J-A02019-14


NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

TCA GIRARD, LP, TCA 12TH STREET, LP              IN THE SUPERIOR COURT OF
TCA GS MEZZANINE, LP AND                               PENNSYLVANIA
TCA 12TH MEZZANINE, LP

                            Appellants

                       v.

MORGAN, LEWIS & BOCKIUS, LLP,
ERIC L. STERN, ESQUIRE AND
MICHAEL J. PEDRICK, ESQUIRE
                 V.
TRINITY CAPITAL ADVISORS, LLC

                            Appellee                  No. 245 EDA 2013


               Appeal from the Order Entered December 21, 2012
              In the Court of Common Pleas of Philadelphia County
               Civil Division at No(s): No. 01612 May Term, 2010


BEFORE: FORD ELLIOTT, P.J.E., OTT, J., and STRASSBURGER, J.*

MEMORANDUM BY OTT, J.                           FILED SEPTEMBER 18, 2014

        TCA Girard, LP, TCA 12th Street, LP, TCA GS Mezzanine, LP, and TCA

12th

entered December 21, 2012, in the Court of Common Pleas of Philadelphia

County, granting summary judgment in favor of defendants, Morgan, Lewis

& Bockius, LLP, Eric L. Stern, Esquire, and Michael J. Pedrick, Esquire



granting a motion in limine
____________________________________________


*
    Retired Senior Judge assigned to the Superior Court.
J-A02019-14


from utilizing a certain methodology because the court found it was contrary

to the methodology set forth within the terms of the applicable loan

agreement. TCA argues the trial court erred and/or abused its discretion:

(1) by failing to consider and apply evidence of customs, practices, usages,

and terminology in its determination of the meaning of an undefined

contract term in the loan agreement; and (2) by disputing the conclusion of

the expert and precluding his testimony, which erroneously invaded the

province of the jury.1 See                        -4. After a thorough review of the

submissions by the parties, relevant law, and the certified record, we affirm.

       The trial court set forth the underlying facts as follows:

              This is a legal malpractice action which arises from the
       financing of a highly-leveraged acquisition of a long-term ground
       lease for Girard Square, a property in Philadelphia, Pa. Plaintiffs
       [TCA] are four special purpose entities created by their sponsor
       Trinity Capital Advisors LLC to acquire and operate the Girard
       Square property. Defendants [ML&B] were the lawyers engaged
       by TCA to provide legal services in connection with the
       acquisition.

                                           ....

             TCA sought to acquire a long-term ground lease on a
       property known as Girard Square. Girard Square is the city
       block bordered by Market Street, 12th Street, Chestnut Street,
       and 11th Street in Philadelphia, Pa. The property consists of four
       multi-tenant buildings and parking garage in the Chestnut Street
       Building. The fee interest is owned by the Estate of Stephen
       Girard.


____________________________________________


1
    Base



                                           -2-
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           In the summer of 2006, TCA engaged ML&B to provide
     legal representation and advice in connection with the potential
                                             responsibilities included
     preparing, reviewing, negotiating a number of transactional
     documents and instruments and offering advice to effect the
     lending transactions necessary to enable TCA to acquire its
     interest in Girard Square.

          On October 17, 2006, a 75 year Ground Lease Agreement
     was entered into between the City of Philadelphia, Trustee under
     the Will of Stephen Girard, and TCA. From April 2007 through
     June 2007, the material terms and conditions of the Loan
     Agreement and supporting documentation were negotiated by

     ML&B on behalf of TCA.

           On June 18, 2007, the loan closed. UBS funded a loan for
     $112.5 million for a term of one year, set to expire on July 9,
     2008, with a one year extension option if Girard Square met
     certain financial benchmarks.1 The Loan Agreement provided
     that $2.5 million of the amount borrowed should be deposited
     with UBS and designated as an Interest Shortfall Reserve Fund
     for the purpose of funding an escrow fund for the payment of
     Debt Service and any other amounts due under the loan
     agreements.2
       1
         The financial benchmarks were set forth in the June 18,
       2007 Loan Agreement § 2.3.2 (b).
       2
           June 18, 2007 Loan Agreement § 6.8.

           [Also on] June 18, 2007, Girard Square entered into a
     Cash Management Agreement with UBS and Wells Fargo, the
     loan servicing agent. This agreement required all rent to be
     deposited into a deposit account and then be disbursed
     according to a certain priority set forth within the Cash
     Management Agreement.3
       3
          The order of disbursement was as follows: 1. Taxes, 2.
       Insurance, 3. Debt Service, 4. Capital Expenditures if funds
       on reserve for such expenditures are less than $100,000,
       5. Rollover Funds if funds on reserve for such expenditures
       are less than $100,000, 6. Any default rate interest or late
       payment charges, 7. Operating Expenses, 8. Extraordinary

                                   -3-
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       Expenses, 9. Excess Cash Flow Account and 10. Borrower
       Remainder Account.

            During the course of the year term, TCA made its debt
     service payments, however the payment of debt service left
     insufficient cash to pay operating expenses.            The Loan
     Agreement and the Cash Management Agreement did not permit
     TCA to have access to reserves sufficient to pay the operating
     expenses. In order for TCA to access the Interest Shortfall
     Reserve Fund, TCA would have to have zero dollars left to pay
     operating costs. Hence, if after paying out the first items as set
                                                                     s,
     insurance, etc., a small amount of revenue remained, TCA could
     not access the Interest Shortfall Reserve Fund, even though the
     amount remaining was insufficient to cover the operating
     expenses. Upon become aware of the results of this restriction,
     TCA began renegotiating the loan agreement with UBS.

           On December 14, 2007, the loan agreement was amended.
     The loan agreement required TCA to repay $11 million of the
     original $112.5 million by reducing certain reserve amounts and
     breaking off the $7.5 million mezzanine loan, reducing the
     mortgage loan balance to $94 million.        The amended loan
     agreement also changed the loan maturity date from July 9,
     2008 to May 9, 2008 and removed the one year renewal option.

           The Cash Management Agreement was also amended to
     change the disbursement order. Taxes, insurance, debt service
     and default payments were the top priority, operating expenses
     became the fifth priority.      Additionally, the amendments
     permitted TCA to draw up to $1,050,000 from the [I]nterest
     [S]hortfall [R]eserve [F]und for the payment of utilities and
     payroll. Girard Square made five draws of $210,000 in 2008.

          In January 2008, UBS assigned the mezzanine loan to Joss

     amount permitted by the December 2007 Amendment from the
     Interest Shortfall Reserve. On July 15, 2008, TCA relinquished
     its interest in the Girard Square Property and entered into a
     Loan Assumption, Substitution and Mortgage and Assignment of
     Leases and Rents Modification Agreement with UBS.          Joss
     ultimately assumed the mortgage on Girard Square and took
     over the property including all outstanding payables on the
     property.     The pledges of additional collateral and the

                                   -4-
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     guarantees on the loan by TCA and certain other individuals
     were released.

           On May 12, 2010, TCA instituted [a] suit by writ of
     summons against ML&B and the various attorneys who worked
     on the TCA matter alleging legal malpractice. Specifically, TCA
     alleged that the Loan and Cash Management Agreements were
     not draf
     to properly advise it of the risk inherent in the documents as
     drafted and failed to appreciate the legal and practical
     implications of the agreements including but not limited to
     accessing the reserve fund to pay operating expenses.

            On June 3, 2010, after the filing of a rule by ML&B, TCA
     filed a complaint alleging claims for professional negligence and
     for breach of contract. On August 12, 2010, the defendant
     ML&B filed an answer to the complaint with new matter and
     counterclaims for breach of contract and unjust enrichment
     based on unpaid services. On August 13, 2010, defendant ML&B
     filed a joinder complaint against Trinity Advisors, Inc.

           TCA retained Lawrence M. Goodman to provide expert
     testimony to illustrate that the operating expense deficit was the

     Reserve Fund since TCA was unable to access said reserve.
     Goodman was also retained to calculate Debt Service Coverage

     ended December 31, 2008 to determine if Girard Square would
     have been in compliance with the DSCR requirement for a one
     year renewal option in its June 18, 2007 Loan Agreement with
     UBS.4 Goodman opined that the DSCR requirement would have
     been met for the one year loan extension.5 In rendering this
     opinion, Goodman assumed the DSCR would be calculated using
     net operating income for the year ended December 31, 2008
     based on actual results for the months January 2008 through
     June 2008 and projected results from July 2008 through
     December 2008.6
       4
          Goodman issued two reports, one dated November 2,
       2011 and January 17, 2012 as well as an affidavit to
       support his opinions.
       5
          TCA was only pursuing damages based on this theory of
       liability.

                                   -5-
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          6
             Goodman made additional assumptions in reaching his
          opinion including but not limited to using the prevailing
          July 2008 LIBOR rate.

Trial Court Opinion, 7/10/2013, at 1-5.

       On December 30, 2011, ML&B filed a motion for summary judgment.

As noted by ML&B,

       [i]n a malpractice action, a plaintiff must establish three
       elements in order to recover:

       (1) The employment of the attorney or other basis for duty;

       (2) The failure of the attorney to exercise ordinary skill and
       knowledge; and

       (3) That such failure was the proximate cause of damage to the
       plaintiff.

Boyer v. Walker, 714 A.2d 458, 462 (Pa. Super. 1998), citing Bailey v.

Tucker, 621 A.2d 108, 112 (1993).2 See also               Motion for Summary

Judgment, 12/30/2011, at 18. Moreover, generally,

____________________________________________


2
       When it is alleged that an attorney has breached his professional
       obligations to his client, an essential element of the cause of

       duty, causing only speculative harm, is insufficient for a finding
       of professional negligence.

       The test of whether damages are remote or speculative has
       nothing to do with the difficulty in calculating the amount, but
       deals with the more basic question of whether there are
                                                                    y if
       the uncertainty concerns the fact of damages rather than the
       amount.

(Footnote Continued Next Page)


                                           -6-
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      for a plaintiff to successfully maintain a cause of action for
      breach of contract requires that the plaintiff establish: (1) the
      existence of a contract, including its essential terms, (2) a
      breach of a duty imposed by the contract and (3) resultant
      damages. . In the narrow realm of legal malpractice claims
      based on an alleged breach of a contract between an attorney
      and a client, the appellate courts of this Commonwealth have
      jurisprudentially established, and refined through time, the
      specific facts which a plaintiff is required to demonstrate in order
      to establish that a breach of a contractual duty on the part of the
      attorney has occurred.

                                            ....

      [I]f a plaintiff demonstrates by a preponderance of the evidence
      that an attorney has breached his or her contractual duty to
      provide legal service in a manner consistent with the profession
      at large, then the plaintiff has successfully established a breach
      of contract claim against the attorney.

Gorski v. Smith, 812 A.2d 683, 692, 697 (Pa. Super. 2002) (citation

omitted).

      ML&B



were the proximate cause

Summary Judgment, 12/30/2011, at 18-19.

                                                                    ML&B] had

asked UBS for loan terms allowing [TCA] to access reserves to pay operating

expenses, UBS would have agreed; or that if [TCA] had been warned by

[ML&B] to walk away from the deal, had they been unable to get the more

                       _______________________
(Footnote Continued)

Boyer, 714 A.2d at 462 (citations and quotation marks omitted).



                                            -7-
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                                                            Id. at 3 (italics

removed).3 Moreover, ML&B asserted TCA did not link the alleged damages




their claims

Id. at 4.4

                                                 Id.



summary judgment contending there was evidence to support the legal

malpractice action, in which a jury could reasonably find the following:


____________________________________________


3

demonstrate that UBS would have agreed to include provisions in the loan
documents that would have permitted access to the Interest Shortfall
Reserve or that [TCA] would not have closed on the loan had UBS refused to

22. ML&B alleged there was no evidence establishing either occurrence. Id.
4

Goodman, [TCA] merely assert[s] that if TCA would have had access to the
Interest Shortfall Reserve from the start, TCA would not have lost the
second year option on the loan when it renegotiated the Loan Agreement in

qualified for the second year by meeting the conditions of the option. Id. at
25-26.     Mo
aggressive and unsupported assumptions and ignores market realities,
Goodman does not discuss whether [TCA] eventually would have lost the
property at the end of the second year, despite a one-year l

commercial real estate market and its devastating effect on attempts to
                          Id. at 26.



                                           -8-
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      breach of the standard of care, by depriving TCA of access to
      funds necessary to operate Girard Square, forced TCA to give up
      its loan-renewal right; (iii) loss of the loan-renewal right forced
      TCA to relinquish Girard Square at the end of the first year of the
      loan term; and (iv) TCA was, accordingly, damaged by the loss
      of the value of its investment in the Girard Square property, as
      well as other incidental losses.



Judgment, 2/9/2012 at 3.     Specifically, TCA asserted ML&B did not satisfy




Agreement and the waterfall provisions in the Cash Management Agreement

                                                                     Id. at 35

(citation omitted).   Moreover,

that the legal documents embodying the financing transaction worked, in



permitted it to meet its debt service obligations and pay its operating

e             Id. at 41-42 (emphasis removed, footnote omitted).

      Likewise, TCA claims the record supported the causation element of its

malpractice suit. TCA states that if ML&B had brought the problem to light,

UBS would readily have agreed to modify the Interest Shortfall Reserve Fund

and/or the waterfall provisions to allow TCA access to sufficient cash to




loan documents by UBS with the precise intention that the reserve be used

                                     -9-
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loan term sheet, consistent



Reserve was established were related directly to, and would be occasioned

                                                                the business



in June of 2007 of entering into loan transactions that, on their face, would



modification in the reserve provision later, when it was alerted to the fact

that Section 6.8 of the Loan Agreement would have to be modified to allow

                                             Id. at 46-47.

       Additionally, TCA contends there was ample evidence to demonstrate

that

       (a) with access to the reserve funds to pay operating expenses,
       or to pay debt service after using revenue to pay such expenses,
       TCA would have operated Girard Square successfully at least
       through July, 2008, (b) TCA would have qualified for the loan
       renewal in July 2008 had it not been compelled to relinquish the
       renewal option, and, to the extent it may be relevant, (c) TCA
       would have been able to operate Girard Square through the
       ensuing additional year of the Lease Term, until 2009.

Id. at 49 (emphasis removed). To support this argument, TCA relied on its

accountant expert, Goodman. TCA stated Goodman was prepared to testify



Shortfall Reserve from the outset in the manner that TCA had expected,

                                    - 10 -
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there would have been ample cash available to pay all of the Girard Square

operating expenses, leaving TCA in position to continue with the operation of

the property at least until July 9, 2008 expiration of the initial one-year loan



expenses throughout 2008, and would not have been compelled in late 2007



                                       s loan-renewal right, TCA would have

met the qualifications for renewal imposed by Section 2.3.2(b) of the original



actually renewed the loan for the additional one-year term, its net operating

income during the 12 months of the extended loan term would have been



Id. at 50-51.

      The trial court originally denied ML&B

on July 2, 2012.

      On October 1, 2012, ML&B filed several motions in limine to exclude

TCA's experts, including Goodman.

attempt to demonstrate that [TCA] would not have lost the Girard Square

property in July of 2008 if the loan documents worked in such a way as to

permit [TCA], from the inception of the loan, to have access to the Interest

                                                                      Limine to




                                     - 11 -
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Exclude the Testimony of Lawrence M. Goodman, 10/12/2012, at 2. ML&B

argued G

      14. First, his testimony rests almost entirely on speculation as




      16. Third, his analysis of the Loan Agreement falls short since
      he considers only two of four conditions for the renewal of the
      Girard Square loan; and he then ignores the actual language of
      the Loan Agreement, substituting his own language instead.

      17. And finally, giving the foregoing, his testimony would be
      prejudicial and should not be allowed to go to a jury.

Id. at 3.

      With respect to the Interest Shortfall Reserve Fund, ML&B contended



access to the Interest Shortfall Reserve from the close in June 2007, it would

have not needed to amend the loan and subsequently UBS would not have



Interest Shortfall Reserve, TCA would not have drawn down from it before

the end of the year 2007 in order to pay operating expenses and that the full

am                                                                   Id. at 9

(emphasis in original).

      With respect to the one-year loan extension, ML&B asserted Goodman

focused solely on two of the four requirements relating to the DSCR, he used

            -

                                    - 12 -
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(i.e., actual) financials, not projection          Id. at 13. (footnote omitted).

                                                                             limine on

                                                                                -based

and not speculative.        See

                     Limine to Exclude the Testimony of Lawrence M. Goodman,




Id. at 14 (footnote omitted).5 To support this argument, TCA pointed to the

following:

             Section 2.3.2(b) itself does not explicitly state that a DSCR
       calculation for purposes of qualifying for the loan extension must

       actual, historical data . In fact, Section 2.3.2(b) does not specify
       the use of revenue and expense numbers for any particular

                                              precisely the method
       stipulated in these two Loan Agreement provisions:          his
       determination of what the DSCR would have been if calculated in

                                               -- the period from January 1 to
       June 30, 2008 --                                        arrive at data for
       the entire calendar year 2008.

Id. at 16-17 (citations and footnotes omitted).
____________________________________________


5
                                                                ial solely on the DSCR

                                                   Limine to Exclude the
Testimony of Lawrence M. Goodman, 10/31/2012, at 15.



                                          - 13 -
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        Oral argument was held on December 13, 2012.         At that time, the

court and the parties discussed the outstanding motions in limine, including



granted in part and denied in part the motion in limine as it pertained to

Goodman.      The court ruled Goodman was not permitted to testify with

regard to the DSCR using any forward-looking projection beyond June 30,

2008.     The court granted TCA leave to file an additional report for the

appropriate period using historical data only.     TCA subsequently informed

the court that no additional report would be forthcoming, and ML&B renewed

its motion for summary judgment.

        Following an additional hearing, on December 21, 2012, the trial court

granted the motion, stating:



        Lawrence Goo
        supplemental report within the limitations defined by the court,
        [ML&B] orally renewed their Motion for Summary Judgment as it

        Although [TCA] oppose[s] the Motion for Summary Judgment,


        cause and damages. [TCA] further informed the court [it was]
        only pursuing one theory of liability, i.e. whether [TCA] would
        have met the conditions to extend the loan for a second year.
        As such, this order is case dispositive and final.1
          1
            [ML&B] informed the court they will be withdrawing their
          counterclaim without prejudice by stipulation which will toll
          the limitations period so [ML&B] may reassert their claim.




                                     - 14 -
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Order, 12/21/2012, at 1. This appeal followed.6

       We begin with our well-settled standard of review:


       judgment requires us to determine whether the trial court
       abused its discretion or committed an error of law[,] and our
                                    Petrina v. Allied Glove Corp., 46
       A.3d 795, 797-
       view the record in the light most favorable to the nonmoving
       party, and all doubts as to the existence of a genuine issue of

       Barnes v. Keller, 62 A.3d 382, 385 (Pa. Super. 2012), citing
       Erie Ins. Exch. v. Larrimore, 987 A.2d 732, 736 (Pa. Super.
       2009)
       as to any material fact and it is clear that the moving party is
       entitled to a judgment as a matter of law will summary
                                 Id.     The rule governing summary
       judgment has been codified at Pennsylvania Rule of Civil
       Procedure 1035.2, which states as follows.

          Rule 1035.2. Motion

          After the relevant pleadings are closed, but within such
          time as not to unreasonably delay trial, any party may
          move for summary judgment in whole or in part as a
          matter of law

              (1) whenever there is no genuine issue of any
              material fact as to a necessary element of the cause
              of action or defense which could be established by
              additional discovery or expert report, or

              (2) if, after the completion of discovery relevant to
              the motion, including the production of expert
              reports, an adverse party who will bear the burden
____________________________________________


6
   The court ordered TCA to file a concise statement of errors complained of
on appeal pursuant to Pa.R.A.P. 1925(b).        TCA filed a timely concise
statement on February 22, 2013. The trial court issued an opinion pursuant
to Pa.R.A.P. 1925(a) on July 10, 2013.



                                          - 15 -
J-A02019-14


            of proof at trial has failed to produce evidence of
            facts essential to the cause of action or defense
            which in a jury trial would require the issues to be
            submitted to a jury.

      Pa.R.C.P. 1035.2.

                      -moving party bears the burden of proof on an
      issue, he may not merely rely on his pleadings or answers in
                                                Babb v. Ctr. Cmty.
      Hosp., 47 A.3d 1214, 1223 (Pa. Super. 2012) (citations
      omitted), appeal denied, 65 A.3d 412 (Pa. 2013). Further,
                       -moving party to adduce sufficient evidence on
      an issue essential to his case and on which he bears the burden
      of proof establishes the entitlement of the moving party to
                                     Id.

         Thus, our responsibility as an appellate court is to
         determine whether the record either establishes that the
         material facts are undisputed or contains insufficient
         evidence of facts to make out a prima facie cause of
         action, such that there is no issue to be decided by the
         fact-finder. If there is evidence that would allow a fact-
         finder to render a verdict in favor of the non-moving party,
         then summary judgment should be denied.

      Id. citing Reeser v. NGK N. Am., Inc., 14 A.3d 896, 898 (Pa.
      Super. 2011), quoting Jones v. Levin, 940 A.2d 451, 452-454
      (Pa. Super. 2007) (internal citations omitted).

Cadena v. Latch, 78 A.3d 636, 638-639 (Pa. Super. 2013).



                  limine with respect to Goodman. Therefore, we note that,

                                                                    motion in

limine is based on the following:


      we must acknowledge that decisions on admissibility are within
      the sound discretion of the trial court and will not be overturned
      absent an abuse of discretion or misapplication of law. In

                                    - 16 -
J-A02019-14


       addition, for a ruling on evidence to constitute reversible error, it
       must have been harmful or prejudicial to the complaining party.

Lykes v. Yates, 77 A.3d 27, 32 (Pa. Super. 2013), quoting Reott v. Asia

Trend, Inc., 7 A.3d 830, 839 (Pa. Super. 2010).

       We begin with



TCA states that under New York law, the court was obliged, but failed, to

                                                          actices,   usages,   and



as set forth in the Loan Agreement. Id.7

       With respect to this dispute, we are constrained to conclude that such

arguments were not preserved for appellate r

2013, Rule 1925(b) concise statement.8             See Pa.R.A.P. 1925(b)(4)(vii)



____________________________________________


7
    Nevertheless, TCA states that the same conclusion would be dictated by


8

custom and usage properly preserved the arguments in its concise
statement. See          s Reply Brief at 17. We disagree. A review of the
concise statement reveals no averments regarding New York governing law
or that New York law requires
                                contract. Rule 1925(b) requires that a party
 shall concisely identify each ruling or error that the appellant intends to

Pa.R.A.P. 1925(b)(4)(ii). Here, it is apparent that TCA did not identify this
claim with sufficient detail to demonstrate the alleged error as the trial court
did not address the issue in its Rule 1925(a) opinion.



                                          - 17 -
J-A02019-14


                                                                 );   see   also

Commonwealth v. Lord, 719 A.2d 306, 309 (Pa. 1998) (holding that if an

appellant is directed to file a concise statement on appeal pursuant to Rule

1925(b), any issues not raised in that statement are waived); McCausland

v. Wagner, 78 A.3d 1093, 1099 n.2 (Pa. Super. 2013) (applying Lord to a

civil case and finding waiver for failure to raise issue in concise statement).

      Moreover, we note TCA

Pennsylvania law in

Opposition to                    Limine to Exclude the Testimony of Lawrence

M. Goodman, and it did not dispute the application of Pennsylvania law at

the December 13, 2012, proceeding before the trial court. Consequently, it

cannot be said that TCA successfully raised the contention that New York law

should apply to this dispute, inasmuch as this appears to be the first time

TCA is raising the argument and this assertion was not a point of contention

between the parties during the prior history of this case.        See Pa.R.A.P.

302(a) ("Issues not raised in the lower court are waived and cannot be

raised for the first time on appeal").

                                                         argues the court erred




                                     - 18 -
J-A02019-14


                                                                                   9
concern

the trailing six-months financial results. See                                     -

up to this argument, in its second issue, TCA claims the trial court erred by

disputing the conclusion of the expert and precluding his testimony, which

erroneously invaded the province of the jury. Id. at 43-45.

       TCA specifically argues that although the trial court properly concluded

      some

t




                                       (emphasis in original).    Furthermore, TCA

contends the trial court erred in holding Section 2.3.2(b) of the Loan



                                                                                  d

expense figures are to be ascertained solely by multiplying the six-month

                                    Id. at 9.      TCA asserts the plain language of

Section 2.3.2(b), the definition of DSCR, and the provisions of Section 4.1.6

did not provide or dictate how the DSCR was to be calculated under Section

2.3.2(b). Id. at 11-13. Likewise, it states the plain language of the Loan

Agreement does not support the argument that any DSCR calculation must
____________________________________________


9
                                                                                  HE
RANDOM HOUSE DICTIONARY       OF THE   ENGLISH LANGUAGE 84 (2nd ed. 1987).



                                          - 19 -
J-A02019-14


exclusively utilize the historical figures as set forth in the financial

statement. Id. at 13-



results. Id. at 31-32. Lastly, it states the Loan Agreement is silent as to

wheth

adjustments to the historical financial results. Id. at 35.



                                                              pplicable to this

dispute are the principles of contract interpretation:

            The interpretation of any contract is a question of


            the trial court and are free to draw our own
            inferences. In interpreting a contract, the ultimate
            goal is to ascertain and give effect to the intent of
            the parties as reasonably manifested by the

            construing agreements     involving  clear  and
            unambiguous terms, this Court need only examine

            understanding.    This Court must construe the
            contract only as written and may not modify the
            plain meaning under the guise of interpretation.

      Szymanowski v. Brace, 2009 PA Super 218, 987 A.2d 717,
      722 (Pa. Super. 2009) (quoting Abbott v. Schnader, Harrison,
      Segal & Lewis, LLP, 2002 PA Super 247, 805 A.2d 547, 553

      interpreting a contract is generally performed by a court rather
      than by a jury. The goal of that task is, of course, to ascertain
      the intent of the parties as manifested by the language of the
                            Maguire v. Ohio Casualty Ins. Co., 412
      Pa. Super. 59, 602 A.2d 893, 894 (Pa. Super. 1992).




                                     - 20 -
J-A02019-14


Humberston v. Chevron U.S.A., Inc., 75 A.3d 504, 509-510 (Pa. Super.

2013).

                                             State Farm Fire and Casualty

Company v. PECO, 54 A.3d 921, 928 (Pa. Super. 2012); see also

Standard Venetian Blind Co. v. American Empire Ins. Co., 469 A.2d

563, 566 (Pa. 1983).

      Here, Section 2.3.2(b) of Loan Agreement provides, in pertinent part,

as follows:

      2.3.2 Payment on Maturity Date.

                                    ....

      (b) Borrower will have one (1) option to extend the Maturity
      Date of the Loan for a consecutive one (1) year period. In order
      to exercise such extension right, Borrower shall delivered to
      Lender written notice of such extension on or before May 1,
      2008 and, upon giving of such notice of extension, and subject
      to the satisfaction of the conditions set forth below in this
      Section 2.3.2.(b) on or before July 9, 2008, the Maturity Date as
      theretofore in effect will be extended to July 9, 2009. The
      Maturity Date shal
      aforesaid, provided that the following conditions are satisfied:
      (i) no Event of Default shall be in existence either at the time of
                                             -current Maturity Date, (ii)
      Borrower shall enter into an Interest Rate Protection Agreement
      through the term of the extension under the same terms and
      conditions of the initial Interest Rate Protection Agreement
      (including its LIBOR strike price) entered into in connection with
      the Loan and shall provide an Assignment of Protection
      Agreement, together with an opinion of counsel with respect
      thereto reasonably acceptable to Lender, (iii) the Debt Service
      Coverage Ratio for the Property shall not be less than
      1.05 to 1.0 and (iv) either (x) the Interest Shortfall Reserve is
      adequately funded as reasonably determined by Lender or (y)
      the Net Cash Flow as calculated by Lender is at least
      $8,200,000.00.

                                    - 21 -
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Loan Agreement, 6/18/2007, at 23-24 (some emphasis added and some

emphasis omitted).

      DSCR is defined as the following:

       Debt Service Coverage Ratio
      applicable period in which:

            (i)    the numerator is the Net Cash Flow for such
                   period as set forth in the financial statements
                   required in accordance with this Agreement; and

            (ii)   the denominator is the aggregate amount of
                   principal and interest due and payable on the
                   Loan and the Mezzanine Loan, if applicable.

Id. at 5.

                                                        DSCR Trigger Event

shall mean, that as of any Debt Service Coverage Ratio Determination Date,

the Debt Service Coverage Ratio based on the trailing six (6) month period

(annualized) immediately preceding the date of such determination is less

                     Id. at 6.

                                                              od, the amount

obtained by subtracting Operating Expenses for such period from Gross

                                                Id. at 13.    Finally, the Loan



      [F]or any period, the total of all expenditures, computed in
      accordance with GAAP, of whatever kind during such period
      relating to the operating, maintenance and management of the
      Property that are incurred on a regular monthly or other periodic
      basis, including without limitation, utilities, ordinary repairs and
      maintenance, insurance, license fees, property taxes and

                                     - 22 -
J-A02019-14


      assessments, advertising expenses, management fees, payroll
      and related taxes, computer processing charges, tenant
      improvements and leasing commissions (which tenant
      improvements and leasing commissions for the purposes of this
      definition shall be calculated based upon an amount no greater
      than the actual or assumed expense of $97,000.00 per month),
      operational equipment or other lease payments as approved by
      Lender, and other similar costs, but excluding depreciation, Debt
      Service, Capital Expenditures, and contributions to the Capital
      Expenditure Funds, the Tax Funds, Insurance Funds, the Rollover
      Funds and any other reserves required under the Loan
      Documents.

Id.

      Additionally, pursuant to Section 4.1.6(b), the Loan Agreement

provides the procedure for monthly financial reporting as follows:

      Prior to a Securitization, within twenty (20) days after the end of
      each calendar month, Borrower shall furnish to Lender a current
      (as of the calendar month just ended) balance sheet, a detailed
      operating statement (showing monthly activity and year-to-date)
      stating Gross Income from Operations, Operating Expenses, and
      Net Cash Flow for the calendar month just ended, a general
      ledger, a rent roll for the subject month and, as requested by
      Lender, a written statement setting forth any variance from the
      Annual Budget and other documentation supporting the
      information disclosed in the most recent financial statements. In
      addition, such statement shall also be accompanied by (i) a
      calculation reflecting the Debt Service Coverage Ratio as of the
      last day of such month for such month and (ii) a certificate of
      the chief financial officer of Borrower or the general partner of
      Borrower stating that the representations and warranties of
      Borrower set forth in Section 3.1.24 are true and correct as of
      the date of such certificate and that there are no trade payables
      outstanding for more than sixty (60) days.

Id. at 43 (emphasis in original).

                                    2, 2011, Report, he made the following

observations and conclusions:


                                     - 23 -
J-A02019-14


     [W]e have calculated the DSCR, at the time of the sale of the
     Girard Square properties, at 1.54 to 1, which would have met
     the requirement for extending the loan.        As mentioned
     previously, when calculating net operating income, forward-
     looking rental revenue and prior period expenses should
     be used. The net operating income used in the DSCR
     calculation includes the estimated $1.7 million in
     increased rental revenue. For illustration purposes, we also
     calculated the DSCR in accordance with the June 18, 2007 loan
     agreement, which includes debt service on the mezzanine loan.
     We based the mezzanine loan debt service on a $7.5 million loan
     with 16% interest. Under the June 18, 2007 loan agreement,
     Girard Square would have also met the required DSCR, at 1.24
     to 1 [with the mezzanine loan].

                                    ....

     Based upon the documents considered and analysis performed,
     we concluded that:

              inability to access funds in the interest shortfall
        account caused operating deficits, resulting in large
        accounts payable balances.

        Had the loan and cash management agreements been

        been able to draw on the interest shortfall reserve,
        accounts payable, at the time the properties were sold,
        would have been reduced to just those classified as current
        and there would be funds remaining in the interest
        shortfall reserve.

        Had the option to extend not been revoked in the
        December 14, 2007 Amended Loan Agreement, TCA would
        have qualified for the additional one year loan extension.

Goodman Report, 11/2/2011, at 10-11 (emphasis added).

     On January 17, 2012, Goodman expounded upon his calculations in a

supplemental report, which stated in relevant part:

        In our initial analysis of the internally prepared financials for
        the first half of 2008, we identified several items we believe

                                    - 24 -
J-A02019-14


       would have required adjustment to reflect a complete and
       accurate profit and loss statement for the six months January
       2008 to June 2008. We made inquiries of [TCA] to assist us
       in understanding the treatment and classification of select
       revenue and expense transactions.           Additionally, TCA
       provided select information to assist us in the projecting of
       revenues and expenses for the second half of 2008.
       Together, the revised first half actual and second half
       projected results will be referred to as 2008 projected
       net operating income.

                                  ....

     Calculation of Projected Operating Revenue for the Year Ended
     December 31, 2008


     total operating revenues of $5,798,040.87 for the first half of
     2008.

     Based on the assumption that Girard Square would have
     remained a viable entity we made several adjustments to reflect
     increased operating revenues through June 30, 2008 and
     projected operating revenues from July 1, 2008 to December 31,
     2008 that we believe would have occurred had the property not
     been sold.

       Garage and parking rent for May and June was not
       recorded to the general ledger for Girard Square. We
       reviewed the first four 2008 monthly amounts posted to
       the general ledger for garage and parking rent and
       calculated average monthly revenue of $95,000. Based
       on projected increased activity, we adjusted the
       monthly revenue to $100,000. We used this amount
       per month for May and June 2008 and factored it into our
       forward looking projections.

       During June 2008, $309,290.71 in rental income
       from TCA was written off. This was rental income
       that was accrued for space rented by TCA for
       management offices.
       general ledger showed that the TCA rent was posted to
       rental income every month since the purchase of the
       property. The write-off agrees to all amounts posted to

                                 - 25 -
J-A02019-14


       the general ledger from July 2007 through June 2008.
       Had TCA remained the owner of Girard Square, those
       amounts would have remained as rental income.

     After adjusting for the additions of garage and parking
     revenues and June 2008 TCA rent write-off add back, the
     first  half   2008    revenues   would    have  totaled
     $6,337,031.58.

     To determine the projected 2008 revenues, first half adjusted
     revenues were doubled to $12,674,063.16.

     An adjustment to second half 2008 projected revenues
     was required to account for new leases entered into after
     January 1, 2008 and rents scheduled to increase after
     January 1, 2008. In those cases, the doubling of rents does
     not fully account for these new rents or rent increases when
     projecting the second half of 2008. Our analysis shows that
     $531,680.31 in additional revenue would have been
     received in the second half of 2008 when compared to the
     first half of 2008. These increases include approximately
     $464,000 in second half 2008 revenues from the tenants Family
     and Municipal Court.

     When the new lease and increased rent adjustment is added to
     the doubled revenues, it results in projected 2008 revenues of
     $13,205,743.47.

     This projection does not consider any additional income that
     might have been realized from any new leases that could have
     been signed in the second half of 2008 had Girard Square
     remained owned by TCA.

     Calculation of Projected Operating Expenses for the Year Ended
     December 31, 2008


     total operating expenses of $3,310,203.88 for the first half of
     2008.

     Based on the assumption that Girard Square would have
     remained owned by TCA, we made several adjustments to reflect
     adjusted operating expenses through June 30, 2008 and
     projected operating expenses from July 1, 2008 to December 31,

                                 - 26 -
J-A02019-14


       2008 that we believe would have occurred had the property not
       been sold.

                                     ....

       The net changes to actual operating expenses for the first half of
       2008 result in an expense reduction of $90,102.65. This change
       causes operating expenses from the internally prepared profit
       and loss statements to reduce from $3,310,203.88 to
       $3,220,101.23.

       The projection of operating expenses for 2008 for Girard Square
       uses the adjusted expenses of $3,220,101.23 and doubles them
       to $6,440,202.46.

                                     ....

       Calculation of Projected Debt Service Expense for the Year Ended
       December 31, 2008

       For purposes of determining the debt service amount to use in
       the DSCR, interest expense is calculated using the LIBOR rate at
       July 2008 (the expected renewal date), 2.46%, plus a spread of
       2.25%, for a total of 4.71%. The LIBOR rate of 2.46% would
       have had to have been capped using a swap agreement until
       July 2009, at which point, the LIBOR rate had decreased by
       approximately 88% to 0.2907%.

       The mezzanine loan carried interest at 16% annually. For both
       the loan and mezzanine loan, the amount of debt service used in
       the DSCR is one year of interest-only payments from July 2008
       through June 2009.

                                                       -4 (emphasis added).

Moreover, Goodman again stated that the DSCR requirement would have

been met, when debt service payments are calculated, including and

excluding mezzanine loan payments, with a ratio of 1.33 to 1.07.        Id. at

4-5.




                                     - 27 -
J-A02019-14


      Here,   the   trial   court   determine



                                                                           Trial

Court Opinion, 7/10/2013, at 7. Additionally, it found the following:

            Goo
      2008 through December 2008 ignored the clear language of the
      Loan Agreement. Under Pennsylvania law, there must be some
      factual predicate for the expert opinion identified on the record.
      An expert may not express his opinion upon facts which are not


      assumption that is contrary to the established facts of record,
      that opinion is worthless.

            In Commonwealth v. Rounds, 518 Pa. 204, 209; 542 A.2d
      997, 999 (Pa. 2005), the Pennsylvania Supreme Court explained
      the reasons why the conclusions of an expert must be based
      upon facts found in the record. The Court stated:

         expert opinion testimony is proper if the facts upon which

         the jury in understanding the problem so that the jury can
         make the ultimate determination. If a jury disbelieves the
         facts upon which the opinion is based, the jury

         if a jury accepts the veracity of the facts which the expert
         relies upon, it is more likely that the jury will accept the
                                                               is the
         veracity of the facts upon which the conclusion is based.
         Without the facts, a jury cannot make any determination

         would result in a total and complete usurpation of the
                         our system of justice.

            The Loan Agreement is clear. Where the words of the
      contract are clear and unambiguous, the intent of the parties
      must be determined exclusively from the agreement itself.
                                                                 he
      DSCR was contrary to the facts of the record and the clear
      language of the Loan Agreement[.]

                                       - 28 -
J-A02019-14



Id. at 8-9 (footnotes omitted).

      While we agree with TCA that the language in the Loan Agreement

does not explicitly provide how the DSCR is to be calculated under Section

2.3.2(b), we find the trial court acted properly in determining: (1) the Loan

Agreement requires the monitoring of DSCR based on historical financials;

(2)

December 2008 ignored the plain language of the Loan Agreement; and (3)



identified in the record.

      With respect to interpreting the meaning of a contract, we note that

                                   aken together in arriving at contractual



carelessly, nor do they assume that the parties were ignorant of the

                                             Murphy v. Duquesne Univ. of

the Holy Ghost, 777 A.2d 418, 429 (Pa. 2001).


      parol evidence be considered to determine the intent of the
      parties. A contract contains an ambiguity if it is reasonably
      susceptible of different constructions and capable of being
      understood in more than one sense. This question, however, is
      not resolved in a vacuum.      Instead, contractual terms are
      ambiguous if they are subject to more than one reasonable
      interpretation when applied to a particular set of facts. In the
      absence of an ambiguity, the plain meaning of the agreement
      will be enforced. The meaning of an unambiguous written
      instrument presents a question of law for resolution by the court.

Id. at 429-430 (citations and quotation marks omitted).

                                    - 29 -
J-A02019-14


     Here, in viewing the contract as a whole, it is evident that the DSCR is

based on the use of historical financial data where the language of the Loan

Agreement provides that: (1) the

Flow for such period as set forth in the financial statements

                                     aggregate amount of principal and

interest due and payable

Operating Expenses, which are part of the Net Cash Flow amount, are based



operation, maintenance and management of the Property that are incurred

on a regular monthly or other periodic basis

                                  calculation reflecting the [DSCR] as of

the last day of such month for such month             See Loan Agreement,

6/18/2007, at 5, 13, 43.



financial information. See Merriam-Webster, supra. With respect to the

Loan Agreement, it bears remarking that the term is only set forth in the

definition of the DSCR Trigger Event. That section provides that as of any



period   (annualized)      immediately   preceding   the   date    of   such

                   Id. at 6. Section 2.3.2(b) and the definition of DSCR do



of DSCR, and consequently Section 2.3.2(b), does refer                     h


                                    - 30 -
J-A02019-14




calculations.                                  -looking revenue in calculating the

net operating income ignored this language of the Loan Agreement.

       Furthermore, as indicated by the trial court, it was demonstrated that

the figures used by Goodman in his reporting were not supported by the

record.10 For example, Goodman adjusted the calculation for the projected

operating revenue by adding (and then doubling) $309,290.71, which had

been written off because it was space rented by TCA for management

offices.11   As noted by ML&B in its brief,12 given tha

never paid for this rent space, there was no justification for including this

number in the DSCR calculation because TCA had not accrued any

payment.13 Likewise, TCA did not provide any proof that this amount would

ever be collectable.

____________________________________________


10
     We note t
                                        Panitz v. Behrend, 632 A.2d 562,
565 (Pa. Super. 1993); see also Pa.R.E. 702 (testimony by experts). Under



11
     See
12
     See                       -21.
13
     At the December 13, 2012, hearing, the trial court noted its concern in

rent from TCA.      I have a really, really hard time counting that as income
                                                     2012, at 28.




                                          - 31 -
J-A02019-14




second half of 2008,14 Goodman based his rent calculation on a forward-

looking standard instead of applying the historical data. He stated that an

adjustment was required to account for new leases entered into after and for




Report, 1/17/2012, at 2. Therefore, Goodman opined that the $531,680.31




to the language of the Loan Agreement and there was no factual support

with respect to his calculation.15

       Lastly, in calculating the DSCR, Goodman used the year ending in

December 31, 2008 for the applicable period of the numerator but chose the

period July 2008 through June 2009 for the denominator.16     However, the

____________________________________________


14
     See
15
    Moreover, the record indicated that there was a projected increase in
vacancy rates at Girard Square based on the 2007 and 2008 Girard Square
rent revenue. See                     Limine to Exclude the Testimony of
Lawrence M. Goodman, 10/12/2012, at 19-20, Exhibits D & E.
16
   See
shall be calculated using net operating income for the year ended December
31, 2008 based on actual results for the months January 2008 through June

(Footnote Continued Next Page)


                                          - 32 -
J-A02019-14


definition of the DSCR provides that both the numerator and denominator

                                             shall mean a ratio for the applicable

                               the same period should be used for both

calculations. Loan Agreement, 6/18/2007, at 5. Accordingly, we conclude



the record.

                              Summers v. Certainteed Corp., 997 A.2d 1152,

1161 (Pa. 2010), and similar cases, for the proposition that the trial court

                                                           -finder is misplaced. In

Summers, the Pennsylvania Supreme Court noted:

      At the summary judgment stage, a trial court is required to take
      all facts of record, and all reasonable inferences therefrom, in a
      light most favorable to the non-moving party. This clearly
      includes all expert testimony and reports submitted by the non-
      moving party or provided during discovery; and, so long as the
      conclusions contained within those reports are sufficiently
      supported, the trial judge cannot sua sponte assail them in an
      order and opinion granting summary judgment. Contrarily, the

      conclusions be disputed, resolution of that dispute must be left
      to the trier of fact.

Summers, 997 A.2d at 1161 (citations omitted). Here, as stated above, the



were not sufficiently supported by the record. Therefore, we conclude the

                       _______________________
(Footnote Continued)


the DSCR is one year of interest-only payments from July 2008 through June




                                           - 33 -
J-A02019-14


                                                                      limine to



       Furthermore, because this matter was disposed of at the summary

judgment point in proceedings and TCA argues ML&B committed legal

malpractice,                                                         had ML&B



            17
                 the Interest Shortfall Reserve Fund from the outset, (2) there

would have been ample cash available to pay all of the Girard Square

operating expenses, and (3) TCA would not have been forced to bargain

away its one-year renewal right, as per Section 2.3.2(b), to gain access to



to   the   reserve    during    2007-

requirements, it would likely have been in a stronger position, if needed, to

manage payables, contribute capital, or obtain outside investment to fund

the Interest Shortfall Reserve to ensure it was at a leve

Goodman Report, 11/2/2011, at 10.



ignores the fact that whether or not TCA had access to the Interest Shortfall

Reserve Fund, TCA must demonstrate that it still would have met the DSCR

for the one-

____________________________________________


17
     Goodman Report, 11/2/2011, at 6.



                                          - 34 -
J-A02019-14


DSCR calculation was not supported by the record.      As such, TCA did not

demonstrate it would have qualified for the one-year renewal option based

on the state of T

       Moreover, the evidence does not support a conclusion that UBS would



Interest Shortfall Reserve Fund. While TCA claims that UBS was willing to

give it more favorable terms because UBS had renegotiated and amended

the Loan Agreement,18 this argument ignores the fact that when TCA and

UBS originally negotiated, TCA could not access the reserve fund unless it

had zero dollars to pay for operating expenses, and when TCA and UBS

renegotiated the loan terms in December 2007, TCA received access to the

reserve fund, permitting it to draw up to $1,050,000 for the payment of

utilities and payroll, but TCA had to relinquish the one-year renewal option.

One can reasonably infer that UBS would not have allowed TCA both

discretionary access to the reserve fund and the one-year renewal option.



reserve would likely have put TCA in a stronger position to manage

payables, contribute capital, and obtain outside investment is too speculative

because he again fails to provide any evidentiary support with respect to this

assumption.
____________________________________________


18
   See
Summary Judgment, 2/9/2012 at 46-47.



                                          - 35 -
J-A02019-14


      Consequently, TCA failed to demonstrate

of access to funds necessary to operate Girard Square, thereby forcing TCA

to give up its loan-renewal right as well as the property altogether.



cause of its damages. Boyer, 714 A.2d at 462. Therefore, we conclude the



                                                    demonstrate damages

based on its legal malpractice claim.

      Order affirmed.

Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary



Date: 9/18/2014




                                    - 36 -
