Applecross Club v. Pulte Homes of PA.
Applecross Club v. Pulte Homes of PA. No. 791 EDA 2016
| Pa. Super. Ct. | Jun 13, 2017Background
- Pulte, a residential developer, agreed in a 2009 Development and Acquisition Agreement to sell and Applecross to acquire and operate a country-club/golf-course serving a planned residential community.
- The agreement required deeds for homes in the community to obligate buyers to purchase club memberships; the community was anticipated to be roughly 1,000 homes and include the Del Webb (Anderson) tract.
- An amendment was executed and the sale closed June 30, 2010; later Pulte cancelled the Del Webb tract after breaching a separate purchase contract for that parcel.
- Applecross sued, claiming the loss of the Del Webb tract materially altered the agreed community scope and seeking damages for lost profits; the trial court found the amended agreement ambiguous and allowed parol evidence.
- A jury awarded Applecross $20,000,000; Pulte moved for JNOV or a new trial and appealed, raising (1) contract ambiguity/parol evidence, (2) admissibility of Applecross’s damages experts, and (3) enforceability of a $500,000 contractual cap on remedies for breach.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the amended Development & Acquisition Agreement was ambiguous, permitting parol evidence | Agreement was ambiguous because a referenced exhibit (defining Development Property/Community) was missing; parties intended the Del Webb tract and ~1,000 homes | Agreement was integrated and unambiguous; parol evidence barred by integration clause | Court: Agreement was ambiguous (missing exhibit referenced in operative definitions); parol evidence admissible; jury properly resolved intent |
| Whether Pulte was entitled to JNOV or a new trial based on alleged erroneous ambiguity ruling | JNOV/new trial required because contract language is clear and should have been construed by the court as a matter of law | Jury resolved factual ambiguity about intent; no legal error warranting JNOV/new trial | Court denied JNOV/new trial; review viewed evidence in light most favorable to verdict winner and found no error |
| Admissibility and reliability of Applecross’s lost-profits experts (Mitchell, Dugas) | Expert opinions unreliable/speculative because club was a new business and relied on Applecross principal’s estimates | Experts used reasonable data and methodologies; cross-examination addressed weaknesses; damages need only reasonable certainty | Court upheld admission; expert reliance and methodology go to weight not admissibility; lost profits recoverable with reasonable certainty |
| Whether §23.3’s $500,000 limit bars Applecross’s $20M award | §23.3 caps Applecross’s recovery for Pulte’s breach at $500,000 | §23.3 limits only reimbursement of "actual out-of-pocket costs" pre-closing; does not limit lost profits or other damages | Court rejected cap challenge: §23.3 limits only out-of-pocket costs to $500,000 and does not reduce jury’s lost-profits award |
Key Cases Cited
- Griffin v. Univ. of Pittsburgh Med. Center-Braddock Hosp., 950 A.2d 996 (Pa. Super. 2008) (standard for reviewing denial of JNOV)
- Mirabel v. Morales, 57 A.3d 144 (Pa. Super. 2012) (standard for reviewing denial of new trial)
- Charles D. Stein Revocable Trust v. Gen. Felt Indus., Inc., 749 A.2d 978 (Pa. Super. 2000) (contract interpretation focuses on parties’ intent)
- Hutchison v. Sunbeam Coal Co., 519 A.2d 385 (Pa. 1986) (definition of contractual ambiguity)
- Kripp v. Kripp, 849 A.2d 1159 (Pa. 2004) (ambiguous writings are for the factfinder; parol evidence rule)
- Blumenstock v. Gibson, 811 A.2d 1029 (Pa. Super. 2002) (integration clause and merger of prior representations)
- Bolus v. United Penn Bank, 525 A.2d 1215 (Pa. Super. 1987) (expert reliance on client data is admissible; flaws affect weight)
- Quinn v. Bupp, 955 A.2d 1014 (Pa. Super. 2008) (lost profits recoverable when established with reasonable certainty)