Theobald, G. v. R.H. Kuhn Company
Theobald, G. v. R.H. Kuhn Company No. 342 WDA 2016
| Pa. Super. Ct. | Mar 17, 2017Background
- Theobald worked for R.H. Kuhn and had a 2010 Employment Agreement providing deferred compensation (24 months' base salary on a "Change of Control" plus termination without cause), conditioned on signing a General Release within 21 days.
- PNC confessed judgment against Kuhn; the court appointed Compass as receiver and retained a liquidator; Compass supervised Kuhn's wind-down and eventually discharged Theobald in March 2011.
- Theobald claimed the receivership constituted a Change of Control and sought $288,000 in deferred compensation; Compass/PNC declined to pay that amount and negotiations failed.
- Theobald filed a motion for leave to sue the receiver (Compass) and others for breach of contract, conversion, and WPCL violations; the trial court denied leave on February 4, 2016; Theobald appealed.
- The trial and appellate courts held (1) the Agreement unambiguously made payment contingent on Theobald executing the General Release within 21 days, which he did not do; and (2) receivers enjoy statutory/implied immunity as appointive judicial officers, so suit against the receiver required leave and was properly denied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether signing the General Release within 21 days was a condition precedent to payment | Theobald: release was not an absolute condition; it only marked the timing of payment | Compass/PNC: Agreement clearly makes execution within 21 days an absolute prerequisite | Court: Agreement is clear; execution within 21 days is an absolute condition precedent and Theobald failed it |
| Whether failure to receive payment first constituted anticipatory repudiation discharging Theobald's duty to sign the release | Theobald: Compass/PNC repudiated payment, so he was excused from signing the release | Compass/PNC: No unequivocal refusal to pay; no absolute repudiation in the record | Court: No anticipatory repudiation proved (requires absolute, unequivocal refusal); claim fails (and was arguably waived) |
| Whether receiver/PNC can be held liable for contract/conversion/WPCL claims | Theobald: receiver/PNC are liable; receivership is a Change of Control triggering payment | Compass/PNC: Receivers are appointive judicial officers with immunity; no privity and release not signed | Court: Because condition precedent unmet, liability analysis unnecessary; in any event receivers have immunity absent intentional misconduct |
| Whether leave to sue the receiver should be granted | Theobald: leave warranted to pursue claims against receiver/indemnifier | Compass/PNC: Leave should be denied because claims are invalid and receiver immunity protects them | Court: Denied leave — petitioner’s alleged claim is not valid and no abuse of discretion in refusal |
Key Cases Cited
- Warner v. Conn, 32 A.2d 740 (Pa. 1943) (leave required to sue a court-appointed receiver)
- Meehan v. Connell Anthracite Mining Co., 178 A. 833 (Pa. 1935) (appointing court should permit suit against receiver when third party’s claim appears valid)
- 2401 Pa. Ave. Corp. v. Federation of Jewish Agencies of Greater Philadelphia, 489 A.2d 733 (Pa. 1985) (anticipatory repudiation requires an absolute and unequivocal refusal to perform)
- Jonnet Dev. Corp. v. Dietrich Indus., Inc., 463 A.2d 1026 (Pa. Super. 1983) (anticipatory repudiation can discharge an obligee’s duty to perform a condition precedent)
- Harrison v. Cabot Oil & Gas Corp., 110 A.3d 178 (Pa. 2015) (clarifies prerequisites for anticipatory repudiation)
- Empire Props., Inc. v. Equireal, Inc., 674 A.2d 297 (Pa. Super. 1996) (breach does not relieve the non-breaching party of proving ability to perform)