“corporations are necessarily required to conduct their business through agents and they are bound by the acts of their representatives within the apparent scope of the business with which they are entrusted”
How later courts described this case
- “corporations are necessarily required to conduct their business through agents and they are bound by the acts of their representatives within the apparent scope of the business with which they are entrusted”
- holding that a township was bound to the terms of a contract that was executed in accordance with its statutory authority
Written by the judges who cited it.
The opinion
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Kevin A. Pezzano, :
Appellant :
: No. 2022 C.D. 2015
v. :
: Argued: October 19, 2016
Towamencin Township :
BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge
HONORABLE P. KEVIN BROBSON, Judge
HONORABLE PATRICIA A. McCULLOUGH, Judge
HONORABLE ANNE E. COVEY, Judge
HONORABLE MICHAEL H. WOJCIK, Judge
HONORABLE JULIA K. HEARTHWAY, Judge
HONORABLE JOSEPH M. COSGROVE, Judge
OPINION BY
JUDGE McCULLOUGH FILED: February 16, 2017
Kevin A. Pezzano (Pezzano) appeals from the October 2, 2015 order
of the Court of Common Pleas of Montgomery County (trial court), sustaining the
preliminary objections of Towamencin Township (Township) and dismissing, with
prejudice, Pezzano’s complaint asserting a claim for breach of contract.
Pezzano was employed by the Township as its Fire Marshal, Code
Enforcement Officer, and Emergency Management Coordinator. On November
28, 2012, Pezzano was told that his employment would be terminated because the
Township was “too small” to have a full-time Fire Marshal. Pezzano and the
Township, by way of its Solicitor, entered into a Confidential Employee Separation
Agreement and General Release (Agreement) dated January 14, 2013, which
contained the following provision:
CONFIDENTIALITY
All parties agree that, at all times hereafter, the facts
relating to the existence, terms and conditions of this
Agreement and the allegations in this matter will be kept
confidential and will not be disclosed voluntarily to any
third party, except to the extent required by law, to
enforce this Agreement, or to obtain confidential legal,
tax or insurance advice with respect thereto. All parties
further agree to refrain from disparaging each other in
any fashion and to that end they will decline comment to
any third party regarding each other, provided, however,
that either may give sworn testimony about the other
party if required or compelled to do so in a legal action or
proceeding.
(Trial court op. at 1-2.)
On January 23, 2013, the Agreement was approved by a 3-2 vote of
the Township Board of Supervisors, with Supervisors David Mosesso (Mosesso)
and Harold Wilson (Wilson) dissenting. The Township’s Solicitor signed the
Agreement on behalf of the Township. Two days later, on January 25, 2013,
Mosesso and Wilson gave statements to a journalist for the newspaper The
Reporter. The next day, an article appeared in The Reporter in which Mosesso and
Wilson were quoted as stating that Pezzano was “dismissed for cause.” The article
was also available online. (Trial court op. at 2.)
On April 4, 2013, Pezzano and his wife Elizabeth filed an action in
the trial court (prior action) raising claims of defamation, invasion of privacy,
fraud, and loss of consortium against Mosesso and Wilson, and breach of contract
against the Township. The prior action alleged that Mosesso and Wilson had no
intention of honoring the confidentiality clause at the time the Agreement was
executed, and that their false statements harmed Pezzano’s veracity and
2
professional reputation. Mosesso, Wilson and the Township all filed preliminary
objections. (Reproduced Record (R.R.) at 34a.)
On November 20, 2013, the trial court sustained the preliminary
objections of Mosesso and Wilson and overruled the preliminary objections of the
Township. The trial court found that the defamation and invasion of privacy
claims against Mosesso were barred by immunity because his position as a second-
class township supervisor qualified him as a high public official and the comments
were made in the scope of his authority. The trial court found that the fraud claim
against both Mosesso and Wilson was legally insufficient because it contained no
well-pleaded material facts, was not stated with particularity, and was predicated
upon speculation and legal conclusions. Pezzano discontinued without prejudice
the prior action as to the Township and appealed the trial court’s ruling as to
Mosesso and Wilson. (R.R. at 26a-31a, 35a-39a.)
In an unpublished panel decision, this Court affirmed the trial court’s
decision sustaining the preliminary objections. Pezzano v. Mosesso (Pa. Cmwlth.,
Nos. 189 C.D. 2014 and 190 C.D. 2014, filed October 24, 2014) (Pezzano I).
Notably, we held that any statements made by Mosesso explaining his vote and the
rationale for his vote were within the course of his legitimate duties and within his
authority; therefore, the trial court did not err in determining that he was entitled to
high public official immunity with respect to the defamation and invasion of
privacy claims. (R.R. at 41a-55a.)
On April 24, 2015, Pezzano filed a second complaint against the
Township alleging a single count of breach of contract, namely the confidentiality
provision of the Agreement. Pezzano claims that the Township breached the
Agreement because Mosesso and Wilson voluntarily provided comment to a
journalist in which they disclosed the existence and terms of the Agreement, and
3
because the statement that Pezzano was “dismissed for cause” was false and
disparaging. The Township filed preliminary objections alleging legal
insufficiency based upon this Court’s prior decision in Pezzano I; failure to state a
claim for breach of contract for failure to show disparagement by the Township;
Township immunity; the “Gist of the Action” doctrine; and a motion to strike
allegations of damages related to defamation. Following oral argument and the
filing of briefs, the trial court issued an order dated October 2, 2015, sustaining the
Township’s preliminary objections and dismissing Pezzano’s complaint with
prejudice. Pezzano then filed a notice of appeal with the trial court. (R.R. at 2a-
24a.)
In its Pa.R.A.P. 1925(a) opinion, the trial court noted that Pezzano’s
complaint solely alleged a breach of contract claim, which requires him to plead
the following: (1) the existence of a contract, including its essential terms; (2) a
breach of duty imposed by the contract; and (3) resultant damages. General State
Authority v. Coleman Cable and Wire Co., 365 A.2d 1347, 1349 (Pa. Cmwlth.
1976). The trial court stated that the law is clear that a contract action cannot be
maintained against a person who is not a party to the contract, unless the plaintiff is
a third-party beneficiary of the contract or the suit is for products liability or breach
of warranty. Commonwealth, State Public School Building Authority v. Noble, 585
A.2d 1136, 1140 (Pa. Cmwlth. 1991). In this case, the trial court noted that
because Supervisors Mosesso and Wilson did not sign, and were not parties to, the
Agreement, they were not bound thereby and their actions could not be a basis for
breach of the same.
The trial court also rejected an agency argument raised by Pezzano,
referencing our prior opinion wherein we held that the Township’s Supervisors
were not bound by the terms of the Agreement simply because of their
4
employee/agency status with the Township. In our prior opinion, we explained
that the Solicitor represented the Township, not individual members, and the
Solicitor cannot make an agreement that would preclude a council person from
explaining why he/she voted a particular way. Finally, the trial court stated that a
master such as the Township cannot be held liable for the actions of its servant
unless there is a cause of action against the servant. Leis v. Mosesso (Pa. Cmwlth.,
Nos. 249-251 C.D. 2014, filed April 17, 2015), 2015 Pa. Commw. Unpub. LEXIS
274.1 The trial court noted that our prior opinion rejected any cognizable cause of
actions against Supervisors Mosesso and Wilson. With no cause of action against
the agents, i.e., the Supervisors, the trial court concluded that there was no basis for
a cause of action against the Township.
On appeal to this Court,2 Pezzano argues that the trial court erred in
sustaining the Township’s preliminary objections because he and the Township,
1
Joseph Leis had worked as the Township’s Director of Community Planning, but was
separated from his employment at the same time as Pezzano. He executed an identical
confidentiality agreement and was subject to the same comments from Supervisors Mosesso and
Wilson, which led to his filing of a complaint alleging claims of defamation, business and trade
disparagement, invasion of privacy, tortious interference with contract, tortious interference with
prospective contractual relationships, and breach of contract against the Supervisors and the
Township. Similar to this case, the trial court sustained preliminary objections filed by the
Supervisors and the Township and dismissed Leis’s complaint. This Court affirmed in the
unpublished decision cited above.
2
Our review of a trial court order sustaining preliminary objections and dismissing a
complaint is limited to determining whether the trial court committed an error of law or abused
its discretion. Myers v. Montgomery County, 92 A.3d 102, 106 n.5 (Pa. Cmwlth. 2014).
Preliminary objections should be sustained only when the law makes clear that the plaintiff
cannot succeed on his claim, and any doubts must be resolved in favor of the plaintiff. Id.
Additionally, when ruling on preliminary objections, courts must accept as true all well-pleaded
material allegations in a complaint and any reasonable inferences that may be drawn from the
averments. Id.
5
which can only act through its Supervisors, entered into an express written contract
which was breached by Supervisors Mosesso and Wilson acting on the Township’s
behalf. The Township responds that its Solicitor, not Supervisors Mosesso and
Wilson, signed the agreement on its behalf and that an individual council member
does not have an agency relationship with the Solicitor. Additionally, the
Township asserts that a contract action cannot be maintained against a person who
is not a party to the contract, unless the plaintiff is a third party beneficiary of the
contract or the suit is for products liability or breach of warranty. State Public
School Building Authority v. Noble C. Quandel, Co., 585 A.2d 1136, 1140 (Pa.
Cmwlth. 1991). However, the Township’s assertions are misplaced.
The contract at issue in this case, i.e., the Agreement, was executed by
Pezzano and the Township’s Solicitor, on behalf of the Township itself. Pezzano
initiated the present suit against the Township, which is in fact a party to the
Agreement. While the Township relies on this Court’s 2014 unpublished decision
relating to Pezzano’s initial complaint, wherein we stated that an individual council
member does not have an agency relationship with the Solicitor, this argument
misses the mark as the issue here is the relationship of Supervisors Mosesso and
Wilson to the Township, not the Solicitor who acts on its behalf and at its
direction. Moreover, the facts of the prior action are distinguishable.
Significantly, in the prior action, Pezzano had initiated a cause of action against
Supervisors Mosesso and Wilson sounding in tort, i.e., defamation, invasion of
privacy, and fraud, and against which Supervisors Mosesso and Wilson enjoyed
high public official immunity.
Additionally, the statement made by this Court, and upon which the
Township now relies, was in response to an allegation of fraud in negotiating the
Agreement, a process in which the Solicitor, not Supervisors Mosesso and Wilson,
6
participated. Indeed, we went on to state in that case that “the only party bound by
the Agreement is the Township . . . .”3 Pezzano I, slip op. at 12. Here, however,
the claim brought by Pezzano does in fact allege a breach of contract claim against
the Township, the party with whom he directly contracted.
The Township’s reliance on our previous decision in Leis is similarly
misplaced. In that case, Leis had specifically alleged that false statements were
made by Supervisors Mosesso and Wilson outside their authority as members of
the Board, outside the scope of their official duties, and outside of their authority to
act or speak on behalf of the Township. Additionally, we noted in Leis that
Supervisors Mosesso and Wilson were not signatories to the Agreement and,
hence, were not subject to a breach of contract claim. Because Leis’s underlying
claims against Supervisors Mosesso and Wilson failed, we held that any claims for
respondeat superior against the Township also failed. However, our discussion
did not consider the fact that Leis, similar to Pezzano herein, brought his breach of
contract action directly against the Township.
To the extent the Township contends Leis stands for the proposition
that a breach of contract claim cannot exist against the Township, this argument is
specifically rejected. Generally, a township is bound to the terms of a legally
executed contract. Aston v. Southwest Delaware County Municipal Authority, 535
A.2d 725, 728-29 (Pa. Cmwlth. 1988) (holding that a township was bound to the
terms of a contract that was executed in accordance with its statutory authority).
Here, despite the negative votes of Supervisors Mosesso and Wilson, the Township
ultimately approved the Agreement with Pezzano. More importantly, Pezzano has
3
We also stated in Pezzano I that “a solicitor cannot make an agreement that would
preclude a council person from explaining why he or she voted” a particular way. (Slip op. at
12.)
7
alleged in his complaint that Supervisors Mosesso and Wilson were agents and/or
officers of the Township at all relevant times, an allegation that must be accepted
as true in ruling on the Township’s preliminary objections in the nature of a
demurrer. Myers. Indeed, in Pezzano I, Supervisors Mosesso and Wilson asserted
immunity on the basis that their actions in speaking with the journalist were in the
course of their official and legitimate duties and within the scope of their authority.
Moreover, as the Honorable Senior Judge Friedman explained in her
dissent in Leis, it is well settled that “a corporation can only act through its
officers, agents, and employees.” Tayar v. Camelback Ski Corporation, Inc., 47
A.3d 1190, 1196 (Pa. 2012); see also Maier v. Maretti, 671 A.2d 701, 707 (a
corporation acts only through its agents and officers, and such agents or officers
cannot be regarded as third parties when they are acting in their official capacity).
Similar to a private corporation, a political subdivision “can only act or carry out
its duties through real people -- its agents, servants or employees.” Weatherly Area
School District v. Whitewater Challengers, Inc., 616 A.2d 620, 621 (Pa. 1992)
(citation omitted). Subsequently, “under the doctrine of vicarious liability, the
corporation, not the employee, is liable for acts committed by the employee in the
course of employment.” Tayar, 47 A.3d at 1196; see also Rinaldi v. Board of
Vehicle Manufacturers, Dealers and Salespersons, 843 A.2d 418, 421 (Pa.
Cmwlth. 2004) (“corporations are necessarily required to conduct their business
through agents and they are bound by the acts of their representatives within the
apparent scope of the business with which they are entrusted”) (citation omitted).
The Agreement executed between Pezzano and the Township
included specific confidentiality requirements relating to Pezzano’s separation
from his employment. The Supervisors, as agents and officers through which the
Township necessarily acts, approved such agreement on behalf of the Township.
8
As this Court recognized in Pezzano I, there is clearly no question that the
Township was bound by the terms of the agreement which it so approved.
Pezzano I, slip op. at 12.
The Township has admitted that Supervisors Mosesso and Wilson
were also agents acting in their official capacity on behalf of the Township when
they disclosed the terms of the confidential Agreement to the newspaper journalist.
Such disclosure clearly violated the terms of the confidential Agreement to which
the Township was bound. As this Court clarified in Pezzano I, the question of
whether Supervisor Mosesso breached the confidentiality clause is of no moment
in determining whether he is immune from a civil suit for damages on the basis of
high public official immunity. Unlike Pezzano I, we are not determining a
question of high public immunity; rather, here, we are concerned with the
obligation of the Township for a breach of a contract to which it was bound.
The extent to which Supervisors Mosesso and Wilson may have high
public immunity, or to which they could have expressed their opposition to the
Agreement without discussing the confidential terms thereof, we do not here
address. The outcome here is dictated by the terms of the Agreement as approved
by the Township, i.e., the contractual obligation which it assumed. Our decision
should not be read as a limitation of a public official’s rights of free speech or
his/her duty to keep the electorate informed. Rather, a Township is liable for its
contractual obligations and, as consistent with Tayar, vicariously liable for the
breach of such obligations by its agents. Thus, the trial court erred in sustaining
the Township’s preliminary objections.
9
Accordingly, the order of the trial court is reversed and the matter is
remanded to the trial court for further proceedings.
________________________________
PATRICIA A. McCULLOUGH, Judge
10
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Kevin A. Pezzano, :
Appellant :
: No. 2022 C.D. 2015
v. :
:
Towamencin Township :
ORDER
AND NOW, this 16th day of February, 2017, the order of the Court of
Common Pleas of Montgomery County (trial court), dated October 2, 2015, is
hereby reversed. The matter is remanded to the trial court for further proceedings.
Jurisdiction relinquished.
________________________________
PATRICIA A. McCULLOUGH, Judge
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Kevin A. Pezzano, :
:
Appellant :
:
v. : No. 2022 C.D. 2015
: Argued: October 19, 2016
Towamencin Township :
BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge
HONORABLE P. KEVIN BROBSON, Judge
HONORABLE PATRICIA A. McCULLOUGH, Judge
HONORABLE ANNE E. COVEY, Judge
HONORABLE MICHAEL H. WOJCIK, Judge
HONORABLE JULIA K. HEARTHWAY, Judge
HONORABLE JOSEPH M. COSGROVE, Judge
DISSENTING OPINION
BY JUDGE WOJCIK FILED: February 16, 2017
I respectfully dissent. Pezzano does not dispute that he sued the
Township, the party with whom he contracted directly, based upon the actions of
the Township’s agents or employees. He argues that a contract can be breached by
the actions of one who is not a party to that contract. He claims that just like a
private corporation, the Township can only act or carry out its duties through
people such as its agents or employees. He asserts that Mosesso’s and Wilson’s
statements were made as agents of the Township within the scope of their duties,
and these actions can be imputed to the Township in a breach of contract action.
As a result, Pezzano claims that the trial court erred in dismissing his breach of
contract claim against the Township.
We addressed Pezzano’s agency argument in an unreported opinion1
based on an identical set of facts in Leis v. Mosesso, (Pa. Cmwlth., Nos. 249 C.D.
2014, 250 C.D. 2014, 251 C.D. 2014, filed April 17, 2015).2 In that case, we
explained that “[u]nless a cause of action exists against the defendant Supervisors,
the Township cannot be held liable.” Id., slip op. at 8 (citing Mamalis v. Atlas Van
Lines, Inc., 528 A.2d 198 (Pa. Super. 1987), aff’d, 560 A.2d 1380 (Pa. 1989) and
Skalos v. Higgins, 449 A.2d 601 (Pa. Super. 1982)). In a prior appeal, we affirmed
the dismissal of Pezzano’s defamation claims against Mosesso and Wilson because
they enjoyed absolute immunity. Pezzano v. Mosesso, (Pa. Cmwlth., Nos. 189
C.D. 2014, 190 C.D. 2014, filed October 24, 2014), slip op. at 6-11. While the
instant matter is purportedly a contract action against the Township, it cannot be
based on the privileged statements of Mosesso and Wilson who were not
signatories to the Agreement. See Leis, slip op. at 8 (“Here, neither of the
defendant Supervisors were parties or signatories to the Agreement. Accordingly,
Leis would have no claim for breach of contract against the defendant
Supervisors. . . . Because Leis’s underlying claims for breach fail against the
1
See Section 414(a) of this Court’s Internal Operating Procedures, 210 Pa. Code
§69.414(a) (“Parties may . . . cite an unreported panel decision of this court issued after January
15, 2008, for its persuasive value, but not as binding precedent.”).
2
The plaintiff, Joseph Leis, filed a complaint alleging, inter alia, a breach of contract
claim against the Township for the purported violation of an identical confidentiality clause
contained in his Confidential Employee Separation Agreement and General Release. As in the
instant case, the Township’s Solicitor signed the Agreement on the Township’s behalf and
Mosesso and Wilson then made statements to a journalist regarding the termination of Leis’s
employment.
MHW - 2
defendant Supervisors, it necessarily follows that any claims for respondeat
superior against the Township must also fail.”).3
Accordingly, unlike the majority, I would affirm the order of the
Montgomery County Court of Common Pleas.
MICHAEL H. WOJCIK, Judge
3
That does not mean that Pezzano does not have a remedy because he may seek
rescission of the Agreement on the basis that there was a mutual mistake. As the Superior Court
has explained:
The doctrine of mutual mistake of fact serves as a defense to the
formation of a contract and occurs when the parties to a contract
have an erroneous belief as to a basic assumption of the contract at
the time of formation which will have a material effect on the
agreed exchange as to either party. A mutual mistake occurs when
the written instrument fails to . . . set forth the “true” agreement of
the parties. [T]he language of the instrument should be interpreted
in light of the subject matter, the apparent object or purpose of the
parties and the conditions existing when it was executed.
Step Plan Services, Inc. v. Koresko, 12 A.3d 401, 410 (Pa. Super. 2010) (citation omitted). In
this case, the parties to the Agreement were apparently mistaken that they could regulate the
immunized statements of two of the Township’s high elected officials.
MHW - 3