J. S36018/16


NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37


HELENA CHEMICAL COMPANY,                    :     IN THE SUPERIOR COURT OF
INDIVIDUALLY & D/B/A/ HELENA                :          PENNSYLVANIA
FINANCE                                     :
                                            :
                          Appellant         :
                                            :
                    v.                      :
                                            :
DARYL L. BEILER                             :     No. 2057 MDA 2015

                Appeal from the Order Entered October 29, 2015
                 In the Court of Common Pleas of Union County
                         Civil Division No(s): 2014-0446

BEFORE: MUNDY, J., DUBOW, J., and STEVENS, P.J.E. *

MEMORANDUM BY DUBOW, J.:                                FILED JUNE 30, 2016

        Appellant, Helena Chemical Company, appeals from the October 29,

2015 Order entered in the Union County Court of Common Pleas sustaining

Appellee’s Preliminary Objections and dismissing Appellant’s Complaint.

After careful review, we hold that the trial court (i) erred in reading the

Promissory Note and Credit Agreement together as one contract and in

finding that the arbitration clause in the Credit Agreement applied to the

Promissory Note; and (ii) erred in finding that venue was not proper in Union

County with regard to the Promissory Note. Therefore, we affirm in part,1



*
    Former Justice specially assigned to the Superior Court.
1
  Appellant does not dispute the trial court’s dismissal of claims arising under
the Credit Agreement.
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reverse the trial court’s Order as it pertains to claims arising under the

Promissory Note, and remand.

     The factual and procedural history of this case is as follows. On July 7,

2014, Appellant filed an action in the Court of Common Pleas of Union

County for breach of a Credit Sales and Service Agreement (“Credit

Agreement”) and for breach of a Promissory Note (“Promissory Note”).

Complaint, filed 7/7/14.

     Appellant’s Complaint alleged the following relevant facts: Appellant is

a chemical supply company in the business of supplying chemicals, fertilizer

and other equipment.2 Id. at ¶ 3. Appellee, Daryl Beiler, is a farmer who

resides in Mifflinburg, Pennsylvania.   Id. at ¶ 2, 4.   On or about April 6,

2009, the parties entered into the written Credit Agreement, which extended

Appellee a line of credit with which he could make purchases from Appellant.

Id. at ¶ 5-6.   Appellee made purchases pursuant to the Credit Agreement

between July 1, 2009, and October 30, 2009.        Id. at ¶ 7-9.    Appellant

alleged that on the date the Complaint was filed, $18,014.88 was due and

owing pursuant to the purchases made subject to the Credit Agreement, and

that Appellee had failed and refused to make payment. Id. at ¶ 10, 16.

     In addition to the claim arising under the Credit Agreement, the

Complaint alleged that on or about April 8, 2009, the parties entered into a


2
  During oral argument, Appellee’s attorney stated that Appellant is located
in Tennessee. N.T., 10/29/15, at 4.



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written Promissory Note in the principal amount of $25,000.00, which funds

were applied as partial payment on Appellee’s debts due and owing to

Appellant for the purchase of Appellant’s goods and services. Id. at ¶ 11-

12.   Under the terms of the Promissory Note, Appellee was to make full

payment, including interest and finance charges, on or before December 1,

2009.     Id. at ¶ 13.          At the time of filing, the Complaint alleged that

$35,437.07 was due and owed to Appellant under the Promissory Note, and

that Appellee had failed and refused to make payment. Id. at ¶ 14, 16.

        On August 3, 2015, Appellee filed Preliminary Objections pursuant to

Pa.R.C.P. 1028(a) and 1006(e), seeking dismissal on the grounds of (i)

improper venue; and (ii) the existence of an arbitration agreement.

Defendant’s Preliminary Objections to Plaintiff’s Complaint, filed 8/3/16, at

4-5 (unpaginated). Specifically, Appellee argued that the claims arising out

of the Credit Agreement should be dismissed because that agreement

contains a binding arbitration clause, and mandates venue in Memphis,

Tennessee. Id. As to claims arising out of the Promissory Note, Appellee

argued venue was improper because that agreement contained a choice of

venue clause that permitted Appellant to file in Shelby County, Tennessee.

Id. at 4.

        Appellant   filed   a    brief   in   opposition   to   Appellee’s   Preliminary

Objections, conceding that claims arising under the Credit Agreement were

subject to a binding arbitration agreement, but arguing that venue in Union



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County was proper for claims arising under the Promissory Note. Plaintiff’s

Brief in Opposition to Defendant’s Preliminary Objections, filed 8/24/16, at 3.

Specifically, Appellant argued that the choice of venue clause in the

Promissory Note was not a mandatory term, but instead permitted

Appellant, in its sole discretion, to establish venue in Shelby County,

Tennessee. Id.

      On October 29, 2015, the trial court held a hearing on the Preliminary

Objections. At the hearing, the trial court, sua sponte, raised the question

of whether the Credit Agreement and Promissory Note should be read

together as one agreement. See N.T., 10/29/15, at 2-3. After arguments

from counsel, the trial court ruled on the record that: (i) the Credit

Agreement and Promissory Note were made as part of “essentially one

transaction” and should be read together; (ii) when read together, there are

inconsistencies in the agreement; (iii) the Promissory Note is ambiguous as

to whether the choice of venue clause is optional; and (iv) the Credit

Agreement and Promissory Note were drafted by Appellant and therefore

must be interpreted against Appellant. Id. at 5-7. In conclusion, the trial

court determined that the intent of the parties was to have all claims arising

out of either agreement subject to binding arbitration in Tennessee. Id. at

7.   Accordingly, the trial court sustained Appellee’s Preliminary Objections

and dismissed the Complaint. Id.




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      Appellant filed a timely Notice of Appeal. Appellant raises the following

three issues on appeal:

      1. Whether the trial court erred and/or abused its discretion in
      finding/concluding that [Appellant’s] breach of contract claim
      under the [Promissory Note] was subject to arbitration and
      choice of venue clauses contained in a separate Credit
      Agreement, requiring arbitration in Memphis, Tennessee and in
      dismissing that claim?

      2. Whether the trial court erred and/or abused its discretion in
      finding/concluding that venue in Union County, Pennsylvania on
      [Appellant’s] breach of contract claim under the [Promissory
      Note] was improper and/or that a change of venue was
      warranted and in dismissing that claim?

      3. Whether the trial court erred and/or abused its discretion in
      ordering a change of venue on [Appellant’s] breach of contract
      claim under the [Promissory Note] for reasons of convenience of
      the parties, judicial economy and/or avoidance of inconsistent
      verdicts, grounds which were not raised by [Appellee] in his
      preliminary objections?

Appellant’s Brief at 3.

      In reviewing the trial court’s disposition of preliminary objections, we

note the following:

      [O]ur standard of review of an order of the trial court overruling
      or granting preliminary objections is to determine whether the
      trial court committed an error of law. When considering the
      appropriateness of a ruling on preliminary objections, the
      appellate court must apply the same standard as the trial court.

      When considering preliminary objections, all material facts set
      forth in the challenged pleadings are admitted as true, as well as
      all inferences reasonably deducible therefrom.        Preliminary
      objections which seek the dismissal of a cause of action should
      be sustained only in cases in which it is clear and free from
      doubt that the pleader will be unable to prove facts legally
      sufficient to establish the right to relief.




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O'Donnell v. Hovnanian Enterprises, Inc., 29 A.3d 1183, 1186 (Pa.

Super. 2011) (citations and quotation marks omitted).

      In its first issue, Appellant argues that the trial court committed an

error of law in interpreting the Promissory Note when it read the Credit

Agreement and the Promissory Note together as having been made as part

of a single transaction, and held that the binding arbitration clause in the

Credit Agreement, therefore, also applies to the Promissory Note.         After

careful review, we agree that the trial court erred as a matter of law.

      When this Court reviews a preliminary objection sustained on the basis

of an alleged arbitration agreement, our standard of review is de novo. “In

Pennsylvania the issue of whether a particular dispute falls within a

contractual arbitration provision is a matter of law for a court decide.”

McNulty v. H&R Block, Inc., 843 A.2d 1267, 1272 (Pa. Super. 2004)

(citation omitted), abrogated on other grounds by AT & T Mobility, LLC v.

Concepcion, 563 U.S. 333 (2011).        “To determine whether the claim is

subject to arbitration the court engages in a two-prong analysis. First, does

a valid agreement exist and[,] second[,] is the dispute within the scope of

the agreement.” Id. (citation omitted). Therefore, “[o]ur review is plenary,

as it is with any review of questions of law.” Huegel v. Mifflin Const. Co.,

Inc., 796 A.2d 350, 354 (Pa. Super. 2002) (citations and quotations

omitted).




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      When interpreting a contract, including any arbitration agreements

therein, “the intention of the parties is paramount[.]” Unit Vending Corp.

v. Lacas, 190 A.2d 298, 300 (Pa. 1963). In determining the intent of the

parties, courts “must examine the entire contract[.]”         In re Mather’s

Estate, 189 A.2d 586, 589 (Pa. 1963).       “Where several instruments are

made as part of one transaction they will be read together, and each will be

construed with reference to the other; and this is so although the

instruments may have been executed at different times and do not in terms

refer to each other.”    Neville v. Scott, 127 A.2d 755, 757 (Pa. Super.

1957). Cf Trombetta v. Raymond James Financial Services, Inc., 907

A.2d 550, 560 (Pa. Super. 2006) (“It is a general rule of law in the

Commonwealth that where a contract refers to and incorporates the

provisions of another, both shall be construed together.”).

      In the instant case, the Credit Agreement includes a binding

arbitration agreement, requiring arbitration in Memphis, Tennessee, with

substantive issues governed by the laws of Tennessee. See Complaint, at

Exhibit A ¶ 16. The Promissory Note, however, makes no reference to an

arbitration agreement.    Id. at Exhibit C.     Therefore, the only way to

conclude that claims arising under the Promissory Note are subject to an

arbitration agreement is to find that the Promissory Note and the Credit

Agreement were made as part of a single transaction, and must therefore be

read together as one agreement.        After a careful review of all of the



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evidence properly before this Court, we conclude that the Promissory Note

was an agreement separate and distinct from the Credit Agreement, and the

trial court erred in reading the two agreements together as part of a single

transaction.

      Appellee argues that the trial court properly read the two agreements

together as one transaction and properly imputed the arbitration clause of

the Credit Agreement onto the Promissory Note.      Appellee’s Brief at 5-11.

Appellee relies on our Opinion in Huegel, supra, to support his argument.

Such reliance is misplaced.   Appellee fails to acknowledge key distinctions

between the facts in Huegel and the present case.

      In Huegel, this Court read as a single transaction two home

improvement contracts and a financing agreement obtained to fund the

home improvement contract. Huegel, supra, at 356-57. Importantly, (i)

husband and wife Plaintiffs each signed all three agreements; (ii) the

enforceability of the second home improvement contract, which operated as

a novation to the first home improvement contract, was expressly

conditioned on the later execution of a financing agreement; (iii) the

financing agreement included express terms making payment under the

financing note “subject to the terms of a home improvement installment

contract”; and (iv) the financing agreement expressly referenced the specific

home improvement contract at issue in the “Description of Goods and




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Services Purchased” and included a copy of the home improvement contract

as an attachment thereto. Id. at 353-56.

     In the instant case, none of these factors exists.         The Credit

Agreement identifies Appellee alone as the borrower, and bears only his

signature and that of Appellant. Complaint, at Exhibit A. In contrast, the

Promissory Note identifies Appellee and one Gina Boiler as the borrowers.

Id. at Exhibit C.   Appellee and Ms. Boiler each executed the Promissory

Note. Id.

     Moreover, although the Credit Agreement includes language that

allows for the possibility that a promissory note might someday be

executed, neither the Promissory Note nor the Credit Agreement is expressly

conditioned on the existence of the other, and neither the Promissory Note

nor the Credit Agreement expressly incorporates the other by reference or

attachment. Compare Huegel, supra, at 353-56. In fact, the only portion

of the Credit Agreement that references the possibility of a promissory note

expressly states that the Credit Agreement is enforceable separate and apart

from any promissory note and “shall not be vitiated or merged into or

extinguished by such promissory note.” Id. at Exhibit A ¶ 14.

     Given the clear language of the Credit Agreement outlining its

enforceability as distinct from any potential promissory note, and given the




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lack of any terms in either agreement incorporating the other, 3 we conclude

that the trial court erred as a matter of law in reading the two agreements

as having been made as part of one transaction.       Moreover, because the

Promissory Note contains no reference to an arbitration clause, the trial

court erred in finding that claims arising under the Promissory Note are

subject to binding arbitration.

      Appellant’s second and third issues both challenge the trial court’s

determination that venue in Union County is improper for claims arising

under the Promissory Note.

      “Although a plaintiff, as a rule, may [choose] the forum in which to

bring suit, that right is not absolute.”     Zappala v. Brandolini Property

Management, Inc., 909 A.2d 1272, 1281 (Pa. 2006). In an action against

an individual, Rule 1006(a) states venue is proper in a county in which “the

individual may be served.” Pa.R.C.P. 1006(a)(1).

      A defendant may challenge venue on three grounds: “improper venue

by preliminary objection, forum non conveniens, and inability to hold a fair

and impartial trial.” Id. Pursuant to Pa.R.C.P. 1006(e), a claim of improper




3
  Our decision in Neville, supra at 757, allows for the possibility that two
instruments may be read together as one agreement even where they do
not expressly incorporate one another.        Later cases, however, have
recognized that an incorporation provision, or lack thereof, is but one factor
a court may use to determine whether several instruments were made as
part of a single transaction. See, e.g., Huegel, supra, at 353-56.



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venue must be raised in a preliminary objection.4 As our Supreme Court has

explained:

      [T]he basis for a Rule 1006(e) challenge is the defendant's belief
      that venue is “improper” in the plaintiff's chosen forum. The
      meaning of the word improper, as used in subsection (e), is, as
      previously noted, shaped by Rules 2179 (providing where a
      personal action against a corporation may be brought), 1006(a)
      and (b) (providing where an action may be brought) and . . .
      1006(c) (“[A]n action ... against two or more defendants . . .
      may be brought against all defendants in any county in
      which the venue may be laid against any one of the defendants .
      . . .”).

Id.

      In the instant case, the record does not support the trial court’s

determination that venue is improper in Union County under the Promissory

Note. Appellant chose to file its complaint in Union County, where Appellee

lives. The Union County Sheriff’s Department personally served Appellee in

Union County.     See Union County Sheriff’s Return, filed 8/1/14.         In

accordance with Rule 1006(a), venue in Union County is proper.5




4
 Forum non conveniens and inability to hold a fair trial challenges are raised
by petition as provided in Pa.R.C.P. 1006(d)(1) and (2).
5
  The trial court’s analysis depended in part on imputing the terms of the
Credit Agreement onto the Promissory Note. As discussed, supra, the trial
court erred in reading the two agreements together. Read alone, the
Promissory Note permits venue in Tennessee at Appellant’s sole discretion,
which Appellant did not exercise. Therefore, we conduct our analysis under
Rule 1006.



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      Accordingly, we reverse the trial court’s Order as it pertains to claims

arising under the Promissory Note and remand for further proceedings

consistent with this Memorandum.

      Order affirmed, in part; Order reversed and case remanded, in part.

Jurisdiction relinquished.



Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary

Date: 6/30/2016




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