Custom Building Systems, LLC v. Nipple, R.

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

CUSTOM BUILDING SYSTEMS, LLC; : IN THE SUPERIOR COURT OF PRACTICAL SOFTWARE SOLUTIONS, : PENNSYLVANIA INC.; PROFESSIONAL BUILDING : SYSTEMS, INC., AS ITSELF AND AS A : MEMBER OF AMERICAN MODULAR : TRANSPORT, LLC; AMERICAN : MODULAR TRANSPORT, LLC : : Appellants : : v. : : RONALD H. NIPPLE, INDIVIDUALLY; : CONNIE I. NIPPLE, INDIVIDUALLY : AND AS AN OWNER OF ICON : REALTY, LLC; KEVIN HICKS, : INDIVIDUALLY AND AS PRESIDENT : OF ICON LEGACY CUSTOMER : MODULAR HOMES, LLC; ICON : LEGACY CUSTOM MODULAR HOMES, : LLC A/K/A LEGACY MODULAR : HOMES, LLC AND LEGACY CUSTOM : MODULAR HOMES, LLC; ICON : No. 127 MDA 2017 LEGACY TRANSPORT, LLC

Appellees

Appeal from the Order Entered December 30, 2016 In the Court of Common Pleas of Snyder County Civil Division at No(s): CV-194-2011

BEFORE: GANTMAN, P.J., PANELLA, J., and FORD ELLIOTT, P.J.E. MEMORANDUM BY GANTMAN, P.J.: FILED OCTOBER 31, 2017

Appellants, Custom Building Systems, LLC (“CBS”), Practical Software Solutions, Inc. (“PSS”), Professional Building Systems, Inc. (“PBS”), as itself and as a member of American Modular Transport, LLC (“AMT”) and AMT, appeal from the order entered in the Snyder County Court of Common Pleas,

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which granted summary judgment in favor of Appellees, Ronald H. Nipple, Connie I. Nipple, and Kevin Hicks, Legacy Custom Modular Homes, LLC (“Icon”) a/k/a Legacy Modular Homes, LLC and Legacy Custom Modular Homes, LLC, and Icon Legacy Transport, LLC in this employment contract action. We affirm.

The relevant facts and procedural history of this care are as follows. William French owns several entities in the manufactured-home industry, including Appellant companies, CBS, PBS, PSS, and AMT. PBS and CBS manufacture and sell modular homes. PSS and AMT provide software and transportation services, respectively, to CBS and PBS. On August 1, 2005, Appellee Ronald Nipple entered into an employment agreement (“Agreement”) to serve as general manager of CBS. The Agreement provided, in relevant part, as follows:

1. General

• • * *

F. As used in this Agreement, the term “Companies” shall mean (i) [CBS], (ii) [PBS], ([iii]) Professional Building Systems of North Carolina LLC (“PBS-NC”); ([iv]) [AMT]. ([v]) Professional Structures, Inc. (“PSI”), ([vi]) [PSS], ([vii]) all subsidiaries and successors of any of the [Companies], and ([viii]) any other companies owned in whole or in part by William D. French.

• • * *

3. Non-Solicitation Covenants

• • * *

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C. During the term of this Agreement, and for a period of three years from the date of termination of this Agreement, the Employee shall not, directly or indirectly, sell, or attempt to sell, any modular structure to any builder, or other person or entity, to whom any of the Companies sold modular structures at any time during the twelve months prior to the Employee’s cessation of employment hereunder.

(See Ronald Nipple Employment Agreement with CBS; Appellees’ Statement of Undisputed Facts, Exhibit E at 1-3; R.R. at 417a-419a). CBS subsequently terminated Mr. Nipple’s employment on April 20, 2007.

In early 2008, Appellee Icon formed as a modular home manufacturing company.1 Icon Legacy Transport, LLC (“Icon Transport”), which hauls Icon’s modular homes, also formed. Mr. Nipple’s wife, Appellee Connie Nipple, invested in Icon and served as Icon’s secretary until 2011. Mr. Nipple’s son-in-law, Appellee Kevin Hicks, has been president of Icon since its formation. Between the date of Icon’s formation and April 2010, Mr. Nipple was not an Icon employee, but he had an office at Icon, maintained regular working hours at Icon, and occasionally sat in on company meetings. Between its formation and April 2010, Icon submitted bids and sold modular homes to several of Appellants’ customers.

On April 19, 2011, Appellants and Mr. French filed a writ of summons against Appellees. Appellants and Mr. French filed a complaint against ____________________________________________

1The name of Icon changed several times since its formation. Icon’s former names included Legacy Custom Modular Homes, LLC.

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Appellees on August 19, 2011, for breach of contract, unjust enrichment, and breach of fiduciary duty. On September 1, 2011, Appellants and Mr. French filed a first amended complaint. Appellees filed on September 19, 2011, preliminary objections to the first amended complaint, which the court sustained in part and overruled in part on November 28, 2011. On December 19, 2011, Appellants and Mr. French filed a second amended complaint, to which Appellees filed preliminary objections on January 5, 2012.

Appellants and Mr. French filed a third amended complaint on January 23, 2012, raising multiple counts of breach of contract, breach of the duty of loyalty and fiduciary duty, misappropriation of trade secret and proprietary information, unfair competition, tortious interference with existing contractual and business relationships, tortious interference with prospective contractual and business relationships, and civil conspiracy. That same day, Appellants filed a motion to discontinue the claims of Mr. French and remove Mr. French from the caption, which the court granted on January 24, 2012.2 Appellees filed preliminary objections to the third amended complaint, which the court sustained in part and overruled in part on September 14, 2012, striking all unfair competition claims against Appellees. Appellees filed an ____________________________________________

2 As a result of the January 24, 2012 order, Mr. French was no longer a party to the trial court proceedings in this matter. Mr. French is not a party to this appeal.

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answer and new matter to the third amended complaint on November 5, 2012.

By stipulation on July 15, 2016, Appellants discontinued their claims asserting breach of duty of loyalty and fiduciary duty and misappropriation of trade secrets and proprietary information. That same day, Appellees filed a motion for summary judgment on the remaining claims, which the court granted on December 30, 2016. Appellants filed a timely notice of appeal on January 17, 2017. On January 19, 2017, the court ordered Appellants to file a concise statement errors complained of on appeal per Pa.R.A.P. 1925(b); Appellants timely complied on February 6, 2017.

Appellants raise the following issues for our review:

IS THERE A GENUINE ISSUE OF MATERIAL FACT AS TO WHETHER [APPELLEE] RONALD NIPPLE INDIRECTLY SOLD MODULAR HOMES TO CUSTOMERS OF [CBS] AND [PBS] IN VIOLATION OF HIS RESTRICTIVE COVENANT, WHERE THE RECORD SHOWS THAT [ICON] SOLD MODULAR HOMES TO 28 OF THE RESTRICTED CUSTOMERS DURING THE YEARS OF [APPELLEE] RONALD NIPPLE’S RESTRICTED PERIOD, AND WHERE THE RECORD SHOWS THAT RONALD NIPPLE WAS THE KEY PERSON IN FORMING, FINANCING, AND OPERATING ICON AND HAD DE FACTO CONTROL OF THE COMPANY?

DID THE TRIAL COURT ABUSE ITS DISCRETION WHERE IT MADE A FINDING OF FACT THAT ENFORCEMENT OF THE “INDIRECT” SALES RESTRICTION WOULD PROHIBIT [APPELLEE] RONALD NIPPLE FROM CONTINUING HIS CAREER IN “ANY CAPACITY,” WHERE THERE IS NO EVIDENCE OF RECORD TO SUPPORT SUCH A CONCLUSION, AND WHERE THE RESTRICTIVE COVENANT APPLIED ONLY TO SELECT CUSTOMERS OF [APPELLANTS]?

DID THE TRIAL COURT ABUSE ITS DISCRETION IN

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DISMISSING THE CLAIM FOR TORTIOUS INTERFERENCE WITH PROSPECTIVE CONTRACTUAL RELATIONSHIPS WHERE THERE IS A GENUINE ISSUE OF MATERIAL FACT REGARDING WHETHER THE PRIOR CUSTOMER RELATIONSHIPS BETWEEN [CBS], [PBS], AND THEIR 28 CUSTOMERS DEMONSTRATE THAT THERE WAS A REASONABLE LIKELIHOOD THAT THESE CUSTOMERS WOULD HAVE PLACED THEIR ORDERS WITH [CBS] OR [PBS], ESPECIALLY IF [ICON] WAS RESTRICTED FROM SELLING TO THESE CUSTOMERS?

DID THE TRIAL COURT ERR IN FINDING THAT [APPELLEES] DID NOT COMMIT CIVIL CONSPIRACY EVEN THOUGH THE RECORD ESTABLISHES THAT ALL [APPELLEES] WERE AWARE OF RONALD NIPPLE’S RESTRICTIVE COVENANT, HELPED CONCEAL HIS INITIAL INVOLVEMENT WITH [ICON], AND HIRED SALESMEN WITH CUSTOMER ACCOUNTS FROM CBS AND PBS IN ORDER TO SELL MODULAR HOMES TO THE VERY CUSTOMERS TO WHOM RONALD NIPPLE WAS PROHIBITED FROM SELLING?

DID THE COURT ERR IN FINDING THAT [CBS] AND [PBS] DID NOT DEMONSTRATE PROBABLE, INFERENTIAL, OR DIRECT PROOF OF THEIR LOSS WHERE THEY PRODUCED PRECISE CALCULATIONS OF REVENUE, LABOR, MATERIAL, AND OTHER COSTS, AND PROJECTED PROFIT FOR THE SALE OF MODULAR HOMES?

(Appellants’ Brief at 3-5).

In reviewing a trial court’s grant of summary judgment,

[W]e apply the same standard as the trial court, reviewing all the evidence of record to determine whether there exists a genuine issue of material fact. We view the record in the light most favorable to the non-moving party, and all doubts as to the existence of a genuine issue of material fact must be resolved against the moving party. Only where there is no genuine issue as to any material fact and it is clear that the moving party is entitled to a judgment as a matter of law will summary judgment be entered. All doubts as to the existence of a genuine issue of a material fact must be resolved against the moving party.

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Motions for summary judgment necessarily and directly implicate the plaintiff’s proof of the elements of [a] cause of action. Summary judgment is proper if, after the completion of discovery relevant to the motion, including the production of expert reports, an adverse party who will bear the burden of proof at trial has failed to produce evidence of facts essential to the cause of action or defense which in a jury trial would require the issues to be submitted to a jury. In other words, whenever there is no genuine issue of any material fact as to a necessary element of the cause of action or defense, which could be established by additional discovery or expert report and the moving party is entitled to judgment as a matter of law, summary judgment is appropriate. Thus, a record that supports summary judgment either (1) shows the material facts are undisputed or (2) contains insufficient evidence of facts to make out a prima facie cause of action or defense.

Upon appellate review, we are not bound by the trial court’s conclusions of law, but may reach our own conclusions.

Chenot v. A.P. Green Services, Inc., 895 A.2d 55, 61 (Pa.Super. 2006) (internal citations and quotation marks omitted).

Significantly:

A plaintiff cannot survive summary judgment when mere speculation would be required for the jury to find in plaintiff’s favor. A jury is not permitted to find that it was a defendant’s [actions] that caused the plaintiff’s injury based solely upon speculation and conjecture; there must be evidence upon which logically its conclusion must be based. In fact, the trial court has a duty to prevent questions from going to the jury which would require it to reach a verdict based on conjecture, surmise, guess or speculation. Additionally, a party is not entitled to an inference of fact that amounts merely to a guess or conjecture.

Krishack v. Milton Hershey School, 145 A.3d 762, 766 (Pa.Super. 2016)

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(internal citation omitted).

“To support a claim for breach of contract, a plaintiff must allege: (1) the existence of a contract, including its essential terms; (2) a breach of a duty imposed by the contract; and (3) resultant damage.” Pittsburgh Construction Company v. Griffith, 834 A.2d 572, 580 (Pa.Super. 2003), appeal denied, 578 Pa. 701, 852 A.2d 313 (2004).

Contract construction and interpretation is a question of law for the court to decide. Profit Wize Marketing v. Wiest, 812 A.2d 1270, 1274 (Pa.Super. 2002); J.W.S. Delavau, Inc. v. Eastern America Transport & Warehousing, Inc., 810 A.2d 672, 681 (Pa.Super. 2002), appeal denied, 573 Pa. 704, 827 A.2d 430 (2003) (reiterating: “The proper interpretation of a contract is a question of law to be determined by the court in the first instance”). In construing a contract, the intent of the parties is the primary consideration. Tuscarora Wayne Mut. Ins. Co. v. Kadlubosky, 889 A.2d 557, 560 (Pa.Super. 2005).

When interpreting agreements containing clear and unambiguous terms, we need only examine the writing itself to give effect to the parties’ intent. The language of a contract is unambiguous if we can determine its meaning without any guide other than a knowledge of the simple facts on which, from the nature of the language in general, its meaning depends. When terms in a contract are not defined, we must construe the words in accordance with their natural, plain, and ordinary meaning. As the parties have the right to make their own contract, we will not modify the plain meaning of the words under the guise of interpretation or give the language a construction in conflict with the accepted meaning of the language used. On the contrary, the terms of a contract are ambiguous if

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the terms are reasonably or fairly susceptible of different constructions and are capable of being understood in more than one sense. Additionally, we will determine that the language is ambiguous if the language is obscure in meaning through indefiniteness of expression or has a double meaning.

Profit Wize Marketing, supra at 1274-75 (internal citations and quotation marks omitted).

Where there is any doubt or ambiguity as to the meaning of the covenants in a contract or the terms of a grant, they should receive a reasonable construction, and one that will accord with the intention of the parties; and, in order to ascertain their intention, the court must look at the circumstances under which the grant was made. It is the intention of the parties which is the ultimate guide, and, in order to ascertain that intention, the court may take into consideration the surrounding circumstances, the situation of the parties, the objects they apparently have in view, and the nature of the subject-matter of the agreement.

Giant Food Stores, LLC v. THF Silver Spring Development, L.P., 959 A.2d 438, 448 (Pa.Super. 2008), appeal denied, 601 Pa. 697, 972 A.2d 522 (2009) (internal citations and quotation marks omitted). In either event, “the court will adopt an interpretation which under all circumstances ascribes the most reasonable, probable, and natural conduct of the parties, bearing in mind the objects manifestly to be accomplished.” E.R. Linde Const. Corp. v. Goodwin, 68 A.3d 346, 349 (Pa.Super. 2013).

“To maintain a cause of action in breach of contract, a plaintiff must establish: (1) the existence of a contract, including its essential terms; (2) a breach of a duty imposed by the contract; and (3) resulting damages.” Lackner v. Glosser, 892 A.2d 21, 30 (Pa.Super. 2006) (citing Gorski v.

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Smith, 812 A.2d 683, 692 (Pa.Super. 2002), appeal denied, 579 Pa. 692, 856 A.2d 834 (2004)). The elements of interference with prospective contractual relations are as follows:

(1) a prospective contractual relationship;

(2) the purpose or intent to harm the plaintiff by preventing the relation from occurring;

(3) the absence of privilege or justification on the part of the defendant; and

(4) the occasioning of actual damage resulting from the defendant’s conduct.

Phillips v. Selig, 959 A.2d 420, 428 (Pa.Super. 2008), appeal denied, 600 Pa. 764, 967 A.2d 960 (2009). The plaintiff bears the burden of pleading and proving each element. International Diamond Importers, Ltd. v. Singularity Clark, L.P., 40 A.3d 1261, 1275 (Pa.Super. 2012). To sustain the cause of action, the plaintiff must show a “reasonable probability or likelihood” that contractual relations will follow. Phillips, supra at 428. In determining “reasonable probability or likelihood,” Pennsylvania courts apply an objective standard and consistently required more evidence than the mere existence of a current business relationship between the parties. Id.

To state a claim for civil conspiracy, “a complaint must allege: (1) a combination of two or more persons acting with a common purpose to do an unlawful act or to do a lawful act by unlawful means or for an unlawful purpose; (2) an overt act done in pursuance of the common purpose; and (3) actual legal damage.” Goldstein v. Phillip Morris, Inc., 854 A.2d 585,

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590 (Pa.Super. 2004). Civil conspiracy requires proof by full, clear and satisfactory evidence. Phillips, supra at 437. “The mere fact that two or more persons, each with the right to do a thing, happen to do that thing at the same time is not by itself an actionable conspiracy.” Id. Additionally, “absent a civil cause of action for a particular act, there can be no cause of action for civil conspiracy to commit that act.” McKeeman v. Corestates Bank, N.A., 751 A.2d 655, 660 (Pa.Super. 2000).

After a thorough review of the record, the briefs of the parties, the applicable law, and well-reasoned opinions of the Honorable Michael T. Hudock, we conclude Appellants’ issues on appeal merit no relief. The trial court opinions comprehensively discuss and properly dispose of the questions presented. (See Trial Court Opinion, filed January 31, 2017, at 1 unpaginated; Trial Court Opinion, filed December 30, 2016, at 6-13) (finding: (1-2) although Icon made sales to prohibited customers during restricted covenant period, no facts of record indicate Mr. Nipple was involved in sales to any of CBS’ customers; record does not support finding that Mr. Nipple made sales directly or indirectly to any customers, much less customers prohibited by non-solicitation provision in Agreement; that Mr. Nipple had office at Icon and Mrs. Nipple and Mr. Hicks worked at Icon do not show Mr. Nipple was involved in sales to prohibited customers; record shows Mr. Nipple merely provided general advice to individuals at Icon; Appellants offered no evidence to show Mr. Nipple’s involvement at Icon

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exceeded advisory role; non-solicitation provision does not prohibit employees of Icon nor Icon itself from contracting with CBS customers; to apply terms of non-solicitation provision per Appellants’ interpretation would effectively prohibit Appellee from continuing his career in modular home industry in any capacity; under Appellants’ view, employer in modular home industry that hired Mr. Nipple in any capacity would be unable to sell to prohibited customers during the restricted covenant period; Agreement, however, does not prohibit Mr. Nipple from competing with PBS and CBS; (3) Appellants’ relationships with customers do not rise to level of prospective contractual relationship; providing customers quotes in normal course of business does not lead to reasonable likelihood or probability of enforceable contractual relationship; although Appellants provide customers with price quote for project, customers are free to seek out multiple quotes and choose any quote; merely providing quote does not create prospective contract; also, record does not indicate Appellees intended to harm Appellants; (4) record does not demonstrate Appellees conducted unlawful act or acted with unlawful purpose; non-solicitation provision does not bar Mr. Nipple from competing in same field as Appellants; Agreement does not require Appellees to disclose to Appellants Mr. Nipple’s lawful involvement with Icon; non-solicitation provision merely prohibits Mr. Nipple from engaging in sales, directly or indirectly, to customers of Appellants; Appellants have not offered facts of record to support claim that Mr. Nipple

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violated terms of non-solicitation provision; (5) Appellants are not entitled to damages for lost sales because Appellants’ claims for breach of contract, conspiracy, and tortious interference are without merit; further, Appellants failed to demonstrate probable, inferential, or direct proof of their loss attributable to Appellees). The record supports the trial court’s rationale. Accordingly, we affirm on the basis of the trial court’s opinions.

Order affirmed. Judgment Entered.

Joseph D. Seletyn, Esq. Prothonotary

Date: 10/31/2017

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