Benec, P. v. Armstrong Cement & Supply
139 WDA 2016
| Pa. Super. Ct. | Nov 22, 2016Background
- Paul Benec, former EVP of marketing at Armstrong Cement, signed a 1984 employment contract promising "stock options" payable in installments over three years; Benec alleges the parties intended a stock "bonus" conferring actual shares.
- Benec claims entitlement to 2,213.23 shares and alleges decades of missed distributions; he attached the offer letters and contract to his complaint.
- Benec filed suit asserting contract reformation (mutual and unilateral mistake), breach of contract, declaratory relief, promissory estoppel, unjust enrichment, minority shareholder oppression, and breach of fiduciary duty; defendants filed demurrers at the preliminary-objection stage.
- Trial court sustained preliminary objections and dismissed Benec’s second amended complaint with prejudice; Benec appealed.
- On appeal the Superior Court accepted the complaint facts as true, addressed admissibility of parol evidence, contract interpretation, and multiple substantive claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Contract reformation for mutual mistake ("stock option" vs "stock bonus") | Benec: both parties intended a stock bonus; parol evidence of conversations should allow reformation. | Armstrong: contract unambiguous; alleged misunderstanding is a mistake of law; parol evidence inadmissible. | Court: Dismissed—no mutual mistake of fact (at best mistake of law); parol evidence excluded. |
| Contract reformation for unilateral mistake | Benec: unilateral mistake warrants reformation. | Armstrong: issue not preserved on appeal. | Court: Waived on appeal for failure to raise in Rule 1925(b). |
| Breach of contract and declaratory relief (ambiguity of "stock option") | Benec: term is patently and latently ambiguous ("awarded" suggests gift); needs extrinsic evidence. | Armstrong: "stock option" means option to buy shares; no ambiguity; contract contemplates future options. | Court: Dismissed—term not ambiguous; parol evidence barred; Benec failed to plead he was denied options or attempted to exercise them. |
| Promissory estoppel / unjust enrichment | Benec: relied on oral assurances; promissory estoppel or unjust enrichment applies if contract interpretation fails. | Armstrong: valid written contract governs; promissory estoppel/injustice inapplicable; unjust enrichment barred by express contract. | Court: Dismissed—valid contract exists with consideration; promissory estoppel and unjust enrichment unavailable. |
| Minority shareholder oppression / breach of fiduciary duty (standing) | Benec: alleged entitlement to stock and pleaded ownership; thus has standing to sue as minority shareholder. | Armstrong: Contract granted options, not ownership; Benec did not plead actual share ownership or attach certificate; lacks standing. | Court: Dismissed—entitlement ≠ ownership; Benec did not allege he owned shares, so no standing. |
Key Cases Cited
- Majorsky v. Douglas, 58 A.3d 1250 (Pa. Super. 2013) (standard for reviewing preliminary objections)
- Feingold v. Hendrzak, 15 A.3d 937 (Pa. Super. 2011) (preliminary-objection standard and factual acceptance on demurrer)
- Murphy v. Duquesne University of the Holy Ghost, 777 A.2d 418 (Pa. 2001) (contract interpretation focuses on parties' objective manifestations and the writing itself)
- Yocca v. Pittsburgh Steelers Sports, Inc., 854 A.2d 425 (Pa. 2004) (parol evidence inadmissible absent fraud, mistake, or ambiguity)
- MacKinley v. Messerschmidt, 814 A.2d 680 (Pa. Super. 2002) (definition of "stock option")
- Fisher v. Fisher, 769 A.2d 1165 (Pa. 2001) (use of "award" language in employer stock-option contexts)
- Voracek v. Crown Castle USA Inc., 907 A.2d 1105 (Pa. Super. 2006) (mutual mistake and when reformation is appropriate)
- Acme Markets, Inc. v. Valley View Shopping Center, Inc., 493 A.2d 736 (Pa. Super. 1985) (mistake of law vs. mistake of fact)
- Sullivan v. Chartwell Inv. Partners, LP, 873 A.2d 710 (Pa. Super. 2005) (elements of breach of contract and limits on promissory estoppel when a valid contract exists)