Hoorfar Dental Grp.-Richboro v. Gatsch

• Decision Date: 14 November 2022
• Docket Number: 2574 EDA 2021,J-A21004-22
• Parties: HOORFAR DENTAL GROUP-RICHBORO, LLC, MERSAD HOORFAR DMD v. ALEXANDRA GATSCH, TERRY RAKAWSKY, DMD, RG DENTAL GROUP OF RICHBORO, LLC Appellants
• Court: Pennsylvania Superior Court

HOORFAR DENTAL GROUP-RICHBORO, LLC, MERSAD HOORFAR DMD v. ALEXANDRA GATSCH, TERRY RAKAWSKY, DMD, RG DENTAL GROUP OF RICHBORO, LLC Appellants

No. 2574 EDA 2021

No. J-A21004-22

Superior Court of Pennsylvania

November 14, 2022

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

Appeal from the Judgment Entered November 10, 2021 In the Court of Common Pleas of Bucks County Civil Division at No(s) 2019-00657

BEFORE: LAZARUS, J., MURRAY, J., and McCAFFERY, J.

MEMORANDUM

LAZARUS, J.

Alexandra Gatsch, Terry Rakawsky, DMD, and RG Dental Group of Richboro LLC (collectively, Defendants/Buyers) appeal from the judgment entered on a jury verdict in favor of Appellees', Hoorfar Dental Group-Richboro, LLC, and Mersad Hoorfar, DMD (collectively, Plaintiffs/Sellers), in this breach of contract action. After careful, we affirm on the basis of the trial court opinion.

On June 14, 2018, Defendants entered into a written Asset Purchase Agreement (APA) to buy Plaintiffs' dental practice (Practice), located in Richboro, Bucks County, for a purchase price of $850,000.00. The APA contained an integration clause memorializing that the "[APA] and the existing exhibits hereto contain the entire agreement between the parties . . . [and that the APA] may not be modified, amended, altered, supplemented, or canceled[,] except pursuant to the terms of an instrument in writing signed by the parties hereto." APA Integration Clause, 6/14/18, at § 17.7 (emphasis added); see also N.T. Jury Trial, 7/13/21, at 28 (Defendants' attorney agreeing contract was "[f]ully integrated"). Defendants also bought the Practice's accounts receivables (Accounts Receivables), as of July 30, 2018, for an additional $78,080.00^[1] (70% of the value of accounts less than 90 days old). The parties executed an amendment to the APA and a Promissory Note (Note) that documented the valuation of the Accounts Receivables. The amendment to the APA and the Note delineated that Defendants were to pay the $78,080.00 in twelve consecutive monthly installments of $6,506.66, without interest, beginning on August 31, 2018. In addition, pursuant to a Professional Services Agreement (PSA), Defendant, Mersad Hoorfar, DMD, agreed to work as an independent contractor for Plaintiff RG Dental Group for a minimum of three months following the sale of the Practice.

Defendants paid the purchase price, took over the Practice, including all dental tools, equipment, and supplies,^[2] collected the Practice's Accounts Receivables (that were billed prior to closing but not yet paid), and began operating RG Dental with Dr. Hoorfar^[3] continuing to work for the agreed-upon three-month-period post-sale. Section 9 of the APA designated that the dental equipment was sold in "As-Is" condition. When Buyers found fault with the condition of the equipment and alleged that there was a shortage in stocking of supplies on hand prior to the time of the transfer of the Practice, Buyers ceased paying the monthly $6,505.66 installment as per the APA and Promissory Note and also deducted money owed under the PSA to make alleged "repairs" to dental equipment. N.T. Jury Trial, 7/13/21, at 145. In addition, Buyers failed to pay Dr. Hoorfar in full for his post-sale work and services that totaled approximately $10,360.50.

On January 31, 2019, Plaintiffs filed a complaint against Defendants alleging breach of contract-promissory note (Count I), breach of contract-professional service agreement (Count II), and invasion of privacy-appropriation of Plaintiff's Identity (Count III). Complaint, 1/31/19, at 3-5. Plaintiffs sought to enjoin Defendants from continuing to appropriate Plaintiff's identity or engage in any unfair or deceptive practices or fraudulent behavior, compensatory damages, the rendering of an accounting of billing and collection of Plaintiffs' professional services rendered, injunctive and equitable relief, as deemed proper by the court, reasonable attorneys' fees and costs, and pre- and post-judgment interest. Id. at 5-6.

On March 5, 2019, Defendants filed an answer with new matter and counterclaims for misrepresentation and breach of contract. Plaintiffs filed preliminary objections to Defendants' new matter and counterclaims, seeking dismissal of Defendants' pleading for lack of specificity and in the nature of a demurrer. See Pa.R.C.P. 1028(a)(3), (4). In their preliminary objections, Plaintiffs claimed that Defendants: (1) defaulted on the Note on November 30, 2019; (2) continue to be in default in the amount of $58,506.02, plus interest, attorneys' fees, and costs; and (3) only made partial payments under the PSA causing Defendants to suffer damages in excess of $10,000.00.

On May 13, 2019, the trial court granted Plaintiffs' preliminary objections, in part, and dismissed Defendants' counterclaim for misrepresentation. On June 7, 2021, Plaintiffs filed a motion in limine to preclude the admission of parol evidence to supplement the parties' written agreements. On July 13, 2021, the trial court held oral argument on Plaintiffs' motion in limine at which Plaintiffs argued that the language in the APA was not ambiguous and Defendants argued the APA's language "aggregate amount" with regard to the Accounts Receivable was susceptible of different, but reasonable, interpretations.^[4] N.T. Jury Trial, 7/13/21, at 23, 32-33. The court ultimately granted Plaintiffs' motion, concluding that the APA was not ambiguous and that the term "aggregate amount" means "total" amount.

A three-day jury trial was held before the Honorable Denise M. Bowman. Prior to the start of trial, Plaintiffs withdrew their invasion of privacy claim. N.T. Jury Trial, 7/13/21, at 5. At the conclusion of trial, Plaintiffs made a motion to dismiss with regard to Accounts Receivable and any claim based on actual damages regarding two pieces of dental equipment. N.T. Trial, 7/15/21, at 89-91. The court denied the motion to dismiss with regard to the equipment and granted the motion^[5] with regard to Defendants' counterclaim for breach of contract relating to Accounts Receivable. The jury rendered a verdict in favor of Plaintiffs for $69,166.00-$58,806.00 (breach of Note) and $10,360.00 (material breach of PSA). See N.T. Jury Trial, 7/15/21, at 218-20.

On July 26, 2021, Defendants filed a post-trial motion seeking a new trial, which the trial court denied on November 5, 2021. On October 21, 2021, Plaintiffs filed a petition for interest, costs, and attorneys' fees. On November 9, 2021, the court granted Plaintiffs' petition awarding Plaintiffs $19,127.94 in pre-judgment interest ($17,302.14 for breach of Note and $1,825.80 for breach of PSA), and $7,655.00 in attorneys' fees and costs. On November 10,2021, Plaintiffs filed a praecipe to enter judgment on the jury verdict; the verdict was reduced to judgment.^[6]

Defendants filed a timely notice of appeal and court-ordered Pa.R.A.P. 1925(b) concise statement of errors complained of on appeal. Defendants raise the following issues for our consideration:

(1) Whether the trial court erred as a matter of law in sustaining the Buyers' preliminary objections in the nature of a demurrer to Count I of the Buyers' counterclaim for misrepresentation by way of its interlocutory order entered May 14, 2019.

(2) Whether, especially in light of its order entered May 14, 2019, the trial court erred as a matter of law in granting the Sellers' motion in limine filed June 7, 2021[,] based upon the parol evidence rule.^[7]

(3) Whether, setting aside its granting of the Buyer's motion in limine, the trial court abused its discretion and/or clearly erred as a matter of law in ruling that the accounts receivable report delivered to the Buyer at the closing on July 31, 2019[,] was not part of the parties' contract and in precluding the Buyer from introducing evidence and testimony on the question of whether the Seller breached the A[PA] in this regard.

(4) Whether the trial court should have entered judgment as a matter of law for the Buyer on the Sellers' claims for breach of the professional services agreement and for $19,775.91 for the Buyer on its counterclaim against the Seller for breach of the A[PA] with regard to the payment of Dr. Teitelman's bonus for services rendered prior to July 31, 2018.

(5) Whether, alternatively, the trial court should have granted the Buyers' request for a mistrial as to all issues when the Sellers' counsel [] stood up in open court before the jury, accused the undersigned of professional misconduct and demanded a mistrial.

Defendants' Brief, at 3.

After reviewing the parties' briefs on appeal, the certified record, and relevant case law, we rely upon Judge Bowman's well-crafted opinion to affirm the trial court's judgment entered on the verdict in favor of Plaintiffs. See Trial Court Opinion, 3/9/22, at 16-21 (court properly dismissed Defendants' counterclaim for misrepresentation under "gist of action" doctrine where contract claim cannot be recast as tort claim as Defendants failed to support counterclaim with anything other than parties' written agreements); id. at 21-25 (court properly granted Plaintiff's motion in limine based upon parol evidence rule where Defendants admitted APA contained integration clause regarding sale/purchase of Accounts Receivable, evidence did not demonstrate ambiguity in APA, Defendants' attorney admitted Defendants were not alleging mistake or misrepresentation, and Defendants never claimed APA ambiguous throughout discovery or sought additional information on what "aggregate amount" meant); id. at 25-30 (court properly concluded Accounts Receivable report not part of parties' contract and precluded Defendants from introducing evidence and testimony on whether Plaintiffs breached APA where emails Defendants sought to...