Cloverleaf Development, Inc. v. Horizon Financial F.A.

• Decision Date: 01 November 1985
• Citation: 347 Pa.Super. 75,500 A.2d 163
• Parties: CLOVERLEAF DEVELOPMENT, INC. and Leonard E. Price and Dorothy J. Price, his wife, Appellants, v. HORIZON FINANCIAL F.A. Successor to Century Federal Savings and Loan Association and Gregor F. Meyer, Edward L. Flaherty, Jr. and Meyer and Flaherty, P.C., a professional corporation, Appellees. 1434 Pittsburgh 1983
• Court: Pennsylvania Superior Court

Page 163

500 A.2d 163

347 Pa.Super. 75

CLOVERLEAF DEVELOPMENT, INC. and Leonard E. Price and Dorothy J. Price, his wife, Appellants, v. HORIZON FINANCIAL F.A. Successor to Century Federal Savings and Loan Association and Gregor F. Meyer, Edward L. Flaherty, Jr. and Meyer and Flaherty P.C., a professional corporation, Appellees.

1434 Pittsburgh 1983

Superior Court of Pennsylvania.

Argued April 10, 1985.

Filed Nov. 1, 1985.

Robert F. Hawk, Asst. Dist. Atty., Butler, for appellants.

Vincent J. Grogan, Pittsburgh, for appellees.

Before WIEAND, CIRILLO and JOHNSON, JJ.

WIEAND, Judge:

In this appeal from an order sustaining preliminary objections in the nature of a demurrer to five of six counts of a complaint, we are asked to determine whether appellants have sufficiently pleaded causes of action for intentionally inflicted emotional distress and for intentionally interfering with prospective contractual relations. Before deciding these issues, however, we must first determine whether the order of the trial court was final and appealable.

On June 23, 1970, Cloverleaf Development, Inc., hereinafter "Cloverleaf," obtained a loan of $1,515,000.00 from Century Federal Savings and Loan Association, hereinafter "Century," who was the predecessor of Horizon Financial, F.A., hereinafter "Horizon." As security for the loan, Cloverleaf executed a note and delivered to Century a mortgage constituting a lien on an apartment complex in Moon Township, Allegheny County. The terms of the loan required Cloverleaf to repay the principal indebtedness in 25 years with interest at the rate of 7.75%. The note also contained a clause vesting an option in Century, in the event of default for two or more months, to demand an increased interest rate not to exceed 9.30%. When so increased, the new rate was to remain in effect until the loan was paid in full. In the event of prepayment, Cloverleaf was to become liable for a penalty in the amount of six percent of the balance being pre-paid.

After a default had occurred, Century made a demand in 1980 that Cloverleaf pay interest at the rate of 9.3% on the unpaid loan balance. Leonard E. Price, who was president of Cloverleaf, refused Century's demand. Century then proposed several amendments to the loan agreement. In a proposed, written modification, Century suggested an annual interest rate of 13.75%, without any option to increase the same, and a reduced term of 38 months. Cloverleaf, through its attorney, rejected the offer to modify the loan agreement. Nevertheless, after September, 1981, Century's monthly statements included computations of interest at the rate of 13.75%. This increased each monthly payment by $2,000.00. Cloverleaf, allegedly because of inadvertence, paid the increased monthly statement without protest and without comment until March, 1982. Although it protested the increased interest rate thereafter, Cloverleaf nevertheless continued to make the increased monthly payments.

In February and March, 1982, Leonard Price received several offers to purchase his Cloverleaf stock. Attempts were made to obtain an agreement from Century to reduce the interest on the loan to the original 7.75%, but Century rejected all such requests and demanded an 18% balloon mortgage from any purchaser who assumed the mortgage and continued to use its money. A Century vice president allegedly said to one of the prospective buyers: "Nobody is going to assume Price's mortgage if I have anything to do about it. I know that Price cannot afford to continue making the extra $2,000.00 a month payments and when he misses the next payment, we are going to take over the whole property and let Price swing." All requests to allow an assumption of the mortgage at a 7.75% rate of interest were rejected.

The apartment complex was thereafter sold on a cash basis but at a price lower than that which had been offered by buyers who had been interested in assuming the existing mortgage. When Century computed and submitted a mortgage payoff figure, it included a prepayment penalty of six percent. This was pursuant to the provisions of the original loan agreement which, however, had been omitted from the modification agreement proposed by Centruy and never accepted by Cloverleaf. The payoff figure also contained a computation of interest at the rate of 13.75% as contained in the proposed but unaccepted modification agreement. In August, 1982, however, after the sale had been finalized, Century agreed to a reduced rate of interest for payoff purposes.

On May 23, 1983, Cloverleaf and Price filed a complaint containing six counts against Horizon, the corporate successor to Century. The first count was in assumpsit and contained averments that Century had breached its contract by unilaterally raising the interest rate to 13.75 percent or by otherwise charging interest at unauthorized rates. The second count alleged a wrongful withholding of funds referred to in the first count and asserted a claim for punitive damages. The third count contained a claim for damages allegedly caused by Century's wrongful interference in negotiations between Cloverleaf and third parties for the sale of the apartment complex. This Century did, according to the averments of the complaint, "by demanding arbitrary and outrageous financing conditions" of anyone who would assume the mortgage. The final three counts of the complaint attempted to state causes of action for the intentional infliction of emotional distress. It was alleged that Century and also its attorneys had intentionally inflicted emotional distress by raising the interest rates on the mortgage, by proposing harsh repayment terms upon potential buyers interested in continuing the use of Century's money, and in otherwise inflicting emotional distress upon Price and his wife. In response to preliminary objections in the nature of a demurrer, the trial court dismissed all but the first count of the complaint. This appeal followed.

The first issue to be resolved is whether appellants are properly before this Court. An appeal will lie only from a final order unless otherwise permitted by statute. "A final order is usually one which ends the litigation or, alternatively, disposes of the entire case.... 'Conversely, an order is interlocutory and not final unless it effectively puts the litigant "out of court." ' " Praisner v. Stocker, 313 Pa.Super. 332, 336-337, 459 A.2d 1255, 1258 (1983) (citations omitted), quoting Giannini v. Foy, 279 Pa.Super. 553, 556, 421 A.2d 338, 339 (1980). See also: Pugar v. Greco, 483 Pa. 68, 72-73, 394 A.2d 542, 544-545 (1978); 42 Pa.C.S. § 742. "As a general rule, an order dismissing some but not all counts of a multi-count complaint is interlocutory and not appealable." Praisner v. Stocker, supra, 313 Pa.Super. at 337, 459 A.2d at 1258. This is so because in most such instances "the plaintiff is not out of court and is not precluded from presenting the merits of his cause of action." Id. at 338, 459 A.2d at 1258. However, the general rule is not without exceptions. Where the dismissal of one count or several counts of a multi-count complaint has the effect of precluding the plaintiff from pursuing the merits of separate and distinct causes of action, the order sustaining preliminary objections is then final, not interlocutory, with respect to those causes of action dismissed. The plaintiff is "out of court" with respect thereto. Id. at 339, 459 A.2d at 1258-1259. This is to be distinguished from the situation in which separate counts have been used to state alternate theories to support recovery on the same cause of action. In such cases, the dismissal of one count does not prevent the plaintiff from proceeding to a determination of the underlying cause of action. Id. at 341, 459 A.2d at 1260. Similarly, "where one of several counts seeks to recover punitive damages in a complaint alleging breach of contract, a dismissal of that count does not put the plaintiff out of court on his underlying cause of action. Only if he is successful in his cause of action for breach of contract does the measure of damages become relevant." Id.

In the instant case, the first count of the complaint, containing a cause of action for alleged breach of contract, awaits disposition in the trial court. The second count is merely a restatement of the first count and includes a claim for punitive damages. The averments of this count are that Century unlawfully withheld interest collected in breach of contract as alleged in the first count. Appellants are not "out of court" on their cause of action for breach of contract; and, therefore, the trial court's rejection of their alternate theory and the claim for punitive damages contained in the second count was interlocutory. Such an order would not ordinarily be appealable. This Court will not review or express an advisory opinion regarding a ruling of the trial court which does not determine finally the cause of action for breach of contract alleged by appellants. We will not suggest which theory or theories appellants should pursue in the trial court or what damages they may recover in their undecided action for breach of contract.

The dismissal of Count No. 3 was final. Appellants are out of court on their claim for damages because of Century's alleged interference with Cloverleaf's...