PPG Architectural Finishes v. N. Siperstein

Citation: Not availableDocket: 1960 WDA 2016

Court: Superior Court of Pennsylvania; March 26, 2018; Pennsylvania; State Appellate Court

Original Court Document: View Document

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The case involves PPG Architectural Finishes Inc. (Appellant) appealing against N. Siperstein West-End Paint Company Inc., Siperstein West End Paint Corporation, and Siperstein's Bricktown Paint Corporation (Appellees) regarding a December 4, 2016 order from the Court of Common Pleas of Allegheny County. Judge Bowes, dissenting, argues that the issues raised by PPG are barred by collateral estoppel and supports affirming the trial court's decision to sustain the Appellees' preliminary objections.

The background indicates PPG had a long-standing business relationship with the Siperstein Companies, dating back to the 1980s, involving significant annual sales of paint. The Siperstein Companies ordered products from PPG, which were shipped across several states. Payment issues arose in the mid-to-late 2000s, leading to Katz, an officer of the Siperstein Companies, executing promissory notes to secure shipments. Despite Katz’s assurances regarding payments, PPG ultimately ceased shipments due to non-payment.

PPG initiated a complaint in June 2009, claiming breach of contract and other related counts against the Siperstein Companies and Katz for over $800,000 in past-due invoices. Following a non-jury trial, the court ruled in favor of PPG, awarding it over $838,000 against the Siperstein Companies. Both parties subsequently appealed.

PPG appealed the trial court's exclusion of amounts owed for products delivered to Siperstein's Long Branch and Bricktown locations, arguing that these locations were part of the 'Siperstein Chain,' which was jointly and severally liable for debts owed to PPG. The appellate court found that PPG did not meet procedural requirements to claim that the Siperstein Companies were jointly and severally liable as an unincorporated association. However, it upheld the trial court’s ruling that other entities in the Siperstein Chain were estopped from denying joint and several liability based on agency principles, as PPG reasonably believed these companies operated as a single entity and relied on that belief when extending credit.

The court determined that the trial court erred in excluding the Long Branch and Bricktown debts from the verdict since all entities with orders billed to PPG's main account were jointly and severally liable for the total debt, regardless of whether they were named defendants. The case was remanded for the trial court to establish proof of these debts for inclusion in the verdict. The Pennsylvania Supreme Court later denied review, and on remand, the trial court added the Long Branch and Bricktown debts to the verdict. PPG subsequently filed a new complaint in 2011 against Appellees for breach of contract and quantum meruit, asserting similar allegations as in the previous action. Appellees raised preliminary objections based on res judicata and collateral estoppel, which the trial court sustained in December 2016. PPG appealed, and after filing a concise statement of errors, the matter is now ready for review.

PPG raises five key issues for consideration regarding the applicability of res judicata and collateral estoppel in their case. First, they question whether the trial court erred by applying these doctrines despite the named defendants not being parties in a previous 2009 action where no verdict was rendered against them. Second, PPG challenges the trial court's conclusion that it had previously assessed the evidence regarding the relationship of the defendants' stores to the 'Siperstein chain' and found them not to be part of it. Third, they argue the court failed to differentiate between the store locations operated by defendants and the corporate entities previously sued. Fourth, PPG contends that res judicata and collateral estoppel should not have been raised through preliminary objections since they are affirmative defenses. Finally, they question whether the necessary conditions for applying these doctrines were met.

While the majority opinion agrees with PPG on the waiver of the fourth issue, the author of the summary disagrees with the conclusion that the trial court erred in upholding the preliminary objections based on collateral estoppel. The author emphasizes that the standard of review for such cases is to determine if the trial court made an error of law. The doctrine of collateral estoppel prevents the re-litigation of issues that were previously decided if certain criteria are met, including identity of the issue, final judgment on the merits, parties being the same or in privity, and having a full and fair opportunity to litigate.

PPG argues that the current action stems from a claim that recovery against the defendants from the 2009 action was not possible, asserting that the issue of the Appellees' joint and several liability for debts related to specific stores was not addressed in the prior litigation. They maintain that since the Appellees were not named in the 2009 action, they cannot be bound by its verdict under the Pennsylvania Rules of Civil Procedure.

PPG argues that the Appellees, not being parties to the 2009 action, do not meet the requirements for collateral estoppel. However, the majority references the prior ruling that the Siperstein Companies were jointly and severally liable, establishing that PPG could pursue claims against the 2011 Defendants under a de facto partnership theory. The majority also contests the trial court's suggestion that PPG should have amended the 2009 complaint or consolidated cases, asserting that while the court had discretion to consolidate, it was not required to do so. 

The dissenting opinion finds that all elements of collateral estoppel are satisfied. It asserts that the issues in both cases are identical, focusing on whether the Siperstein Companies were jointly and severally liable for debts owed to PPG, which was previously affirmed by the court. The dissent emphasizes that the legal distinction of the corporate entities involved is not determinative, noting that collateral estoppel does not require identity of parties, unlike res judicata. 

The dissent further argues that the issue was litigated to a final judgment, with PPG being a party in the 2009 action, thus receiving a full opportunity to litigate. It concludes that the finding of joint and several liability was essential to the previous judgment, highlighting that this was the main focus of the prior litigation and resolved the liability among the defendants.

PPG's argument that collateral estoppel does not apply because the corporate defendants were not parties in the 2009 action is rejected. Collateral estoppel aims to prevent re-litigation of issues in different actions, even if based on different causes of action. A prior court established that the Siperstein enterprise is jointly and severally liable for the debts of its separate legal entities, including those relevant to this case. The debts of the Long Branch and Bricktown stores were included in the modified verdict of the 2009 action. 

It's important to differentiate between issue preclusion (collateral estoppel) and claim preclusion (res judicata). Collateral estoppel prevents re-litigation of any claims that rely on the same factual or legal issues previously determined. In this instance, it bars PPG from contesting the liability of third parties for debts already adjudicated in favor of PPG in 2009. The specific cause of action PPG asserts in the current case is irrelevant because the underlying issue has been resolved. 

PPG's inability to collect on the judgment from the 2009 action does not change this outcome. The court had previously ruled that PPG could recover amounts owed by the Siperstein Companies, including the Long Branch and Bricktown locations involved here. PPG's failure to include all relevant Siperstein Companies in the 2009 action is a matter of its own oversight. Consequently, there are no remaining factual or legal issues to resolve in this case. The trial court's decision to uphold Siperstein’s preliminary objections based on collateral estoppel is affirmed, leading to a dissenting opinion.