and Bridgeway

as to his progress. (Id. at 227-228, 236, 261-262.) As a result, Pijut fired

Girton on June 19, 2012. (Id. at 250.)

2
  Pijut specifically testified that the critical Phase 2 customer relationship
management software had been installed, but had not yet been made
available to Bridgeway. (Id. at 79.)

                                    -3-
J. A11005/15

     Pijut claimed that he informed Parnell of Girton’s deception during a

telephone conversation at that time. (Id. at 77.) Pijut also stated that he

had a sit-down meeting with Parnell and Bridgeway on June 20, 2012, where

he again informed them about Girton’s deception including his fabrication of

the fake search engine.      (Id. at 82, 226-228, 236.)   At the time, Pijut

informed Parnell and Bridgeway that he believed that Killer could still meet

its obligations, stating that they “should be on target or very close on the

rest of the phases.”    (Id. at 81.)    However, when Pijut and his other

employees subsequently reviewed Girton’s computer code, they discovered

that it was going to take more time and effort to fix than they had first

thought. (Id. at 82, 237.)

     For her part, Parnell denied that she was informed in June as to

Girton’s deception. (Id. at 128.) Rather, she claimed that the deception did

not come to her knowledge until November 2012. (Id. at 128-129.) On or

about November 30, 2012, Bridgeway informed Killer that they were done

making payments on the contract. (Id. at 130.) Bridgeway had, in fact, not

made a payment to Killer since May 2012.       (Id. at 146.)    Sometime in

mid-December of 2012, Bridgeway told Killer that they were no longer to

work on the project. (Id. at 66.) Finally, Parnell admitted that after Girton

was fired from Killer, she hired him to create a warehouse management

system that would “talk the same language” as the system Killer was

creating under Phase 2. (Id. at 146-147.)

                                     -4-
J. A11005/15

      Bridgeway filed its Complaint on April 18, 2013. As noted, it sounded

in breach of contract, fraud, unjust enrichment, and sought to pierce the

corporate veil in order to hold Pijut personally liable.   Killer and Pijut filed

their Answer, New Matter, and Counterclaim on May 30, 2013.                  The

Counterclaim sought the $22,650 that was still owing on the contract, plus

compensation for additional work that had been performed, and the $1,000

wrongful cancellation charge described in the termination clause. Both sides

also sought counsel fees.

      Following a bench trial on March 11, 2014, the trial court rendered its

decision on March 13, 2014. The court found in favor of Killer on all counts

of both the Complaint and the Counterclaim except that count of the

Counterclaim seeking the $22,650 that Killer claimed was still owing. The

court found that Killer was owed $60,586 for the contract work performed,

$2,000 for additional work, and $1,000 for the wrongful termination charge,

for a total of $63,586. The court further found that Bridgeway had overpaid

this amount, having made payments to Killer totaling $66,500. Therefore,

the court awarded Bridgeway the difference between the sums, $2,914. No

counsel fees were awarded.     Following post-trial motions, Bridgeway filed

this timely appeal.

      On appeal, Bridgeway raises the following issues:

            A.    Did the lower court err in asserting that it was
                  compelled to enforce specific terms of the
                  written contract against the Plaintiff when, as a
                  matter of law, Defendants admitted fraudulent

                                     -5-
J. A11005/15

                 misrepresentations to Plaintiff voided the terms
                 of the contract which the lower court construed
                 against Plaintiff?

           B.    Did the lower court err in denying the Plaintiffs’
                 claim for damages arising from Defendants’
                 material breach of the contract and/or from
                 Defendants’ unjust enrichment when the lower
                 court conceded and/or the evidence adduced
                 at trial demonstrated (a) Plaintiff paid
                 $66,500.00 to Defendants on a contract for the
                 installation of a software system, (b) that
                 Defendants failed to install the software
                 system pursuant to the contract, and (c) that
                 Defendants’ failure to install the software
                 system was the result of Defendants’ wrongful
                 and intentional conduct?

           C.    Did the lower court err in failing to pierce the
                 corporate    veil   despite  (a)    Defendants’
                 admissions that the corporation was severely
                 undercapitalized, (b) Defendants’ admission
                 that Jason Pijut comingled his personal funds
                 and debts with those of the LLC, and (c) The
                 fact that the Defendants were involved in the
                 perpetration of a fraud?

Bridgeway brief at 7.

     We begin our analysis with our standard of review:

           Our review in a non-jury case is limited to whether
           the findings of the trial court are supported by
           competent evidence and whether the trial court
           committed error in the application of law. We must
           grant the court’s findings of fact the same weight
           and effect as the verdict of a jury and, accordingly,
           may disturb the non-jury verdict only if the court’s
           findings are unsupported by competent evidence or
           the court committed legal error that affected the
           outcome of the trial.       It is not the role of an
           appellate court to pass on the credibility of
           witnesses; hence we will not substitute our judgment
           for that of the fact[-]finder. Thus, the test we apply

                                    -6-
J. A11005/15

            is not whether we would have reached the same
            result on the evidence presented, but rather, after
            due consideration of the evidence which the trial
            court found credible, whether the trial court could
            have reasonably reached its conclusion.

Agostinelli v. Edwards, 98 A.3d 695, 704 (Pa.Super. 2014), appeal

denied,        A.3d    , (Pa. Apr 01, 2015) (NO. 698 MAL 2014), quoting

Lynn v. Pleasant Valley Country Club, 54 A.3d 915, 919 (Pa.Super.

2012).

      Bridgeway first complains that the trial court erred in enforcing the

obligations of the contract because the contract was rendered void by

Girton’s misrepresentation.

            In order to void a contract due to a fraudulent
            misrepresentation, the party alleging fraud must
            prove, by clear and convincing evidence: (1) a
            representation; (2) which is material to the
            transaction at hand; (3) made falsely, with
            knowledge of its falsity or recklessness as to whether
            it is true or false; (4) with the intent of misleading
            another into relying on it; (5) justifiable reliance on
            the misrepresentation; and (6) resulting injury
            proximately caused by the reliance. Bortz v. Noon,
            556 Pa. 489, 499, 729 A.2d 555, 560 (1999); Gibbs
            v. Ernst, 538 Pa. 193, 207, 647 A.2d 882, 889
            (1994). All of these elements must be present to
            warrant the extreme sanction of voiding the
            contract.

Porreco v. Porreco, 811 A.2d 566, 570-571 (Pa. 2002).

      Bridgeway cannot void the contract because no injury was caused by

reliance on Girton’s misrepresentation. The trial court specifically found the

testimony of Pijut to be credible as to alerting Bridgeway to Girton’s

                                     -7-
J. A11005/15

misrepresentation in June of 2012.          (Pa.R.A.P. 1925(a) STATEMENT,

11/10/14 at 4-5.) Thereafter, Bridgeway did not immediately give 30 days’

notice that it desired to terminate the contract; rather, Bridgeway apparently

acceded to Killer’s entreaties to allow their relationship to continue and that

Killer would attempt to meet its contractual obligations.        Thus, Bridgeway

did not rely on Girton’s misrepresentation, but chose to proceed with full

knowledge of it. Moreover, the injury here is a delay in completion of the

contract on schedule. By going forward after it had been advised of Girton’s

misrepresentation, Bridgeway accepted the delay caused by Girton. In sum,

the contract here is not voidable because of any reliance on Girton’s

misrepresentation.

        In its next issue, Bridgeway argues that the trial court’s decision is

absurd, because it “paid [Killer] $66,500, but received nothing of any value

as a result of fraudulent conduct of Mr. Girton,” 3 that “[t]here is no doubt

that none of the six proposed phases of the System are accessible and

operational,”4 and that it is egregiously absurd that Bridgeway is being

forced to pay Killer for any work done by Girton.            This argument is

essentially that the verdict is against the weight of the evidence.

                          [a]ppellate review   of a weight
                    claim is a review of the   [trial court’s]
                    exercise of discretion,    not of the
                    underlying question of     whether the

3
    Bridgeway brief at 36.
4
    Bridgeway brief at 37.

                                     -8-
J. A11005/15

                  verdict is against the weight of the
                  evidence. Because the trial judge has
                  had the opportunity to hear and see the
                  evidence presented, an appellate court
                  will give the gravest consideration to the
                  findings and reasons advanced by the
                  trial judge when reviewing a trial court’s
                  determination that the verdict is against
                  the weight of the evidence. One of the
                  least assailable reasons for granting or
                  denying a new trial is the lower court’s
                  conviction that the verdict was or was
                  not against the weight of the evidence
                  and that a new trial should be granted in
                  the interest of justice.

            Accordingly, there is a general rule barring appellate
            review of weight claims in the first instance. As
            such, where an appellant fails to raise a weight claim
            before the trial court, thus preventing it from
            addressing the claim from the vantage point of
            having presided over the trial, the claim is
            unreviewable on appeal.

Phillips v. Lock, 86 A.3d 906, 919 (Pa.Super. 2014), quoting In re Estate

of Smaling, 80 A.3d 485, 490-491 (Pa.Super. 2013) (en banc) (citations

omitted).

      Bridgeway did not raise a weight of the evidence claim in its motion for

post-trial relief but only addressed the issue of fraud and the voidability of

the contract. The trial court did not review the weight of the evidence and

there is nothing for us to review.   The failure to include a weight of the

evidence claim in a post-trial motion waives the claim.        Bensinger v.

University of Pittsburgh Medical Center, 98 A.3d 672, 685 (Pa.Super.

2014).

                                     -9-
J. A11005/15

       We note that the trial court regarded this issue not as a weight of the

evidence claim, but as a challenge to its determination of damages

(Pa.R.A.P. 1925(a) STATEMENT, 11/10/14 at 5.)             To the extent that

Bridgeway’s argument presents a question of whether the evidence supports

the damages awarded, we reiterate the following standard of review:

                   If a verdict bears a reasonable resemblance to
            the proven damages, this Court will not substitute its
            assessment for that of the trier of fact. Reimer v.
            Tien, 356 Pa.Super. 192, 514 A.2d 566 (1986). Our
            standard of review is extremely narrow. Taylor v.
            Celotex, 393 Pa.Super. 566, 593, 574 A.2d 1084,
            1098 (1990). An order for remittitur is only justified
            if the verdict is unsupported by the evidence or was
            the product of “partiality, prejudice, mistake or
            corruption.” [Rafter v. Raymark Industries, Inc.,
            429 Pa.Super. 360, 371, 632 A.2d 897, 902 (1993)].

Barrack v. Kolea, 651 A.2d 149, 156 (Pa.Super. 1994), appeal denied,

668 A.2d 1134 (Pa. 1995).

       Bridgeway’s claims that it paid Killer $66,500, but received nothing of

any value and that none of the six proposed phases were accessible and

operational relies wholly on Bridgeway testimony. The testimony presented

on behalf of Killer readily supports that it had implemented much of the

necessary computer code, but that the code had simply not been activated

yet:

            Q.    Do you recall your testimony earlier?

            A.    Yes.

            Q.    Do you recall     your     testimony   about   the
                  website?

                                    - 10 -
J. A11005/15

          A.   Yes.

          Q.   And you conceded, did you not, that the
               website is not accessible from the World Wide
               Web at this point, correct?

          A.   I know it was accessible is what I said. I said
               it wasn’t -- it wasn’t accessible through a dot
               com. It was accessible through an IP address.

          Q.   All right. But you can’t type in Bridgeway
               Academy into Google and get that website,
               correct?

          A.   No. The main -- like I said, I can explain it if
               --

          Q.   Is that correct? Is that correct? You can’t -- if
               you type in Bridgeway Academy --

          A.   Sure. You -- the main -- the dot com was
               never appointed to that IP address.

          Q.   Okay. So just for everyone’s understanding, if
               you type in Google like I do, Bridgeway
               Academy, a website comes up, but it’s not the
               website -- it’s not this website?

          A.   No. They opted never to put it live.

          Q.   All right. For reasons that were discussed at a
               previous exhibit where they said there were
               problems?

          A.   For his -- yeah. For his breakdown of the
               search issues that he believed he was going to
               have.

          Q.   So -- and certainly [Phase 2] was never
               complete, correct?

          A.   The Family File Section of [Phase 2] was
               completed where family files can be corrected

                                 - 11 -
J. A11005/15

                    and   indexed   and   cross-referenced  and
                    searched and all those pieces. All that was
                    completed.

              Q.    [Phase 2] as outlined in the proposal is not
                    complete, correct?

              A.    The full phase of it, no, was not completed.

Notes of testimony, 3/11/14 at 73-75 (cross-examination of Pijut).

        This testimony clearly indicates that Killer completed parts of the

computer code, including parts of Phase 2, albeit not all of the project. The

trial court credited Killer’s efforts with a value of $60,586.25 on a contract

bearing a total value of $86,000. (Pa.R.A.P. 1925(a) STATEMENT, 11/10/14

at 5.)5 Killer was plainly not accorded the value of the completed project.

The trial court based its finding, in part, on trial exhibit number 27, which

was a report of Killer’s billable hours to date. Id. We find that the evidence

supported the ultimate award to Bridgeway, and we find no error in the trial

court’s assessment.

        In its final issue, Bridgeway contends that the trial court erred in

failing to pierce the corporate veil in order to hold Pijut personally liable.

                    [T]here is a strong presumption in
                    Pennsylvania   against  piercing   the
                    corporate    veil.      Wedner       v.
                    Unemployment Board, 449 Pa. 460,
                    464, 296 A.2d 792, 794 (1972) (“[A]ny
                    court must start from the general rule
                    that the corporate entity should be
                    recognized and upheld, unless specific,
                    unusual circumstances call for an

5
    The final award ignored the extra 25 cents accorded to Killer.

                                      - 12 -
J. A11005/15

               exception. . . . Care should be taken on
               all occasions to avoid making the entire
               theory of corporate entity * * * useless.
               Zubik v. Zubik, 384 F.2d 267, 273 (3d
               Cir.1967)”). Also the general rule is that
               a corporation shall be regarded as an
               independent entity even if its stock is
               owned entirely by one person. College
               Watercolor Group, Inc. v. William H.
               Newbauer, Inc., 468 Pa. 103, 117, 360
               A.2d 200, 207 (1976).

                     Commonwealth Court has set out
               the factors to be considered in
               disregarding the corporate form as
               follows:

                     undercapitalization, failure to
                     adhere        to      corporate
                     formalities,        substantial
                     intermingling of corporate and
                     personal affairs and use of the
                     corporate form to perpetuate a
                     fraud.       Department      of
                     Environmental Resources v.
                     Peggs Run Coal Co[.], [423
                     A.2d 765 (Pa.Cmwlth.1980)].

               Kaites v. Dept. of Environmental
               Resources, [529 A.2d 1148, 1151
               (Pa.Cmwlth.1987)].           See     also
               Watercolor Group v. Newbauer, 468
               Pa. at 117, 360 A.2d at 207, (corporate
               veil may be pierced whenever one in
               control of a corporation uses that control
               or corporate assets to further his
               personal interests).

          Lumax Industries, Inc. v. Aultman, 543 Pa. 38,
          41-42, 669 A.2d 893, 895 (1995). “Nevertheless, ‘a
          court will not hesitate to treat as identical the
          corporation and the individuals owning all its stocks
          and assets whenever justice and public policy
          demand and when the rights of innocent parties are

                                 - 13 -
J. A11005/15

             not prejudiced thereby nor the theory of corporate
             entity made useless.’” Good v. Holstein, 787 A.2d
             426, 430 (Pa.Super.2001) (quoting Kellytown Co.
             v. Williams, 284 Pa.Super. 613, 426 A.2d 663, 668
             (1981)). Stated differently, “‘[T]he corporate form
             will be disregarded only when the entity is used to
             defeat public convenience, justify wrong, protect
             fraud or defend crime.’” Good, 787 A.2d at 430
             (quoting First Realvest, Inc. v. Avery Builders,
             Inc., 410 Pa.Super. 572, 600 A.2d 601, 604
             (1991)).

Advanced Telephone Systems, Inc. v. Com-Net Professional Mobile

Radio, LLC, 846 A.2d 1264, 1277-1278 (Pa.Super. 2004) (footnote

omitted), appeal denied, 859 A.2d 767 (Pa. 2004).

        We find no basis for piercing the corporate veil. Bridgeway did adduce

testimony that Pijut made personal withdrawals on the Killer corporate bank

account, but as Killer and Pijut indicate, the amounts were not significant

enough, compared to Killer’s gross receipts, to merit piercing the corporate

veil. Bridgeway also argues that Killer was undercapitalized because there

were no funds to pay a subcontractor Killer hired to work on the Bridgeway

project.6   However, Pijut testified that he was relying on future payments

from Bridgeway as well as other incoming funds to pay the subcontractor.

(Notes of testimony, 3/11/14 at 113.) Finally, the use of the corporate form

here was not instrumental to the fraud that was alleged. Simply stated, this

is not an example of the grievous misuse of the corporate form required to

pierce the corporate veil.    Given the strong presumption in Pennsylvania

6
    Reenhanced, LLC.

                                     - 14 -
J. A11005/15

against piercing the corporate veil, we must affirm the trial court’s decision

not to do so.

      Accordingly, having found no merit in the issues on appeal, we will

affirm the judgment entered below.

      Judgment affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 6/3/2015

                                     - 15 -