Gutteridge v. J3 Energy Group, Inc.
165 A.3d 908
| Pa. Super. Ct. | 2017Background
- Gutteridge formed Applied Energy Partners (AEP) in 2004; AEP sold energy‑related products through ~15 "channel partners" who either resold products or earned commissions.
- J3 Energy Group (J3), founded by Stephen Russial, provided energy procurement and demand‑response services. Gutteridge and Russial agreed (informally) in 2008 to form an "Energy Buyers Group" (the Group) to market J3 services via AEP’s channel partners.
- Parties agreed on a revenue split: ultimately 60/40 (J3/AEP) but initially 65/35 (J3/AEP); AEP would pay channel partners 20% and retain 15% net.
- After the Group reached a 50 MW threshold and began generating revenue, Russial began dealing directly with two key channel partners (Porreca and Keaton), had them sign non‑competes, paid them directly, and declined to pay AEP its share unless AEP signed new terms cutting AEP out.
- AEP sued J3 and Russial (writ filed 2009; complaint 2010) alleging unjust enrichment, promissory estoppel, breach of contract, tortious interference, etc.; after a non‑jury trial the court awarded AEP $343,887 on unjust enrichment and promissory estoppel theories.
- On appeal, the Superior Court affirmed: it held Russial personally liable based on the trial court’s credibility findings, found unjust enrichment and promissory estoppel supported by the evidence, and upheld the damages measure (35% of gross revenues = $343,887).
Issues
| Issue | Plaintiff's Argument (Gutteridge/AEP) | Defendant's Argument (Russial/J3) | Held |
|---|---|---|---|
| Personal liability of Russial | Gutteridge dealt with Russial personally; Russial made promises inducing performance, so Russial can be held individually | Transactions were with J3 (a corporation); no basis to pierce corporate veil or hold officer personally liable | Affirmed: trial court credited testimony that Gutteridge dealt with Russial personally and could hold him liable based on the credible factual record |
| Unjust enrichment liability | J3/Russial kept revenues generated by AEP’s efforts and induced AEP to market J3 services; retaining 35% without payment is inequitable | No unjust enrichment: J3 paid channel partners directly; AEP did not perform as promised | Affirmed: elements met (benefit conferred, appreciation/retention by defendants, inequitable to retain); court credited plaintiff’s evidence of wrongdoing |
| Measure of damages for unjust enrichment | Recovery should equal the value of benefits conferred (35% of gross revenue) to prevent injustice | Damages should be limited (at most 15% net commission) because J3 paid channel partners directly and AEP’s net would have been lower | Affirmed: damages measured by value of benefit conferred (quantum meruit = 35% of revenues); no offset for payments made by defendants absent evidence of release or credit |
| Promissory estoppel remedy (contract vs reliance damages) | Promises induced AEP’s actions; full enforcement (benefit of bargain) is necessary to avoid injustice | If promissory estoppel applies, recovery should be limited to reliance damages only | Affirmed: promissory estoppel elements found; remedy (benefit of bargain) appropriate here because equity did not require limiting to reliance damages |
Key Cases Cited
- Stoeckinger v. Presidential Fin. Corp. of Del. Valley, 948 A.2d 828 (Pa. Super. 2008) (elements and purpose of unjust enrichment explained)
- AmeriPro Search, Inc. v. Fleming Steel Co., 787 A.2d 988 (Pa. Super. 2001) (quantum meruit and restitution as measure of unjust enrichment)
- Styer v. Hugo, 619 A.2d 347 (Pa. Super. 1993) (equitable nature of unjust enrichment doctrine)
- Crouse v. Cyclops Indus., 745 A.2d 606 (Pa. 2000) (promissory estoppel as equitable remedy to avoid injustice)
- Terletsky v. Prudential Prop. & Cas. Ins. Co., 649 A.2d 680 (Pa. Super. 1998) (appellate standard: deference to trial court credibility findings)