Cappiali and Blumenthal, P.C. v. Nichols, H., 2205 EDA 2015

Background

Hare Nichols & Company, LLC (HNC) engaged Global Force to broker an affiliation; Global Force fee was 10% of average annual revenues of the brokered firm.
In Nov. 2009 HNC affiliated with Cappiali & Blumenthal, P.C. (CB) under a written Affiliation Agreement providing revenue splits, staffing/overhead obligations, retirements, noncompete payments, and a two-year “Demerger Option” requiring 90 days’ notice and a $13,500 fee (half the Global Force fee) if CB elected to unwind.
On June 6, 2011 Cappiali delivered a letter titled “Re: Demerger” stating CB was demerging due to alleged breaches by HNC (failure to pay monies, inadequate staffing, hostile work environment) and seeking a fair accounting; parties continued negotiations and HNC granted delays; affiliation ended by Dec. 1, 2011.
Each side sued: CB asserted breach of contract, unjust enrichment, and quantum meruit; HNC sued for breach, accounting, and interference; cases consolidated for a non-jury bench trial.
At trial, CB principals testified HNC failed to provide adequate staffing and benefits; HNC principals blamed CB for not meeting required hours. Trial court effectively entered mutual defense verdicts (no relief awarded) and denied appellants’ post-trial JNOV/new-trial motions.
On appeal, HNC (appellants) argued trial court erred in (1) not treating the June 6 letter as a valid invocation of the demerger option requiring payment, (2) improperly finding HNC materially breached excusing CB’s obligations, and (3) issuing inconsistent verdicts without awarding damages to CB for HNC’s breach.

Issues

Issue	Plaintiff's Argument (CB)	Defendant's Argument (HNC)	Held
Whether the June 6, 2011 letter validly invoked the contract’s Demerger Option and triggered the $13,500 fee	The letter effectuated the demerger and invoked the option, so CB must pay the fee	The letter did not validly invoke the option and, in any event, HNC breached first so fee not owed	Court held the letter expressed termination tied to claimed breaches; because HNC materially breached, CB had no duty to pay the fee
Whether HNC materially breached the Affiliation Agreement, excusing CB’s contractual obligations	CB: HNC failed to supply promised staffing/benefits and thus materially breached, excusing CB	HNC: CB failed to perform required hours, so HNC did not materially breach	Court credited CB’s testimony and found HNC materially breached before June 6, 2011, excusing CB’s duties
Whether trial court should have entered JNOV or granted a new trial for HNC	HNC: evidence compelled judgment for HNC or at least a new trial; court’s factual findings were unsupported	CB: evidence supported trial court’s findings; credibility determinations bind appellate court	Court denied JNOV/new trial — sufficient competent evidence supported the verdict and credibility findings
Whether verdicts were inconsistent because court found breach but awarded no damages to CB	CB: if breach excused CB, CB should have damages awarded	HNC: verdicts are inconsistent and unreconcilable	Court found verdicts reconcilable: breach could be found without demonstrable damages, so no inconsistency

Key Cases Cited

Griffin v. Univ. of Pittsburgh Med. Center-Braddock Hosp., 950 A.2d 996 (Pa. Super. 2008) (standard for JNOV review and viewing evidence in light most favorable to verdict winner)
Buckley v. Exodus Transit & Storage Corp., 744 A.2d 298 (Pa. Super. 1999) (JNOV principles)
De Lage Landen Fin. Servs., Inc. v. M.B. Mgmt. Co., Inc., 888 A.2d 895 (Pa. Super. 2005) (appellate deference to trial court credibility findings)
Ott v. Buehler Lumber Co., 541 A.2d 1143 (Pa. Super. 1988) (material breach doctrine bars complaining about nonperformance by the other party)
Umbelina v. Adams, 34 A.3d 151 (Pa. Super. 2011) (material breach relieves continuing duties)
McDermott v. Biddle, 674 A.2d 665 (Pa. 1996) (presumption of consistency in verdicts)
Polett v. Public Communications, Inc., 83 A.3d 205 (Pa. Super. 2013) (standard of review for denial of new trial)
Lockley v. CSX Transportation, 5 A.3d 383 (Pa. Super. 2010) (appellate review limits for new trial absent controlling legal error)