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

• Court: Superior Court of Pennsylvania
• 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
• Decision Date: 01 November 1985

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.

Page 165

[347 Pa.Super. 78] 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[347 Pa.Super. 79] 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

Page 166

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 [347 Pa.Super. 80] 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...