Front Street Development Associates, L.P. v. Conestoga Bank
161 A.3d 302
| Pa. Super. Ct. | 2017Background
- Front Street Development Associates, L.P. (Borrower) and Joseph Pacitti (Guarantor) executed a Loan Modification and Forbearance Agreement with Conestoga Bank in 2010 that included a broad release of claims and required execution of a deed in lieu to be held in escrow.
- The Forbearance Agreement was amended in writing in 2012 and 2013 to extend the maturity date; it defined “Loan Documents” to include prior and future modifications.
- In 2014 Pacitti signed a Deed in Lieu of Foreclosure presented at a meeting; Plaintiffs later alleged the bank and assignee LDC conspired with third parties to divest them of the property and induced Pacitti to sign by misrepresentations.
- Plaintiffs filed a multi-count complaint (fraud, misrepresentation, tortious interference, commercial disparagement, conspiracy, breach, etc.) and demanded a jury trial; defendants moved to strike the jury demand based on jury-waiver provisions and moved for judgment on the pleadings relying on the 2010 Release.
- The trial court granted judgment on the pleadings for the Bank defendants and LDC, concluding the Release barred the asserted claims; the jury-waiver issues were rendered moot by that disposition.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether judgment on the pleadings was improper because factual disputes exist about applicability of the 2010 Release | Plaintiffs: release should not bar later-accruing claims (2014); factual allegations (fraud, course of dealing, oral extensions) take claims outside the Release | Defendants: Release is broad, covers known and unknown claims related to Loan Documents (including future modifications); claims arise from Loan Documents and thus are released | Court: Judgment on the pleadings affirmed — Release bars plaintiffs’ claims as a matter of law |
| Whether the Release bars unaccrued/future claims (including torts) | Plaintiffs: releases must be strictly construed; Release did not explicitly limit to future claims so should not cover claims that arose later | Defendants: Release expressly covers "known or unknown, contingent or otherwise…whether now known or hereinafter discovered" and Loan Documents include future modifications | Court: Release construed to include future claims related to Loan Documents; it barred the asserted claims |
| Whether LDC (assignee) may enforce the Release though not an original party | Plaintiffs: LDC was not a signatory; Release should not benefit assignee for claims arising later | LDC: Release expressly references assigns and assignment was contemplated; assignee stands in assignor’s shoes | Court: LDC entitled to enforce Release as assignee; claims against LDC barred |
| Whether jury-trial demand should have been preserved despite jury-waiver provisions | Plaintiffs: tort claims arise outside loan documents and Pacitti didn’t sign waiver; some defendants not parties to waiver — court should bifurcate or allow jury on non-waived claims | Defendants: loan-documents contain valid jury-waivers; but court only reached this after resolving Release | Court: Did not decide on merits — issue became moot after affirming judgment on the pleadings |
Key Cases Cited
- Restifo v. McDonald, 30 A.2d 199 (Pa. 1943) (release covers matters within the parties’ contemplation when given)
- Three Rivers Motors Co. v. Ford Motor Co., 522 F.2d 885 (3d Cir. 1975) (future claims may be released if contemplated by the parties)
- Buttermore v. Aliquippa Hosp., 561 A.2d 733 (Pa. 1989) (general release of past, present and future claims can be enforceable)
- Omicron Sys. v. Weiner, 860 A.2d 554 (Pa. Super. 2004) (releases interpreted by ordinary meaning and what was in contemplation of the parties)
- Mellon Bank, N.A. v. Aetna Business Credit, Inc., 619 F.2d 1001 (3d Cir. 1980) (commercial parties are free to contract as they wish)