Court Opinion

ID: 4653268
Source: CourtListenerOpinion
Date Created: 2021-01-21 19:12:40.544562+00
Date Added: 2024-06-11T07:50:11.821358
License: Public Domain

J-S49002-20

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

    GEORGE J. MORGAN                           :   IN THE SUPERIOR COURT OF
                                               :        PENNSYLVANIA
                       Appellant               :
                                               :
                                               :
                v.                             :
                                               :
                                               :
    A. FROST, INC., D/B/A FROST & CO.          :   No. 538 WDA 2020
    DIAMONDS                                   :

                 Appeal from the Order Entered March 11, 2020
       In the Court of Common Pleas of Allegheny County Civil Division at
                              No(s): AR-19-5649

BEFORE:      OLSON, J., DUBOW, J., and STEVENS, P.J.E.*

MEMORANDUM BY OLSON, J.:                              FILED JANUARY 21, 2021

        Appellant, George J. Morgan, appeals from the March 11, 2020 order

sustaining the preliminary objections filed by A. Frost, Inc. d/b/a Frost & Co.

Diamonds (“Frost”) and dismissing Appellant’s amended complaint with

prejudice.1 We affirm.
____________________________________________

*   Former Justice specially assigned to the Superior Court.

1  The trial court’s order sustaining Frost’s preliminary objections in the nature
of a demurrer and dismissing the amended complaint with prejudice is a final
order for purposes of appeal without resorting to the filing of exceptions or
reducing the order to a judgment. See U.S. Nat’l Bank in Johnstown v.
Johnson, 487 A.2d 809, 814 (Pa. 1985). Appellant’s notice of appeal was
filed on April 28, 2020, more than 30 days after entry of the order sustaining
the preliminary objections and dismissing Appellant’s amended complaint with
prejudice. See Pa.R.A.P. 903(a) (stating, “the notice of appeal . . . shall be
filed within 30 days after the entry of the order from which the appeal is
taken”). In a Second Supplemental Order entered on April 1, 2020, our
Supreme Court, however, suspended “all time calculations for purposes of
J-S49002-20

        The trial court summarized the factual history as follows:

        [Appellant] claims that on November 4, 2015, he put a
        $3,500[.00] down[-]payment on a diamond at [Frost’s] jewelry
        store. [Appellant] signed an invoice[,] which provided that the
        diamond was being sold to [Appellant] for [$12,529.70] and that
        [Appellant] paid a deposit of $3,500[.00]. Also, to complete the
        purchase, [Appellant was required to] pay the remaining balance
        of $9,029.70. Finally, the invoice expressly provided[,] "no cash
        refunds, store credit only". Within a few days [of signing the
        invoice, Appellant] changed his mind about this particular
        diamond.     [Frost] was unable to find a diamond that met
        [Appellant’s] specifications. Four years later, [Appellant] filed [a]
        complaint seeking $3,500[.00 in damages]. [Appellant] allege[d]
        extrinsic evidence regarding the terms of the agreement.

Trial Court Opinion, 6/16/20, at unnumbered pages 1-2 (extraneous

capitalization omitted).

        The record demonstrates that on November 15, 2019, Appellant filed a

complaint, alleging causes of action for violation of the Unfair Trade Practices

and Consumer Protection Law,2 breach of contract, breach of express

warranty, and unjust enrichment and seeking $3,500.00 in damages.3 Frost

filed preliminary objections, and Appellant subsequently filed an amended

____________________________________________

time computation relevant to court cases or other judicial business, as well as
time deadlines” through April 30, 2020, due to the COVID-19 pandemic. See
In re General Statewide Emergency, Judicial Docket Nos. 531 and 532,
Second Supplemental Order, 4/1/20. Appellant’s appeal of the final order,
therefore, was timely filed on April 28, 2020.

2   73 P.S. §§ 201-1 to 201-10.

3 A review of Appellant’s amended complaint demonstrates that Appellant is
seeking relief in the form of, inter alia, a cash refund of his deposit.

                                           -2-
J-S49002-20

complaint on January 9, 2020, again setting forth the aforementioned causes

of action.   Thereafter, Frost filed preliminary objections in the nature of a

demurrer to Appellant’s amended complaint, arguing, inter alia, that Appellant

failed to state a claim upon which relief could be granted because the parol

evidence rule barred Appellant from introducing evidence of alleged verbal

representations that varied from the terms set forth in the sales invoice. Frost

further maintained that Appellant was not entitled to a cash refund of his

deposit pursuant to the terms of the sales invoice.           After entertaining

argument on the parties’ respective positions on March 11, 2020, the trial

court sustained Frost’s preliminary objections and dismissed Appellant’s

amended complaint with prejudice. This appeal followed.

      Appellant raises the following issues for our review:

      1.     Whether the trial court erred in [sustaining Frost’s]
             preliminary objections, as a matter of law, when it found
             that the simple and attenuated invoice and receipt for the
             purchase of the diamond constituted the full and final
             agreement contemplated by the parties, thus barring parol
             evidence and dismissing []Appellant's claims with prejudice?

      2.     Whether the trial court erred in [sustaining Frost’s]
             preliminary objections, as a matter of law, when it found
             that statements made by [Frost], both oral and written, and
             the subsequent actions by [Frost] did not constitute a
             modification and waiver to the terms of the invoice and
             receipt under the Pennsylvania Commercial Code, thus
             barring parol evidence of the same and dismissing
             []Appellant's claims with prejudice?

      3.     Whether the trial court erred in dismissing []Appellant's
             breach of contract claim with prejudice where[,] regardless
             of the applicability of the parol evidence rule, [Frost]
             nevertheless failed to materially perform its duties under the

                                      -3-
J-S49002-20

            invoice to provide a diamond or extend store credit to
            [Appellant]?

Appellant’s Brief at 2-3.

      Appellant, in sum, challenges the trial court’s order sustaining Frost’s

preliminary objections.     In reviewing an order disposing of preliminary

objections, our standard of review is well-settled. This Court reviews an order

sustaining, or overruling, preliminary objections for an error of law and in so

doing, must apply the same standard as the trial court. Haun v. Community

Health Sys., Inc., 14 A.3d 120, 123 (Pa. Super. 2011) (citation omitted).

      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.

Id. (citation and quotation marks omitted).

      Appellant’s first issue challenges the trial court’s conclusion that the

invoice was a full and final integrated written agreement between the parties

that barred, under the parol evidence rule, the introduction of extrinsic

evidence to prove additional terms not present in the written sales invoice.

Appellant’s Brief at 15.

      In explaining the parol evidence rule, our Supreme Court has stated,

                                      -4-
J-S49002-20

      Where the parties, without any fraud or mistake, have deliberately
      put their engagements in writing, the law declares the writing to
      be not only the best, but the only, evidence of their agreement.
      All preliminary negotiations, conversations[,] and verbal
      agreements are merged in and superseded by the subsequent
      written contract and unless fraud, accident[,] or mistake be
      averred, the writing constitutes the agreement between the
      parties, and its terms and agreements cannot be added to nor
      subtracted from by parol evidence.

Yocca v. Pittsburgh Steelers Sports, Inc., 854 A.2d 425, 436 (Pa. 2004)

(ellipsis omitted), citing, Gianni v. Russell & Co., 126 A. 791 (Pa. 1924). In

order for the parol evidence rule to apply, the writing must represent the

entire contract between parties. Yocca, 854 A.2d at 436 (citation omitted).

      To determine whether or not a writing is the parties' entire
      contract, the writing must be looked at and if it appears to be a
      contract complete within itself, couched in such terms as import a
      complete legal obligation without any uncertainty as to the object
      or extent of the parties' engagement, it is conclusively presumed
      that the writing represents the whole engagement of the parties.
      An integration clause which states that a writing is meant to
      represent the parties' entire agreement is also a clear sign that
      the writing is meant to be just that and thereby expresses all of
      the parties' negotiations, conversations, and agreements made
      prior to its execution.

Id. (quotation marks, ellipsis, and brackets omitted).    The absence of an

integration clause, however, “does not automatically subject the written

agreement to parol evidence.” Kehr Packages, Inc. v. Fidelity Bank, Nat’l

Ass’n, 710 A.2d 1169, 1173 (Pa. Super. 1998) (citation omitted). “Rather,

in the absence of an integration clause, the court must examine the text of

the agreement to determine its completeness.”          Id. (citation, original

quotation marks, and brackets omitted). Parol evidence may not be received

                                    -5-
J-S49002-20

where the subject of the extrinsic evidence is referred to in a writing, and the

writing, which includes, inter alia, an invoice for the sale of goods, is found to

be the complete agreement between the parties. Knirnschild v. Pittsburgh

Brewing Co., 1369 A.2d 316, 319 (Pa. 1957).

      A contract for the sale of goods is governed by Article 2 of the Uniform

Commercial Code, as adopted in Pennsylvania. Allegheny Energy Supply

Co. v. Wolf Run Mining Co., 53 A.3d 53, 62 (Pa. Super. 2012), appeal

denied, 69 A.3d 599 (Pa. 2013); see also 13 Pa.C.S.A. §§ 2101-2725.

Section 2201(a) of the Pennsylvania Uniform Commercial Code, Article 2,

Sales (“PA-UCC”) requires that a contract for the sale of goods for a price of

$500.00 or greater must be reduced to “some writing sufficient to indicate

that a contract for sale has been made between the parties and signed by the

party against whom enforcement is sought” in order to be enforceable. 13

Pa.C.S.A. § 2201(a). “A contract is formed when the parties to it 1) reach a

mutual understanding, 2) exchange consideration, and 3) delineate the terms

of their bargain with sufficient clarity.” Company Image Knitware, Ltd. v.

Mothers Work, Inc., 909 A.2d 324, 330 (Pa. Super. 2006) (citation and

original quotation marks omitted), appeal denied, 929 A.2d 645 (Pa. 2007).

“Interpreting the terms of a contract is a question of law, thus implicating a

de novo standard of review and a plenary scope of review.” Commonwealth

by Shapiro v. UPMC, 188 A.3d 1122, 1132 (Pa. 2018) (citation omitted).

“Where the terms of the contract are unambiguous, they are deemed to reflect

the intent of the parties.” Id. at 1131 (citation omitted). “Extrinsic evidence

                                      -6-
J-S49002-20

may be employed to ascertain the meaning of contractual terms only when

they are ambiguous, i.e., subject to more than one reasonable interpretation.”

Id. at 1132.

        Here, Appellant contends that the sales invoice was “essentially a receipt

for [Appellant’s] deposit” and did not constitute a “fully integrated written

agreement between the parties.” Appellant’s Brief at 17. Appellant argues

that “the parol evidence rule should not apply[] because there was no fully

integrated written agreement” between the parties. Id. (internal quotation

marks omitted).       Appellant asserts that the “lack of an integration clause

strongly militates toward a finding that [the sales invoice] was not a fully

integrated agreement.” Id. at 18. Appellant contends that the sales invoice

was not a fully integrated agreement but, rather, “merely prevented the sale

of that diamond” to another of Frost’s customers. Id. at 19-20. The sales

invoice, Appellant maintains, evidenced the deposit that he made in order for

Frost to hold that diamond in its inventory while Frost attempted to acquire a

different diamond that was certified by the Gemological Institute of America

(“GIA”).4 Id. The deposit was to be applied toward Appellant’s subsequent

purchase of the GIA-certified diamond, once it was located. Id.

____________________________________________

4   We take judicial notice that,

        GIA’s commitment to protecting diamond buyers inspired the
        Institute to create the Diamond 4Cs [(carat weight, color grade,
        clarity grade, and cut grade)] and the International Diamond

                                           -7-
J-S49002-20

       The trial court found that the sales invoice “was a full and final

integrated written agreement between the parties” because the sales invoice

“provided a description of the diamond, the total cost, the deposit amount,

[Appellant’s] signature[,] and the words ‘no cash refunds store credit only.’”

Trial Court Opinion, 6/16/20, at unnumbered pages 2-3. Therefore, the trial

court concluded that Appellant was prohibited from introducing parol evidence

to substantiate his causes of action and that, pursuant to the terms of the

contract, he failed to state a claim upon which the relief he seeks could be

granted. Id.

       The record demonstrates that on November 4, 2015, Appellant signed

a Frost sales invoice (invoice number 54641) for the purchase of a diamond.

See Appellant’s Amended Complaint, 1/9/20, at Exhibit C. The sales invoice

described the diamond as a 1.85-carat diamond with a round, brilliant cut, a

clarity of “SI2”, and the color classification of “E” (colorless). Id. The sales

invoice further identified the diamond by the number “3412167125.” Id. The

total cost of the diamond was $12,529.70. Id. The sales invoice showed that

Appellant paid a deposit of $3,500.00 towards the purchase of the diamond,

and the balance due was $9,029.70.               Id.   On the line above Appellant’s

____________________________________________

       Grading System™. These methods are the universal benchmarks
       by which all diamonds are judged.

See https://4cs.gia.edu/en-us/about-gia/ (last visited 12/15/20).

                                           -8-
J-S49002-20

signature, the sales invoice stated, “No Cash Refunds – Store Credit Only”.

Id.

      We concur with the trial court that the sales invoice, as a matter of law,

represented the fully integrated written agreement between Appellant and

Frost, in which Frost agreed to sell Appellant a specific diamond and Appellant

agreed to purchase that diamond for a set purchase price. In consideration

for Frost’s promise to sell the diamond, Appellant paid a deposit to be applied

towards the full purchase price of the diamond. The sales invoice delineated

the terms of their bargained-for agreement, including the term that no cash

refunds would be given, and that only store credit would be provided if the

agreement were terminated.        The sales invoice portrayed a complete

statement of contractual terms and the trial court correctly considered it a

fully integrated written agreement between the parties. Absent an averment

of fraud, accident, or mistake, Appellant was not entitled to offer parol

evidence of alleged oral conversations or written correspondence that

deviated from the terms set forth in the sales invoice. See Yocca, 854 A.2d

at 436.

      A review of Appellant’s amended complaint demonstrates that Appellant

averred,

      11.   On November 4, 2015, [Appellant] visited the store and
            [Frost’s employee] showed him a 1.85[-]carat diamond that
            was not GIA certified, however the diamond was very close
            to [the] color, clarity, carat, and cut that [Appellant] was
            looking for. The cost of the diamond was $12,529.70,
            reasonably within [Appellant’s] $10,000.00 to $12,000.00
            price range.

                                     -9-
J-S49002-20

     12.   At this November 4, 201[5] visit, [Frost’s employee]
           informed [Appellant] that he could not guarantee that he
           could hold [] the diamond in inventory for much longer, and
           that if [Appellant] wanted to ensure that the diamond would
           be kept in [Frost’s] inventory, then [Appellant] would have
           to pay a $3,500.00 deposit.

     13.   Prior to, contemporaneously, and subsequently with
           [Appellant’s] deposit, [Frost’s employee] guaranteed that
           [Frost] was going to obtain a diamond within [Appellant’s]
           previously stated specifications and price range, and if
           [Appellant] chose not to purchase this specific diamond,
           then [Appellant] would be entitled to a cash refund [of] the
           deposit. These terms and conditions formed the basis of
           [Appellant’s] and [Frost's] bargain.

     14.   [Appellant], [Frost’s employee], and [Appellant’s] nephew[]
           were present when [Frost’s employee] and [Appellant]
           entered into an oral agreement to put a $3,500.00 cash
           refundable deposit on the diamond so that [Frost] would
           hold [] the diamond in inventory and obtain a diamond
           within [Appellant’s] specifications and price range.

     15.   After [Frost’s employee’s] guarantee, [Appellant] paid the
           $3,500.00 [] deposit on November 4, 201[5], and received
           a receipt[,] as well as an invoice[,] for the deposit on the
           diamond. []

     16.   This invoice does not represent a full and final expression of
           the terms and conditions of [Appellant’s] agreement with
           [Frost] nor does the invoice contain an integration clause.

     17.   Indeed, the very next day, on November 5, 2015,
           [Appellant] emailed [Frost’s employee] explaining to him
           that [Appellant] would not be purchasing the diamond that
           [Frost’s employee] showed [Appellant] on November 4,
           201[5], and specified that he was again looking for a
           diamond that [was] two carats, with a color grade of "E" or
           "F", and with a clarity grade of "SI1”[.]

Appellant’s Amended Complaint, 1/9/20, at ¶¶ 11-17.

     In finding the absence of an averment of fraud, accident, or mistake in

the amended complaint, the trial court stated,

                                   - 10 -
J-S49002-20

        The [amended] complaint alleges that [Appellant paid] a deposit
        on the diamond and [Frost] issued an invoice which stated[,] "no
        cash refunds store credit only". [Appellant] signed the invoice and
        then later changed his mind. The invoice clearly states that
        [Appellant] was not entitled to a cash refund.

Trial   Court   Opinion,   6/16/20,    at   unnumbered     page   3   (extraneous

capitalization omitted).

        We concur with the trial court that Appellant’s averments do not give

rise to allegations of fraud, accident, or mistake in Appellant’s execution of

the sales invoice and agreement to purchase the diamond specified therein.

The parol evidence rule, therefore, bars reliance upon extrinsic evidence to

support Appellant’s causes of action.       It is axiomatic that if Appellant took

steps to terminate the agreement to purchase the diamond via electronic mail

on November 5, 2015, Appellant understood at the time he signed the sales

invoice that he had entered an agreement to purchase that diamond. See

Appellant’s Amended Complaint, 1/9/20, at ¶ 17. Pursuant to the terms of

the sales invoice, which Appellant executed, if Appellant changed his mind on

the purchase of the diamond identified therein, he was entitled to a store

credit, and not a cash refund, of any money paid towards the purchase of that

diamond. Consequently, Appellant’s first issue is without merit.

        In his second issue, Appellant contends that the trial court erred in

finding that the oral and written statements made by Frost’s employee, as

well as the subsequent actions by the employee to locate a GIA-certified

diamond did not constitute a modification and waiver of the terms of the sales

invoice. Appellant’s Brief at 24-26.

                                       - 11 -
J-S49002-20

      Section 2209 of the PA-UCC, in pertinent part, states

              § 2209. Modification, rescission and waiver

                                     ...

      (b) Writing excluding modification or rescission.--A signed
      agreement which excludes modification or rescission except by a
      signed writing cannot be otherwise modified or rescinded, but
      except as between merchants such a requirement on a form
      supplied by the merchant must be separately signed by the other
      party.

      (c) Compliance of modified contract with statute of
      frauds.--The requirements of section 2201 (relating to formal
      requirements; statute of frauds) must be satisfied if the contract
      as modified is within its provisions.

      (d) Ineffective modification or rescission as waiver.--
      Although an attempt at modification or rescission does not satisfy
      the requirements of subsection (b) or (c) it can operate as a
      waiver.

13 Pa.C.S.A. § 2209(b)-(d).

      Appellant argues, in the alternative, that if the sales “invoice

contractually bound [Appellant] to purchase the diamond described therein,

[the electronic mail] and oral statements [made by Frost’s employee]

operated as a contractual waiver” and modification of the terms of the

agreement.    Appellant’s Brief at 23-24. Relying on Section 2209(d) of the

PA-UCC, Appellant contends, “[Frost’s employee] expressly agreed to search

for a GIA-certified diamond, in lieu of the diamond identified in the [sales]

invoice, which constituted both [] a modification [of the terms of] the [sales]

invoice and a waiver” of Appellant’s obligation to purchase the diamond

specified on the sales invoice. Id. at 24. Appellant asserts that the parol

                                    - 12 -
J-S49002-20

evidence rule does not apply to the doctrine of waiver, under Section 2209(d),

and the evidence establishes Frost’s intent to waive the terms of the invoice,

specifically releasing [Appellant] from purchasing the non-GIA certified

diamond identified in the sales invoice. Id.

      In support of his causes of action, Appellant relied on the electronic

correspondence between Appellant and Frost’s employee, as well as alleged

oral statements made prior to Appellant’s execution of the sales invoice. As

discussed supra, evidence of electronic mail and alleged oral statements made

prior to Appellant executing the sales invoice on November 4, 2015, is barred

by the parol evidence rule because the sales invoice represented the entire

written agreement between the parties. Therefore, Appellant cannot rely on

this parol evidence to demonstrate a modification of the agreement, or a

waiver of its terms.

      On November 5, 2015, Appellant notified Frost that he was terminating

the agreement to purchase the diamond specified in the sales invoice. The

parol evidence rule is not applicable to the electronic mail and alleged oral

statements made by Frost’s employee after Appellant terminated the

agreement. See Yocca, 854 A.2d 425, 436 (stating, the parol evidence rule

applies to evidence of previous oral or written statements or agreements

involving the same subject matter as the written contract). Because Appellant

terminated the original agreement on November 5, 2015, evidence of oral and

written statements made after the termination on November 5, 2015, could

only explain Appellant’s reason for terminating the agreement or explain his

                                    - 13 -
J-S49002-20

ongoing objective to purchase a GIA-certified diamond. Moreover, because

the oral and written statements occurred after the termination of the original

agreement, they could not be used to modify or invalidate the terms of the

fully integrated, and now terminated, agreement. Appellant’s second issue,

therefore, is without merit.

      In his third issue, Appellant claims the trial court erred in sustaining

Frost’s preliminary objections and dismissing, with prejudice, Appellant’s

breach of contract claim because the allegations demonstrated that Frost

failed to materially perform its duties, pursuant to the sales invoice, by

providing the diamond specified in the sales invoice or extending Appellant

store credit. Appellant’s Brief at 30-31.

      This Court recently reiterated,

      It is well-established that three elements are necessary to plead
      a cause of action for breach of contract: (1) the existence of a
      contract, including its essential terms; (2) a breach of the
      contract; and, (3) resultant damages.

Kelly v. Carman Corp., 229 A.3d 634, 653 (Pa. Super. 2020) (citation

brackets omitted).

      As discussed supra, the terms of the agreement, as delineated in the

sales invoice, required Appellant to purchase a 1.85-carat diamond for a

purchase price of $12,529.70.      If Appellant changed his mind about the

purchase, no cash refunds of money paid towards the purchase would be

provided and only store credit would be issued.      Pursuant to the written

agreement, Frost agreed and Appellant accepted the term of store credit if the

                                    - 14 -
J-S49002-20

transaction were not completed.            By including the statement, “No Cash

Refunds – Store Credit Only” on the sales invoice, Appellant and Frost agreed

that any money paid towards the purchase of the diamond, and therefore, due

as a refund upon termination of the agreement, would be returned to

Appellant in the form of store credit and not a cash refund. Appellant is not

obligated to purchase the 1.85-carat diamond identified in the November 4,

2015 sales invoice because he terminated the agreement.               Appellant,

however, is entitled only to a store credit of his deposit money and not a cash

refund per the terms of the agreement.5

       Appellant, in his amended complaint, pleaded a cause of action for

breach of contract seeking the refund of his $3,500.00 deposit in cash. See

Appellant’s Amended Complaint, 1/9/20, at ¶¶ 26, 37-44. Pursuant to the

terms of the parties’ agreement, Appellant is not entitled to a cash refund of

his deposit since Frost never promised to refund his deposit in cash. Appellant,

therefore, failed to state a claim upon which the relief he seeks could be

granted. We find no abuse of discretion or error of law in the trial court’s

order sustaining Frost’s preliminary objections in the nature of a demurrer and

dismissing Appellant’s breach of contract claim, as framed, with prejudice.

       Order affirmed.

____________________________________________

5Frost concedes that Appellant is entitled to a store credit in the amount of
$3,500.00. See Frost’s Renewed Preliminary Objection, 1/28/20, at 3 ¶9.

                                          - 15 -
J-S49002-20

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 1/21/2021

                          - 16 -