J-E02003-16

                                  2017 PA Super 150



CHRISTOPHER GUTTERIDGE AND                            IN THE SUPERIOR COURT OF
APPLIED ENERGY PARTNERS, LLC                                PENNSYLVANIA

                            Appellee

                       v.

J3 ENERGY GROUP, INC., T/D/B/A J3
ENERGY GROUP AND STEPHEN RUSSIAL

                            Appellants                     No. 3397 EDA 2013


            Appeal from the Judgment Entered November 25, 2013
               In the Court of Common Pleas of Chester County
                    Civil Division at No(s): 2009-09160-CA


BEFORE: GANTMAN, P.J., FORD ELLIOTT, P.J.E., BENDER, P.J.E.,
        BOWES, J., PANELLA, J., SHOGAN, J., LAZARUS, J., OLSON, J.,
        and OTT, J.

OPINION BY LAZARUS, J.:                                      FILED MAY 17, 2017

       J3 Energy Group, Inc. (J3) and Stephen Russial (Russial) (collectively

Appellants/Defendants) appeal from the judgment entered in the Court of

Common Pleas of Chester County in favor of Christopher Gutteridge

(Gutteridge)     and    Applied     Energy     Partners,   LLC   (AEP)   (collectively

Appellees/Plaintiffs), in the amount of $343,887.00. After careful review, we

affirm.1
____________________________________________


1
 Appellant/Defendant J3 filed a motion to withdraw the appeal as to J3 only,
averring J3 is now “under common ownership with Plaintiff/Appellee [AEP].”
We grant J3’s motion to withdraw the appeal.          See Pa.R.A.P. 1973.
Additionally, Appellees/Plaintiffs have filed a motion to strike portions of
Appellants’/Defendants’ brief. We deny this motion.
J-E02003-16



        The underlying facts of the case are as follows. In 2004, Gutteridge

formed AEP, which sold electronic motor controls and energy saving lighting

products to commercial and industrial customers.             AEP conducted its

business through approximately fifteen sales agents known as channel

partners.     Channel partners who had their own businesses would buy

products from AEP at discounted prices and sell them to their customers at

higher prices. Channel partners who did not have their own businesses were

paid a commission by AEP for the sales they generated.

        The case before us arises out of business dealings between AEP and

J3. Gutteridge formed AEP in 2004, and Russial founded J3, a corporation,

in 2002. J3 provides energy procurement2 and demand response services3

to commercial and industrial clients.
____________________________________________


2
    At trial, Gutteridge defined “procurement” as follows:

        The business of helping the end-user consumer buy their
        electricity or natural gas most advantageously. Ten or 15 years
        ago all utilities were fully regulated and you had no choice. Over
        the last ten or 15 years various states have become deregulated,
        so now end[-]user consumers can buy their own electricity from
        ten to 15 different potential suppliers.

N.T. Trial, 6/12/12, at 31.
3
    At trial, Gutteridge defined “demand response” as follows:

        The business where a utility will pay a large electrical user to
        curtail their usage on days when the electrical grid has a high
        load, which are nearly always summer afternoons. If the load on
        the grid gets too high, they send out a message. And those
        people who have signed up for demand response, and who will
(Footnote Continued Next Page)


                                           -2-
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      Gutteridge and Russial met in 2007; in March 2008, they developed a

plan whereby AEP would use its channel partners to provide J3’s services to

its customers.    They discussed forming a joint venture called the Energy

Buyers Group (the Group); the Group’s members would benefit from lower

electric supply costs that the Group would negotiate for them. Gutteridge,

through AEP, had a sales network that called upon manufacturers, which

Russial did not have, and Russial had technical knowledge and expertise

within the energy procurement industry, which Gutteridge did not have.

See N.T. Trial, 6/12/12, at 36, 44.

      Gutteridge and Russial agreed that they would divide the revenue

generated by the Group as follows: 60% to J3 and 40% to AEP. However,

in the beginning, the revenue would be divided 65% to J3 and 35% to AEP

because J3 would be heavily involved in closing the sales, while the AEP

channel partners were learning about energy procurement and demand

response services.        Additionally, AEP would pay the channel partners 20%

of the total revenue, and retain a net commission of 15%.

      At an AEP meeting in January 2008, Gutteridge introduced the channel

partners to Russial and J3. At training sessions in January and May 2008,

the Group concept was discussed, and Russial explained how J3’s services

                       _______________________
(Footnote Continued)

      be paid for doing it, agree to curtail their use during those
      periods.

Id. at 30.



                                            -3-
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worked and how to sell them. Only two of the channel partners, Lori Porreca

(owner of A1 Restoration, Inc., and A1 Energy, Inc.) and Herb Keaton

(owner of Plastic Machinery Sales), sold the Group’s services; they were the

sole channel partners with customers in the PPL 4 utility area, which was

scheduled to become deregulated in January 2010.5

       At the initial meetings in 2008, Russial told the channel partners that it

was important for the Group to reach 50 megawatts of purchasing volume

because that was the amount needed to secure optimum pricing from

energy suppliers. On February 25, 2009, Russial sent an email confirming

that the Group had reached this threshold.

       Although Gutteridge maintained that he and AEP made significant

efforts to market the Group, Russial became dissatisfied with AEP’s

performance with respect to AEP’s efforts to develop and train a sales force

to market J3’s energy services. On March 9, 2009, Russial sent Gutteridge

an email setting forth a proposal that J3 compensate A1 Restoration, Plastic

Machinery Sales and AEP channel partner Mark Burton directly for any sales

they close.     Under the new proposal, J3 would pay AEP a 10% or 20%

referral fee for any sales generated by channel partners other than Porreca,


____________________________________________


4
  PPL, formerly known as PP&L, or Pennsylvania Power and Light, is an
energy company headquartered in Allentown, Pennsylvania.
5
  The other large utilities in Pennsylvania, PECO and MetEd, were scheduled
to deregulate in January 2011.



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Keaton or Burton, depending on the extent of Appellants’/Defendants’

involvement.   This referral fee was less than the share being paid to AEP

under the existing arrangement. The proposal also included a requirement

that AEP sign a non-compete agreement for any existing or new clients of

the Group.

      On April 21, 2009, Russial sent an email to Gutteridge informing him

that Russial would not make any payments to AEP from J3 unless

Appellees/Plaintiffs agreed to sign a document prepared by Russial that

would include a non-compete clause for any customers secured by Porreca,

Keaton or Burton. AEP never signed a new agreement with J3, and J3 never

paid AEP for any of the revenues generated from the Group joint venture.

      Appellants/Defendants voluntarily paid channel partners Porreca and

Keaton directly for their services, rather than Appellees/Plaintiffs. They also

had Porreca and Keaton sign non-compete agreements, which caused

Appellees/Plaintiffs to lose two key channel partners, and resulted in the

customers Porreca and Keaton had obtained for the Group becoming direct

customers of J3. Despite the fact that the parties manifested intentions to

ultimately reach an agreement to form Energy Buyers Group and then

market that entity to prospective clients for the sale of energy procurement

and   demand    response   services,   Russial   unilaterally   transformed   the

relationship in order to develop a direct association with the most committed

AEP channel partners, Porreca and Keaton.




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       Gutteridge and AEP commenced this action against Russial and J3 by

filing a writ of summons on August 14, 2009. They filed a complaint on May

10, 2010, raising several counts against Appellees/Defendants, including

promissory estoppel, breach of contract, unjust enrichment, breach of

implied duty of good faith and tortious interference with contractual rights.

Following a four-day non-jury trial before the Honorable William P. Mahon,

the court issued a verdict on June 30, 2013, in favor of Appellees for

$343,887.00 on the counts of unjust enrichment and promissory estoppel. 6

       All parties filed motions for post-trial relief. The trial court did not rule

on the post-trial motions within 120 days, and on November 25, 2013,

Appellants filed a praecipe for entry of judgment on the verdict. Judgment

was entered, and this timely appeal followed.7

       Appellant Stephen Russial has filed a substituted brief on appeal

before this Court en banc. He raises the following issues for our review:

       1.    Did the trial court abuse its discretion and/or commit an
       error of law in holding Appellant, Stephen Russial, who was the
       shareholder and corporate officer of J3[], personally liable for
____________________________________________


6
  The trial court entered judgments in favor of Appellants/Defendants on
Appellees/Plaintiffs’ claims for breach of contract/implied duty of good faith
and tortious interference with contractual relations.    See Verdict, 7/3/13.
The court found no mutual assent. Id. at n.4.        See Bair v. Manor Care
of Elizabethtown, PA, LLC, 108 A.3d 94, 96 (Pa. Super. 2015) (touchstone
of any valid contract is mutual assent and consideration). Those judgments
have not been appealed.
7
  Appellee/Defendant J3 has withdrawn its appeal from the judgment
entered against it.



                                           -6-
J-E02003-16


      any amount under the theories of unjust enrichment/promissory
      estoppel or any other basis?

      2.    Did the trial court abuse its discretion and/or commit an
      error of law in finding liability against Appellant, Stephen Russial,
      under the theory of unjust enrichment?

      3.    In the event Appellant, Stephen Russial, or both
      Appellants, did in fact have liability to the Appellees under the
      legal theory of unjust enrichment, did the trial court abuse its
      discretion and/or commit error an of law and apply the wrong
      measure of damages?

      4.    Did the trial court abuse its discretion and/or commit an
      error of law in finding liability against Appellant, Stephen Russial,
      or both of the Appellants, under the theory of promissory
      estoppel?

      5.     In the event Appellant, Stephen Russial, or both of the
      Appellants, did in fact have liability to the Appellees under the
      legal theory of promissory estoppel, did the trial court abuse its
      discretion and/or commit an error of law and apply the wrong
      measure of damages?

      6.    In the event the Superior Court affirms liability of
      Appellant, Stephen Russial, or both the Appellants, under unjust
      enrichment and/or promissory estoppel and affirms that the
      Appellees were entitled to damages based on lost commissions
      as opposed to reliance damages, was the amount of the trial
      court’s verdict excessive and an abuse of discretion and/or an
      error of law?

Substituted Brief of Appellant Stephen Russial, at 4-6.

      Our standard of review in non-jury cases is limited to:

      a determination of whether the findings of the trial court are
      supported by competent evidence and whether the trial court
      committed error in the application of law. Findings of the trial
      judge in a non-jury case must be given the same weight and
      effect on appeal as a verdict of a jury and will not be disturbed
      on appeal absent error of law or abuse of discretion. When this
      Court reviews the findings of the trial judge, the evidence is
      viewed in the light most favorable to the victorious party below



                                      -7-
J-E02003-16


      and all evidence and proper inferences favorable to that party
      must be taken as true and all unfavorable inferences rejected.

Company Image Knitwear, Ltd. v. Mothers Work, Inc., 909 A.2d 324,

330 (Pa. Super. 2006) (citation omitted). Additionally, this Court has stated

that we will respect a trial court’s findings with regard to the credibility and

weight of the evidence “unless the appellant can show that the court’s

determination   was   manifestly   erroneous,   arbitrary   and   capricious   or

flagrantly contrary to the evidence.”      J.J. DeLuca Co. v. Toll Naval

Associates, 56 A.3d 402, 410 (Pa. Super. 2012), quoting Ecksel v.

Orleans Const. Co., 519 A.2d 1021, 1028 (Pa. Super. 1987).

      Russial first asserts that the trial court abused its discretion and

committed an error of law by holding Russial personally liable for the

judgment entered against J3. For the following reasons, we find no error.

      At trial, Gutteridge testified that he and Russial had done business

together in the first half of 2007, and that during a road trip to Pittsburgh in

the fourth quarter of 2007, they discussed forming the Group.         See N.T.

Trial, 6/12/12, at 160.

      Q:   At your deposition I remember asking you[,] when you
      met Steve Russial[,] were you aware of his company, J3 Energy
      Group, Inc., were you aware of that company?

      A:    Yes.

      Q:    And were you aware that the company was a corporation?

      A:    No, not specifically, but I assumed so.

                                    ...




                                     -8-
J-E02003-16


     Q:   Mr. Gutteridge, I’m handing you your deposition on
     January 6, 2012 of this year. I’m bringing your attention to
     page 26, lines 14 through 21. Would you read those and let me
     know when you’re finished?

     A:    “Let’s talk about that. One of my clients is J3 Energy
     Group[,] Inc. Were you aware of J3 Energy Group, Inc. when
     you started dealing with Mr. Russial?”

           “Yes.”

           “Were you aware that that was a corporation?”

           “Yes.”

                                   ...

     Q:    I also asked you if, when you were dealing with Mr.
     Russial, were you dealing with him in his capacity as president of
     this corporation – of his corporation. You don’t remember what
     your answer was?

     A:    I don’t remember what my answer was, but when I first
     met Mr. Russial, I was dealing with him personally. At the point
     that we started setting up the Energy Buyers Group, it was
     Applied Energy Partners[-] J3 venture.

     Q:    I’m going to approach you one more time.

           If I show you, again, page 26, the last three lines, and
     then your answer on the top of your deposition testimony?

     A:   Yes. You asked me in my dealings with Mr. Russial was he
     always dealing as president of J3 and I said I assumed so.

     Q:    Thank you.

N.T. Trial, 6/13/12, at 8-10 (emphasis added).

     The trial court credited Gutteridge’s testimony that, when he first met

Russial, Gutteridge believed that he “was dealing with him personally.” N.T.

Trial, 6/13/12, at 10.     The court also heard Gutteridge’s deposition

testimony in which he stated that he assumed he was dealing with Russial as



                                   -9-
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president of J3. Id.    Gutteridge testified that “[a]t the point that we started

setting up the Energy Buyers Group, it was Applied Energy Partners[-] J3

venture.” N.T., 6/13/2012, at 10.

      The court specifically notes in its Pa.R.A.P. 1925(b) opinion that,

“Gutteridge initially entered into the business relationship with . . . Russial.”

Trial Court Opinion, 6/11/14, at 4. Clearly, the court believed Gutteridge’s

testimony that he was dealing with Russial personally. The court stated that

it “finds credible the testimony of . . . Gutteridge when considered against

that of . . . Russial.” Id. at 1.

      The court found further support for its conclusion of personal liability in

the   following   exchange    that   took   place   during   Gutteridge’s   cross-

examination:

         Q: Would you admit that neither you nor your company
         AEP has a written contract with either J3 Energy Group,
         Inc. or Mr. Russial?

         A: Formal written contract, no.

         Q: In your dealings with J3 Energy Group, did J3 Energy
         Group make it clear several times to you that it wanted a
         written contract in order to continue a business
         relationship with AEP?

         A: Yes, and I made the same representations in reverse.

         THE COURT: Mr. Gutteridge, I thought I heard testimony
         earlier on direct examination that Mr. Russial said to you
         that there was no need to do this in written form, as long
         as the respective obligations of the parties were well
         defined?

         A: Yes, Your Honor.



                                      - 10 -
J-E02003-16


         THE COURT: So at what point in time did the idea of
         having a written document come into being? Because
         apparently early on there wasn’t one, and it wasn’t being
         pursued.

         A: No. You’re right. After, I guess, March or so of 2008, is
         when the issue came up of should we form a separate
         legal entity to run the Energy Buyers Group. And [counsel
         for Appellants’/Defendants’] advice at the time was we
         didn’t need that. But into the fall and the rest of the year
         2009, the issue of how we should formalize the
         relationship came up a number of times over.

N.T. Trial, 6/13/12, at 10-11.

      The court found that Russial and Gutteridge discussed the formation of

the Energy Buyers Group as a joint venture between AEP and J3, but never

executed written contracts. The court found no express contract, as there

was insufficient evidence of “mutual assent.” Based on this testimony, the

court concluded that, once the parties were unable to come to a written

agreement with respect to the Group, it was “perfectly reasonable for . . .

Gutteridge to believe that the formation of the sales and marketing

relationship between himself and . . . Russial was ongoing and continued

despite their inability to formalize the creation of the Energy Buyers Group.”

Trial Court Opinion, 6/11/14, at 4 (emphasis added).

      “In a non-jury trial, the factfinder is free to believe all, part, or none of

the evidence, and the Superior Court will not disturb the trial court’s

credibility determinations.” Triffin v. Dillabough, 716 A.2d 605, 607 (Pa.

1998).   See also Miller v. C.P. Centers, Inc., 483 A.2d 912, 915 (Pa.

Super. 1984). “Assessments of credibility and conflicts in evidence are for



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the trial court to resolve; this Court is not permitted to reexamine the weight

and credibility determinations or substitute our judgments for those of the

factfinder.”   Turney Media Fuel v. Toll Bros., 725 A.2d 836, 841 (Pa.

Super. 1999). “The test is not whether this Court would have reached the

same result on the evidence presented, but rather, after due consideration

of the evidence the trial court found credible, whether the trial court could

have reasonably reached its conclusion. Terletsky v. Prudential Prop. &

Cas. Ins. Co., 649 A.2d 680, 686 (Pa. Super. 1998).

      Here, the court’s conclusion, that Gutteridge was dealing with Russial

individually and that Gutteridge and Russial were parties to a failed business

deal, is supported by evidence that the trial court deemed credible. Mindful

of our limited role as an appellate court, we may not disturb that conclusion.

See Turney Media Fuel, supra; Terletsky, supra. See also Company

Image Knitwear, supra (when reviewing findings of trial judge in non-jury

trial, evidence is viewed in light most favorable to victorious party below and

all evidence and proper inferences favorable to that party must be taken as

true and all unfavorable inferences rejected).

      Appellants/Plaintiffs next assert that the trial court abused its

discretion or committed an error of law by finding liability against Russial

under the theory of unjust enrichment.           We find no error or abuse of

discretion.

      “Unjust enrichment” is essentially an equitable doctrine.      Styer v.

Hugo, 619 A.2d 347 (Pa. Super. 1993). It is well-established that “[c]ourts

                                    - 12 -
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sitting in equity hold broad powers to grant relief that will result in an

equitable resolution of a dispute.” Williams Twp. Bd. of Supervisors v.

Williams Twp. Emergency Co., Inc., 986 A.2d 914, 921 (Pa. Cmwlth.

2009).   In addition, “a trial court must formulate an equitable remedy that

is consistent with the relief requested . . .” Id. (citing North Mountain

Water Supply Co. v. Troxell, 81 A. 157 (Pa. 1911)).

     In Stoeckinger v. Presidential Financial Corp. of Delaware

Valley, 948 A.2d 828 (Pa. Super. 2008), this Court held that:

     A claim for unjust enrichment arises from a quasi-contract. “A
     quasi-contract imposes a duty, not as a result of any agreement,
     whether express or implied, but in spite of the absence of an
     agreement, when one party receives unjust enrichment at the
     expense of another.” AmeriPro Search, Inc. v. Fleming Steel
     Co., 787 A.2d 988, 991 (Pa. Super. 2001).

         The elements of unjust enrichment are benefits conferred
         on defendant by plaintiff, appreciation of such benefits by
         defendant, and acceptance and retention of such benefits
         under such circumstances that it would be inequitable for
         defendant to retain the benefit without payment of value.
         Whether the doctrine applies depends on the unique
         factual circumstances of each case. In determining if the
         doctrine applies, we focus not on the intention of the
         parties, but rather on whether the defendant has been
         unjustly enriched.

     Styer v. Hugo, 619 A.2d 347, 350 (Pa. 1993) (quotation marks
     omitted).

Stoeckinger, 948 A.2d at 833.

     “To sustain a claim of unjust enrichment, a claimant must show that

the party against whom recovery is sought either wrongfully secured or

passively received a benefit that it would be unconscionable for her to


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retain.”    Torchia v. Torchia, 499 A.2d 581, 582 (Pa. Super. 1985)

(quotation marks and citation omitted).           The application of the doctrine

depends on the particular factual circumstances of the case at issue.              In

determining if the doctrine applies, our focus is not on the intention of the

parties, but rather the most critical element of this equitable doctrine, which

is whether the enrichment of the defendant is unjust.           “The doctrine does

not apply simply because the defendant may have benefited as a result of

the actions of the plaintiff.” Styer, 619 A.2d at 350.

      Here, the trial court found credible evidence that Russial committed

wrongful    acts   by   breaking   his   promises    to   Appellees/Plaintiffs   after

Appellees/Plaintiffs performed services in reliance on those promises. As a

result, Russial kept all of the revenues from the Group, obtained through

Appellees’ efforts, and secured exclusive relationships with AEP’s most

productive channel partners.

      The trial court found credible the evidence that Appellees/Plaintiffs

expended considerable efforts attempting to develop the Energy Buyers

Group and to persuade its AEP partners and their customers to market and

purchase Appellants’/Defendants’ services. The court found that, despite the

fact that Russial had expressed disappointment with AEP’s sales and

marketing efforts, Russial had promised Appellees/Plaintiffs 35% of the

revenues, and

           [a]fter AEP and its partners produced considerable income
           for [them, Russial and J3] then decided that a relationship
           could be formed directly with AEP Partners Porreca and

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        Keaton without the need for AEP or Gutteridge. Russial
        had obtained the services of the most committed AEP
        Partners and set out to develop a direct relationship with
        them and impact adversely their relationship with AEP.
        Russial unilaterally determined that he would pay directly
        to Porreca and Keaton the percentage of sales commission
        that AEP was obligated to pay them as a result of their
        sales efforts for [Russial and J3’s] services.

Trial Court Opinion, 6/11/14, at 4-5 (emphasis added).

      The court found Appellees/Plaintiffs also presented credible evidence

that the benefits that Appellants/Defendants secured unjustly were equal to

the   amount   of   money   Appellees/Plaintiffs   would   have   received   had

Appellants/Defendants not unilaterally altered the agreed 65%/35% revenue

split arrangement.    See Exhibit P-64 (showing total revenue for both

procurement and demand services through December 31, 2011, totaling

$982,537.00). The trial court determined that Gutteridge and AEP had an

expectation of payment for services performed, that Russial wrongfully kept

revenues obtained through Appellees/Plaintiffs’ efforts, and that it would be

inequitable for Appellants/Defendants to retain the benefits of that revenue

without payment of value. See Wiernik v. PHH U.S. Mortgage Corp., 736

A.2d 616, 622 (Pa. Super. 1999).      Accordingly, the trial court determined

that Appellants/Defendants were unjustly enriched by retaining 35% of that

amount, or $343,887.00.

      Russial also argues that even if the trial court did not err in finding

liability under unjust enrichment, the court abused its discretion and/or

committed an error of law by applying the wrong measure of damages.


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Russial argues the verdict was excessive and improperly calculated, and that

the court improperly awarded damages “based on unpaid commissions, as

opposed to reliance damages[.]” Appellant’s Brief, at 26. Russial contends

that, at most, Appellees/Plaintiffs were entitled to a commission of fifteen

percent, which is the net they would have earned after paying commissions

to A1 and/or Plastic Machinery Sales.     Additionally, Russial notes that “J3

did, in fact, pay the twenty (20%) percent commission to A1 Energy and

Plastic Machinery Sales.”   Appellant’s Brief, at 27. Russial claims that the

court’s damages award is “perplexing” because it awarded damages on a

“contract basis of 35% of gross revenues, instead of trying to determine a

reasonable value for whatever services, if any, the Appellees[/Plaintiffs]

provided” to Appellants/Defendants. Id. at 45. Accordingly, Russial asserts

“the court’s verdict of $343,887.00, which was calculated by the trial court

by taking 35% of the gross sales of $982,537.00, should be reduced to no

more than $147,380.55, which is 15% of the gross sales figure of

$982,537.00.” Id. We find no error.

      Russial has been enriched, unjustly, and the measure of damages is

the value of the benefits conferred; that is, Russial must make restitution to

Appellees/Plaintiffs in quantum meruit.      AmeriPro    Search     Inc.    v.

Fleming Steel Co., 787 A.2d 988 (Pa. Super. 2001). The value was 35% of

the revenue, which included Appellees’/Plaintiffs’ obligation to compensate

the channel partners for their commissions on those revenues. The fact that

Russial may have unilaterally decided to pay directly to Porreca and Keaton

                                    - 16 -
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the 15% commission that AEP was obligated to pay them is, as the trial

court noted, “not part of this litigation.”   See Verdict, 7/3/13, at n.4.

“[Appellants’/Defendants’] willingness to pay AEP’s sales commissions to

Porreca and Keaton [does] not entitle them to a ‘credit’ against any claims

that [Appellees/Plaintiffs] have against [Appellants/Defendants,] nor does it

relieve [Appellants/Defendants] of any sales commission obligations that

[they] may have to Porreca and Keaton.” Trial Court Opinion, 6/11/14, at 5.

      Russial has produced no evidence that the channel partners have

released Appellees/Plaintiffs from their commission obligations.   Therefore,

had the trial court discounted the damages award to offset the commissions

Appellants/Defendants paid to the channel partners, Appellees/Plaintiffs

would be left responsible for paying commissions without having received

full compensation.

      Russial next asserts that the trial court abused its discretion or

committed an error of law by finding liability under the theory of promissory

estoppel.

      Our Supreme Court has explained the doctrine of promissory estoppel

as follows:

      Where there is no enforceable agreement between the parties
      because the agreement is not supported by consideration, the
      doctrine of promissory estoppel is invoked to avoid injustice by
      making enforceable a promise made by one party to the other
      when the promisee relies on the promise and therefore changes
      his position to his own detriment. [Restatement (Second)
      Contracts] § 90; see, e.g., Shoemaker v. Commonwealth
      Bank, 700 A.2d 1003, 1006 (Pa. Super. 1997). In order to
      maintain an action in promissory estoppel, the aggrieved party

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      must show that 1) the promisor made a promise that he should
      have reasonably expected to induce action or forbearance on the
      part of the promisee; 2) the promisee actually took action or
      refrained from taking action in reliance on the promise; and 3)
      injustice can be avoided only by enforcing the promise. Id. As
      promissory estoppel is invoked in order to avoid injustice, it
      permits an equitable remedy to a contract dispute.

Crouse v. Cyclops Industries, 745 A.2d 606, 610 (Pa. 2000).

      Russial argues “there was no evidence presented by Appellees and the

trial court made no findings in its Verdict or Opinion finding any of the three

elements   of    promissory    estoppel   against     either   Appellant,   especially

Appellant Stephen Russial.” Appellant’s Brief, at 46. We disagree.

      Here, the court found evidence that Appellants/Defendants made

promises to Appellees/Plaintiffs that were expected to induce action by

Appellees/Plaintiffs. The court found credible testimony that: (1) Russial

personally promised a revenue sharing arrangement to Gutteridge; (2) their

personal business relationship continued while they attempted to formalize

the Group buying arrangement involving their companies; and (3) J3

promised AEP that in exchange for marketing its business, it would pay a

percentage of the revenues generated from AEP so that AEP could pay

commissions to its existing sales force.

      There     was   also   evidence   that     Appellants’/Defendants’    promises

induced Appellees/Plaintiffs to take various actions. As a result of Russial’s

promises, Gutteridge introduced Russial and J3 to the AEP channel partners,

who made several sales calls to potential customers to market the Group.

Furthermore, Gutteridge testified that AEP only sought to become involved in

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the    demand      response      and     procurement          market    based    on

Appellants’/Defendants’    promises     to   enter     into   the   shared   revenue

arrangement. N.T. Trial, 6/12/12, at 187.

      Lastly,   the    court   concluded        that   “[e]quity    demands     that

[Appellees/Plaintiffs] recover on the theory of promissory estoppel to the

extent that [Appellants/Defendants] are unjustly enriched by 35% of the

revenues that would otherwise be paid to [Appellees/Plaintiffs].”        Trial Court

Opinion, 6/11/14, at 4. In other words, permitting recovery on the promise

is the only way to avoid injustice. See Crouse, supra.

      This conclusion is supported by the testimony deemed credible by the

trial court, that only once the Group met its target of 50 megawatts of

purchasing volume, Appellants/Defendants decided they were unhappy with

Appellees’/Plaintiffs’ work.    Appellants/Defendants then refused to pay

Appellees/Plaintiffs unless they signed an agreement that would cut them

out of the Group and allow Appellants/Defendants to use the AEP sales force

for their exclusive gain.       Appellees/Plaintiffs rejected this offer, and

Appellants/Defendants then refused to pay the already agreed-to              35% of

the revenues generated by the channel partners, which amounted to

$343,887.

      Appellants/Defendants then began paying AEP’s two most productive

and committed channel partners, Porreca and Keaton, directly for their

services and had them sign non-compete agreements to the detriment of

Appellees/Plaintiffs. Appellees/Plaintiffs thus lost the ability to sell to Porreca

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and Keaton’s clients, including the ability to sell them the services of their

new vendor for energy procurement services, World Energy.

      Russial   argues    there   was     no     injustice      in    this   case   because

“Appellees[/Plaintiffs] did not perform as they represented they would or

could[.].”   Appellants’ Brief, at 47.    Relying heavily on his own testimony,

Russial claims “Appellees[/Plaintiffs] failed to identify 12 to 14 sales agents,

as they represented they could do.”                Id.       Russial also claims that

Appellees/Plaintiffs purported to have a network of agents who could sell

J3’s services without J3 being involved in training or operating the network

or closing sales. However, in light of the trial court’s statement that it “finds

credible the testimony of . . . Gutteridge when considered against that of

[]Russial,” Trial Court Opinion, 6/11/14, at 1, Russial’s contention that no

injustice occurred fails.     The court had before it Gutteridge’s credible

testimony that it was only when the 50 megawatt goal was reached, and the

Group    was    about    to   realize    revenues,       that        Appellants/Defendants

communicated any dissatisfaction with Appellees’/Plaintiffs’ efforts, and then

engaged in conduct to lure away Appellees’/Plaintiffs’ most successful

channel partners. Under these circumstances, the trial court did not err in

concluding that the doctrine of promissory estoppel applied in this matter.

      Russial next argues that even if the trial court correctly found liability

under the theory of promissory estoppel, it should have awarded only

reliance damages to Appellees/Plaintiffs.         Russial argues that “any recovery




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under promissory estoppel would be for reliance damages, i.e., damages

incurred in reliance of the alleged promise.” Appellant’s Brief, at 49.

      Restatement (Second) of Contracts § 90(1), Comment d, provides, in

relevant part:

      A promise binding under this section is a contract, and full-scale
      enforcement by normal remedies is often appropriate. But the
      same factors which bear on whether any relief should be granted
      also bear on the character and extent of the remedy.            In
      particular, relief may sometimes be limited to restitution or to
      damages or specific relief measured by the extent of the
      promisee’s reliance rather than by the terms of the promise.

      Accordingly, the general rule is that a plaintiff should be awarded the

value of the defendant’s promises            unless equity dictates otherwise.

Although Russial cites Banas v. Matthews Int’l Corp., 502 A.2d 637 (Pa.

Super. 1985), for the general proposition that “any recovery under

promissory estoppel would be for reliance damages,” Appellant’s Brief, at 49,

he paints with too broad a brush. Rather, as our Supreme Court noted, a

promissory estoppel remedy may be limited as justice requires.              Lobolito,

Inc. v. North Pocono Sch. Dist., 755 A.2d 1287, 1292 n.10 (Pa. 2000).

Therefore, the issue is whether the trial court correctly found that the instant

case does not involve equitable considerations that would justify deviating

from contract damages.

      Here, the trial court heard evidence regarding the sales and marketing

activities   that   Appellees/Plaintiffs   performed   in   reliance   on    Russial’s

promises.     It    also   heard    testimony    regarding     the     losses    that



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Appellees/Plaintiffs sustained as a result of relying on those promises.

Under these circumstances, the court concluded that the damages which are

necessary to prevent injustice and to put Appellees/Plaintiffs in the position

in which they would have been had Russial not unilaterally altered his

relationship with Appellees/Plaintiffs, were the benefit of their bargain. We

agree this was appropriate, and Russial has not demonstrated any equitable

concerns that would justify a lesser, alternative calculation of damages.

       Lastly, Russial claims that the verdict of $343,887.00 was excessive

and/or improperly calculated.         We have disposed of this argument already

and find that Russial’s claim is of no merit.8

       As the trial court explained, Russial refused to abide by what had been

agreed upon as the 65%/35% split, and unilaterally altered the arrangement

and developed an exclusive direct relationship with Porreca and Keaton to

Plaintiffs’/Appellees’ detriment.        We agree with the trial court’s reasoning

that “[Appellants’/]Defendants’ willingness to [allegedly] pay AEP’s sales

commissions to Porreca and Keaton do[es] not entitle them to a ‘credit’

____________________________________________


8
  We also note that in their Answer and New Matter to Plaintiffs’ Second
Amended Complaint, filed 1/26/11, Appellees/Defendants do not allege
“payment” as an affirmative defense. See Pa.R.C.P. 1030(a) (“Except as
provided by subdivision (b), all affirmative defenses including but not limited
to the defenses of . . . payment . . . shall be pleaded in a responsive
pleading under the heading “New Matter[.]”        See also Pa.R.C.P. 1032(a)
(“A party waives all defenses and objections which are not presented either
by preliminary objection, answer or reply, except a defense which is not
required to be pleaded under rule 1030(b)[.]”).



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against    any    claims     that    [Appellees/]Plaintiffs   have    against

[Appellants/]Defendants[,] nor does it relieve [Appellees/]Plaintiffs of any

sales commission obligations that it may have to Porreca and Keaton.” Trial

Court Opinion, 6/11/14, at 5 (emphasis added). Russial points to nothing in

the record to support a finding that Porreca and Keaton have released AEP

from its commission obligations.      We find no error.       See Lesoon v.

Metropolitan Life Ins. Co., 898 A.2d 620 (Pa. Super. 2006) (duty of

assessing damages is for factfinder, whose decision will not be disturbed on

appeal unless record clearly shows caprice, partiality, prejudice, corruption,

or other improper influence); see also Delahanty v. First Pennsylvania

Bank, 464 A.2d 1243, 1257 (Pa. Super. 1983) (“In reviewing the award of

damages, the appellate courts should give deference to the decisions of the

trier of fact who is usually in a superior position to appraise and weigh the

evidence.”).

     Judgment affirmed.

     President Judge Gantman, President Judge Emeritus Ford Elliott,

President Judge Emeritus Bender, Judge Panella, and Judge Ott join the

Opinion.

     Judge Bowes files a Concurring and Dissenting Opinion in which Judge

Shogan and Judge Olson join.




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Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary



Date: 5/17/2017




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