Marano, F. & D. v. Fulton Bank, N.A.

Citation: Not availableDocket: Marano, F. & D. v. Fulton Bank, N.A. No. 812 MDA 2016

Court: Superior Court of Pennsylvania; April 4, 2017; Pennsylvania; State Appellate Court

Original Court Document: View Document

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Frank Marano and Donald Marano appeal a ruling from the Court of Common Pleas of Lancaster County, which granted summary judgment in favor of Fulton Bank, N.A. and Fulton Financial Advisors, N.A. The court's order, dated April 26, 2016, awarded Fulton $300,151.04 from Frank Marano and $720,279.08 from Donald Marano, along with accrued interest, attorneys' fees, and costs, while dismissing the Maranos' complaint with prejudice.

The Maranos were employed by Fulton as financial consultants starting December 15, 2008, entering into various employment documents, including promissory notes and bonus letters. These documents did not contain integration clauses. Fulton provided loans to both Maranos, totaling $554,125 for Frank and $1,329,746 for Donald, linked to their previous commissions at Wachovia, with an agreement to reduce the debt during their employment. 

After the Maranos resigned without notice on August 22, 2013, they failed to repay the loan balances. On August 22, 2014, they filed a lawsuit against Fulton alleging fraud, misrepresentation, breach of contract, and other claims. The case was transferred from Montgomery County to Lancaster County due to a forum selection clause. Fulton responded with preliminary objections and counterclaims for breach of the promissory notes and unjust enrichment. 

Following a motion for summary judgment by Fulton on October 15, 2015, the court conducted oral arguments and requested additional briefing on contract completeness. The court ultimately ruled in favor of Fulton, leading to the current appeal, where the Maranos raise specific issues for consideration.

The Honorable Lower Court made multiple errors in its rulings on the Plaintiffs' claims, including fraud in the inducement, fraud, negligent misrepresentation, breach of contract, promissory estoppel, unjust enrichment, and declaratory relief. Specifically, the court improperly granted Fulton's Motion for Summary Judgment and Dismissal despite the presence of genuine issues of fact and law. The Plaintiffs assert that Fulton's representations about their ability to generate referrals were critical to their decision to leave their previous employer, Wachovia. The excerpt also outlines the standards for summary judgment, emphasizing that it should only be granted when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. The text highlights the importance of written agreements, stating that when parties have documented their agreement without fraud or mistake, the written contract supersedes any prior negotiations or verbal agreements, thus requiring an entire contract for the parol evidence rule to apply.

A writing is presumed to be the entire contract of the parties if it is complete and clear, imposing a legal obligation without uncertainty regarding the parties' engagement. An integration clause indicates the writing encapsulates all prior negotiations and agreements. Once established as the complete contract, the parol evidence rule renders previous negotiations inadmissible to alter the contract's terms, with exceptions for claims of fraud, accident, or mistake, and for clarifying ambiguities. The presence of an integration clause strongly supports this presumption, but its absence requires a court to assess the agreement's completeness. The trial court determined that the employment documents constituted a fully integrated contract, applying the parol evidence rule and ruling that prior oral or written negotiations, including claims of fraud, were inadmissible. The court found no evidence of fraud by the Maranos, rejected their negligent misrepresentation claim regarding future promises, and ruled that equitable claims could not proceed due to existing written agreements. Clear terms in promissory notes established the Maranos' repayment obligations, which they acknowledged by signing the employment documents. Upon their termination in August 2013, the Maranos had outstanding balances and interest due under the notes, with any issues regarding interest and set-offs to be addressed in a future damages hearing.

The trial court, under Judge David L. Ashworth, affirmed the summary judgment in favor of Fulton Bank regarding a dispute with Frank and Donald Marano over bonus provisions in their employment letters. The Maranos argued that the trial court wrongly concluded that the documents constituted a fully integrated contract, citing their promissory notes which stated that the letters did not create an employment contract. This argument was rejected, referencing the legal principle that multiple documents in a transaction can be interpreted together, as established in Huegel v. Mifflin Construction Co. The court emphasized the parol evidence rule, which prevents altering a written contract's terms through oral agreements, thus supporting the integrity of the written agreements. The Maranos' appeal followed the trial court's dismissal of their complaint and a judgment against them for significant amounts, alongside Fulton's awarded attorneys' fees. The court requested the appeal be denied, highlighting the procedural and factual background, including the Maranos' transition to Fulton from Wachovia Securities.

The Maranos commenced their employment with Fulton on December 17, 2008, executing various agreements, including New Hire Bonus Letters and Promissory Notes. Frank and Donald Marano received loans of $554,125 and $1,329,746, respectively, with specified quarterly repayment obligations over ten years. Default on these loans occurs if payments are not made within five days of the due date, allowing Fulton to demand immediate repayment of the full balance without notice. Fulton can recover any associated costs or attorney fees from the Maranos.

After nearly five years, the Maranos resigned from Fulton on August 22, 2013, without notice, and began employment with Morgan Stanley, receiving another loan of $766,350. As of their resignation, Frank owed $300,151.04 and Donald owed $720,279.08 under the original Notes, which accrued interest at a specified federal rate.

On August 22, 2014, the Maranos filed a complaint in Montgomery County claiming fraud, breach of contract, and other related actions, seeking to be released from their obligations under the Promissory Notes. Fulton objected, citing a forum selection clause mandating disputes be resolved in Lancaster County, which was upheld by the Montgomery County Court and affirmed by the Superior Court, leading to the case's transfer to Lancaster County on March 11, 2015.

Fulton submitted an Answer, New Matter, and Counterclaims against the Maranos for breach of Promissory Notes and unjust enrichment. Following the closure of pleadings, Fulton moved for summary judgment on October 15, 2015, asserting entitlement to judgment on its Counterclaims and arguing that the Maranos' claims were legally insufficient. The Maranos responded on December 4, 2015, contending they demonstrated genuine issues of material fact warranting a jury trial. After briefs and oral arguments, supplemental briefs were requested regarding the completeness of the agreement for contract integration. On April 26, 2016, the court granted Fulton's summary judgment motion concerning the breach of Promissory Notes, citing no genuine issue of material fact, and dismissed the Maranos' Complaint with prejudice. The Maranos appealed, raising several issues: error in granting summary judgment on fraud claims, improper exclusion of parol evidence, and errors concerning negligent misrepresentation, breach of contract, promissory estoppel, unjust enrichment, declaratory relief, and on the Promissory Notes. The summary judgment standard aims to dismiss cases before trial when no claim or defense can be established after discovery, requiring the non-moving party to present essential evidence. The court must view records favorably for the non-moving party, resolving doubts against the moving party.

The Superior Court's standard for reviewing a trial court's grant of summary judgment requires that reversal occurs only if the lower court incorrectly determined that no genuine issue of material fact existed and that the moving party was entitled to judgment as a matter of law. The court must assess the record favorably for the non-moving party, resolving any doubts against the moving party. The appellate review is de novo, focusing solely on legal questions to ascertain whether material facts are undisputed or if sufficient evidence exists to establish a prima facie case for action.

In the case concerning Fulton's breach of Promissory Notes claim against the Maranos, it is established under Pennsylvania law that a plaintiff must prove the existence of a signed promissory note and the defendant's failure to make required payments. The Maranos admitted to executing the Notes and failing to pay the outstanding amounts. They claimed fraud in their inducement to sign the Notes and New Hire Bonus Letters based on alleged oral representations from Fulton. However, the Maranos' argument was rejected on the grounds of the parol evidence rule, which prevents the introduction of evidence regarding prior oral agreements when a written contract is deemed the final expression of the parties' agreement. The relevant case law reinforces that the written contract supersedes any prior negotiations unless fraud, accident, or mistake is proven, which was not established in this instance.

The Supreme Court clarified the application of the parol evidence rule, which requires a written document representing the 'entire contract between the parties.' For a writing to be deemed the complete contract, it must present a definitive legal obligation without ambiguity regarding the parties' engagement. Once established as the entire contract, the parol evidence rule renders prior oral or written negotiations concerning the same subject matter generally inadmissible to alter the contract's terms, except in cases of fraud, accident, or mistake. The court first assesses, as a legal question, if a writing constitutes the entire contract. In the current context, the Promissory Notes and New Hire Bonus Letters lack integration clauses; however, their absence does not automatically permit the introduction of parol evidence. Instead, the court evaluates the agreement's text for completeness. In this analysis, the relevant documents included the Offer Letters, Promissory Notes, New Hire Bonus Letters, and Non-Solicitation and Confidentiality Agreements. The Maranos contended that these documents do not comprehensively capture their employment terms. Nonetheless, it was determined that these documents collectively outline the essential terms of the agreement, referencing Fulton's Advisor Compensation Plan, which details various compensation components such as qualifying grid production, deferred compensation requirements, and other critical financial policies and provisions relevant to the Maranos' employment.

The Offer Letters outline essential provisions regarding the Maranos' employment, including compensation calculation for their first year, work schedules, branch assignments, transitional and additional bonuses, regulatory requirements, arbitration, team employment agreements, COBRA provisions, and various miscellaneous terms. Notably, they incorporate the Non-solicitation and Confidentiality Agreements. The December 17, 2008 New Hire Bonus Letters detail the terms of the New Hire Bonus and also attach the Promissory Notes and the Non-solicitation and Confidentiality Agreements. The Promissory Notes address key terms such as payment structures, late charges, events of default, and stipulations regarding amendments, emphasizing that no amendments were made in writing.

The Non-solicitation and Confidentiality Agreements define the Maranos' obligations regarding confidentiality and customer solicitation post-employment, along with remedies for breaches. The assertion by the Maranos that critical employment terms were not documented is characterized as baseless and disingenuous. Additionally, their claim regarding the necessity of including 'the Wachovia Model' in the employment agreement is deemed meritless, as the absence of this term suggests no agreement was formed on Fulton's obligation to implement it. The Offer Letters explicitly state that Fulton does not guarantee the Maranos' business performance.

Conclusively, the terms and conditions of the employment relationship are encapsulated in clear, unambiguous writings that reflect the parties' full intent, forming a fully integrated contract. Thus, parol evidence rules apply, rendering previous negotiations generally inadmissible, except in cases where a term is claimed to have been excluded due to fraud, accident, or mistake, as argued by the Maranos regarding the New Hire Bonus Letters and Promissory Notes.

Maranos argue that their agreement to the New Hire Bonus Letters and execution of Promissory Notes were induced by Fulton's alleged oral misrepresentations regarding future referrals, the establishment of a leading investment and securities business, and the acquisition of expertise and personnel. However, under Pennsylvania law, specifically referenced in the case of Toy, the fraud exception to the parol evidence rule applies only to fraud in the execution of a contract, not fraud in the inducement. Fraud in execution implies the written agreement does not reflect the true intent due to omitted terms, allowing for the introduction of parol evidence. Conversely, in cases of fraud in inducement, such representations are deemed superseded by a fully integrated written agreement.

Consequently, the Maranos cannot raise fraudulent inducement as a defense since they did not demonstrate fraud in execution. The court deemed it appropriate to exclude evidence beyond the executed documents, which constitute the complete agreement between the parties. Regarding Fulton's counterclaim, the Promissory Notes and New Hire Bonus Letters have clear terms, indicating Fulton’s obligation to pay while the Maranos were employed and the Maranos' responsibility for repayment upon employment termination. The Maranos acknowledge their agreement to these documents, their employment commencement, termination on August 22, 2013, and their failure to repay the outstanding amounts under the Notes.

No genuine issue of material fact existed regarding the Promissory Notes signed by the Maranos, nor their breach, which entitled Fulton to judgment as a matter of law. The Maranos were required to pay the full outstanding principal, accrued interest, and Fulton's attorneys' fees as stipulated in the Notes. In their Complaint, the Maranos asserted several claims including fraud in the inducement, fraudulent misrepresentation, negligent misrepresentation, breach of contract, promissory estoppel, unjust enrichment, and declaratory relief. These claims were deemed legally insufficient based on undisputed facts.

Specifically, the claims of fraud in the inducement and negligent misrepresentation hinged on alleged statements made by Fulton concerning future intentions, such as providing referrals and growing a securities business. Pennsylvania law establishes that promises regarding future actions are not actionable as fraud, and negligent misrepresentation requires misrepresentations of existing facts rather than future promises. Since the Maranos' allegations related to future actions rather than present facts, they could not support claims for fraudulent or negligent misrepresentation. The legal consensus in various jurisdictions confirms that negligent misrepresentation claims cannot arise from unfulfilled promises regarding future events.

The Maranos' appeal regarding the dismissal of their breach of contract claim against Fulton is denied due to the existence of clear, executed contracts that form the complete employment agreement between the parties. The parol evidence rule prevents the Maranos from introducing oral agreements to modify this written contract. Their alternative claims of promissory estoppel and unjust enrichment are also rejected, as these theories are only applicable in the absence of a valid contract. Promissory estoppel is an equitable remedy in Pennsylvania meant for situations without a contract, and unjust enrichment implies that no enforceable written agreement exists. Since the parties have clear written agreements, these claims fail as a matter of law. The court's opinion was submitted in compliance with appellate procedural rules, and the order was officially filed on July 15, 2016.