Chhaya Management, LLC v. Cigar Wala, LLC

J-A17021-20


NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

  CHHAYA MANAGEMENT, LLC C/O             :    IN THE SUPERIOR COURT OF
  NEHAL DESAI                            :         PENNSYLVANIA
                                         :
                    Appellant            :
                                         :
                                         :
              v.                         :
                                         :
                                         :    No. 1285 EDA 2019
  CIGAR WALA, LLC; CIGAR WALA            :
  NEWS STAND, LLC; CHESTNUT 733          :
  ASSOCIATES, LP; THE GOLDENBERG         :
  GROUP, INC.; GOLDENBERG                :
  MANAGEMENT, INC.; MAULIKKUMAR          :
  SHAH; KAMAL PATEL; AND DHANJI          :
  DESAI                                  :

           Appeal from the Judgment Entered December 10, 2018
    In the Court of Common Pleas of Philadelphia County Civil Division at
                          No(s): No. 150600691


BEFORE: BOWES, J., McCAFFERY, J., and FORD ELLIOTT, P.J.E.

MEMORANDUM BY McCAFFERY, J.:                    FILED OCTOBER 14, 2020

     Chhaya Management, LLC c/o Nehal Desai (Chhaya) appeals from the

judgment entered in the Philadelphia Court of Common Pleas, Civil Division

(Commerce Court), after a bench trial on Chhaya’s breach of contract claim.

On appeal, Chhaya claims the trial court erred in denying its tort claims on

summary judgment, denying corporate veil-piercing, and denial of pre-

judgment interest. For the reasons below, we largely affirm the judgment, but

vacate and remand for correction of an error the trial court identifies in its

opinion.
J-A17021-20


      The trial court summarized the facts in a 2017 summary judgment

opinion as follows:

            [Chhaya] brings this action alleging breach of contract,
      unlawful eviction, conversion, conspiracy and aiding and abetting
      tortious conduct against numerous defendants. [Chhaya] had
      contracted with Cigar Wala, LLC (“Cigar Wala”), the owner of a
      business called The Smoke Shop[,] to manage its store at 87
      South 8th Street in exchange for consideration [as] described in a
      Management Agreement. The dispute is primarily over terms of
      the Management Agreement.

           The Smoke Shop is located within a multi-store property
      group at 725-735 Chestnut Street owned by Defendant [Chestnut
      733 Associates, LP (“733 Associates”)]. Cigar Wala is a tenant of
      [733 Associates].      Defendant Goldenberg Management Inc.
      [(GMI)1] was hired by [733 Associates] to manage the entire
      property group and its stores, including the Smoke Shop. Among
      [GMI’s] responsibilities were tenant relations with Cigar Wala.

                                  *    *    *

      Background

            The real property located at 727-35 Chestnut Street consists
      of a number of ground level store fronts facing 8th [ ] and
      Chestnut Streets, and they are leased. When [733 Associates]
      took ownership of 727-35 Chestnut Street, the company became
      successor in interest to existing leases there. One of these was a
      five year lease for the Smoke Shop. Cigar Wala was the named
      lessee and the lease term had begun on May 1, 2010. The lease
      was executed [ ] on behalf of Cigar Wala by . . . Dhanji Desai [ ].


1  Appellees Chestnut 733 Associates, L.P. (733 Associates) and Goldenberg
Management, Inc. (GMI) (collectively, Goldenberg Appellees) filed a joint brief
in this matter. Goldenberg Appellees’ Brief, cover. No other appellee brief was
filed. In it, they explain that Chhaya initially filed suit against 733 Associates
and The Goldenberg Group, Inc. (TGG), but subsequently learned that TGG is
not involved in this dispute. TGG was dismissed by consent and GMI was added
when Chhaya filed its Amended Complaint. See Amended Complaint, 4/1/16,
at 1 (naming GMI); Stipulation of Counsel to Dismiss All Claims Against
Defendant [TGG] Only, With Prejudice, 6/27/16, at 1-2.

                                      -2-
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     When he signed this lease, Cigar Wala was owned by him. Later,
     [he] sold 50% of Cigar Wala to Kamal Patel (“Patel”) and 25% to
     Malik Shah (“Shah”).

           In May 2012, Dhanji Desai ousted Shah and Patel from
     operating Cigar Wala and attempted to seize legal control of the
     Smoke Shop. Shah and Patel responded by filing suit against
     Dhanji Desai in a case captioned Shah and Patel v. Desai, et.
     al., CP Phila 1207-2814. Dhanji Desai raised claims for breach of
     contract, breach of fiduciary duty, and conversion. In September
     2012, Patel and Shah filed a petition for preliminary injunction
     against Dhanji Desai and on September 17, 2012, an Order signed
     by the late Honorable Albert J. Snite was entered by agreement
     of the parties, which read in part:

          (2) Defendants [Dhanji Desai] shall not sell any
          interest in [Cigar Wala] or the 8th Street Smoke Shop
          located at 87 S. 8th Street, Philadelphia, Pa. 19106
          during the pendency of the litigation without court
          approval.

           On March 14, 2014, a nonjury Commerce Court trial took
     place before the Honorable Pamela Pryor Dembe. On June 18,
     2014, Judge Dembe entered a finding in favor of Patel and Shah.
     In pertinent part, the Court found:

          “Plaintiff Shah remains a 25% owner of [Cigar Wala]
          while Plaintiff Patel remains 50% owner of [Cigar
          Wala]. Plaintiffs are therefore entitled to entry into
          the business and to have full access to all accounts,
          books and records of the business.”

     Additional Defendant Dhanji Desai today continues to own 25% of
     [Cigar Wala].

     Management Agreement

           On March 27, 2014, after trial in Patel and Shah v. Desai,
     but before Judge Dembe entered her findings, Cigar Wala entered
     into a written Management Agreement with [Chhaya]. The
     Management Agreement is a contract . . . with terms governing
     [Chhaya’s] duty to provide managerial assistance to Cigar Wala in
     the operation of the Smoke Shop in exchange for consideration.
     Among the duties was management and operation of a state

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     lottery machine. Cigar Wala promised [Chhaya] all Smoke Shop
     monthly profits above the first $3,000. The contract may be
     ambiguous, however. An example is the following at Section 4:

                 “ANNUAL COMPENSATION. In consideration for
           the services to be provided hereunder, MANAGER shall
           retain all profits of the Smoke Shop after paying
           OWNER $3000.00 per month (herein after
           “Management Fee”) no later than Monday of each
           month. MANAGER and OWNER shall equally split all
           profits in excess of $100,000 each calendar year
           from the lottery only.       MANAGER shall pay all
           expenses associated with the operation of the Smoke
           Shop including taxes, insurance, lottery liability, city,
           state and federal taxes.” ([Emphasis] added).

          Also potentially unclear is the contract’s meaning for the
     phrase “all profits.” Did the parties intend that all profits including
     from Lottery sales be included, or did they mean “all profits” as
     generated from store inventory?

          Another potential ambiguity relates to the Management
     Agreement’s use of the word “inventory” itself at Paragraph 10:

                  “OWNER AND MANAGER hereby agree that the
           inventory has been paid for in full by MANAGER and
           no balance exists to OWNER. Upon termination or
           completion of this contract, OWNER and MANAGER
           agree to perform an inventory at which time OWNER
           shall reimburse MANAGER the wholesale cost for the
           inventory on hand, [handwritten text] including dead
           inventory.”

           Without a schedule, at least in general terms, to explain
     what types of goods are meant by “inventory” or “dead inventory”,
     a dispute seems to have taken place.

            Dhanji Desai signed the Management Agreement on behalf
     of Cigar Wala as President. His authority to sign is challenged in
     this lawsuit by [Chhaya] whose owner[,] Nehal Desai[,] signed the
     Management Agreement. Cigar Wala has not joined Nehal Desai
     individually as an additional defendant and has not challenged
     Nehal’s authority to bind Chhaya Management . . . .


                                      -4-
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     Municipal Court Action

           In July 2014, defendants [733 Associates] and [GMI] filed a
     landlord/tenant complaint in Municipal Court against Cigar Wala.
     They alleged that Cigar Wala failed to pay rent for the Smoke
     Shop. (This lawsuit was filed before Judge Dembe had entered
     her order determining Cigar Wala’s ownership). On September 8,
     2014, a Municipal Court judge entered judgment in favor of [733
     Associates] and [GMI], granting possession and money. Cigar
     Wala appealed on October 4, 2014 to Common Pleas Court, but
     before adjudication here, [733 Associates] learned that
     defendants Shah and Patel were in dispute with Dhanji Desai over
     ownership and control of Cigar Wala.

           This was the problem decided by Judge Dembe in Patel and
     Shah v. Desai et al. After her final order, [733 Associates] and
     [GMI] began negotiating with Shah and Patel, who [ ] now owned
     and controlled Cigar Wala. Shah, Patel and [733 Associates] went
     on to execute a new five year lease for the Smoke Shop — with a
     five year option to renew. This new lease started on May 1, 2015
     and the three parties also signed a “Separate Agreement” whose
     purpose was to end all remaining disputes between [733
     Associates] and Cigar Wala under the previous Lease. At the time
     the Separate Agreement was signed, the Court of Common Pleas
     had not heard the de novo landlord-tenant appeal from the
     Municipal Court.

            The Separate Agreement contained the following
     representations and warranties:     Shah and Patel are the
     controlling members of Cigar Wala with Patel owning 50%, Shah
     owning 25%, and Dhanji Desai owning 25%. A term of the
     Separate Agreement states the signatures of Patel and Shah are
     sufficient to bind Cigar Wala to the new Lease with [733
     Associates]. Dhanji Desai was not a signor of the Separate
     Agreement or the new Lease.

           After execution of the new Lease and the Separate
     Agreement, the de novo appeal from the Municipal Court was
     discontinued by Patel and Shah on behalf of Cigar Wala. Then, on
     June 15, 2015, with the consent of [733 Associates] but not Dhanji
     Desai’s, Cigar Wala assigned the new Lease to a new entity,
     defendant Cigar Wala News Stand, LLC (“Cigar Wala News
     Stand”).


                                    -5-
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     Changing of the Locks

           On May 11, 2015, before the Lease assignment, Patel, Shah,
     and the representatives of [733 Associates] and [GMI] went to the
     Smoke Shop and authorized a locksmith to change the store’s
     door locks. Dhanji Desai was present at the time. The effect was
     to lock-out Dhanji Desai, throw him out of the Smoke Shop and
     discontinue his ability to operate the Smoke Shop and its lottery
     machine.

            When this lock-out occurred, both Patel and Shah were
     beginning to negotiate a new management agreement with
     [Chhaya,] who ultimately declined and works today under the
     original Management Agreement dated March 27, 2014. While
     negotiating, Patel and Shah may have [reached an agreement]
     relating to inventory accounting under Paragraph 10 of the
     Management Agreement but in any event, there remains no
     agreement between [Chhaya] and Cigar Wala on inventory value.

           When the May 11, 2015 lock-change happened, a [Chhaya]
     representative, apparently not Nehal Desai himself, allegedly
     removed a few cigarette cartons from the store without Dhanji
     Desai’s permission. Patel, Shah, [733 Associates] and [GMI] later
     hired a professional appraisal service which has allegedly valued
     the Smoke Shop’s inventory as of May 12, 2015.

     Procedural History

            On June 4, 2015, [Chhaya] filed this Complaint which
     included an action for injunctive relief[, against Cigar Wala, LLC;
     Cigar Wala News Stand; 733 Associates; The Goldenberg Group,
     Inc. (TGG); TGG was dismissed by consent and Goldenberg
     Management, Inc. (GMI) was substituted; see n. 1]. [Chhaya]
     also claimed legal actions for breach of contract, unlawful eviction,
     conversion, civil conspiracy and aiding and abetting tortious
     conduct. [Chhaya] later filed a separate petition for temporary
     restraining order and preliminary injunction.

           On June 19, 2015, the petition for temporary restraining
     order and preliminary injunction was denied. In July, 2016 default
     judgments were entered against Cigar Wala defendants but these
     judgments were later reopened. On March 16, 2016, [Chhaya]
     was permitted to join Dhanji Desai as an additional defendant; an
     Amended Complaint was filed.

                                     -6-
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Trial Ct. Op., 5/25/17, at 1-7 (trial court footnotes and references to the record

omitted; footnote added).

      The following relevant facts are from the trial court’s opinion on appeal:

            The Commerce Court of Philadelphia has been engaged since
      2012 in adjudicating a series of contentious business disputes over
      a small tobacco store near 8th and Chestnut [Streets] in
      Philadelphia called the Chestnut Smoke Shop. This is the second
      time a judgment has been entered by the Commerce Court
      involving this store.

            [Chhaya] is now appealing an award in its favor following a
      breach of contract by [Appellee Cigar Wala]. [Chhaya] claims we
      erred in deciding [its] summary judgment motion by applying the
      gist of the action doctrine and dismissing its tort claims. Our
      reasons are explained in detail in an Order and memorandum
      Opinion dated May 25, 2017 . . . .

            Following a bench trial, we found . . . Cigar Wala liable for
      breaching the terms of its Management Agreement with . . .
      [Chhaya. Chhaya], however, did not produce evidence to pierce
      the corporate veil of [Appellees Shah and Patel] . . . who are the
      majority owners of Cigar Wala. This is not because fraudulent
      conduct was absent within Cigar Wala, but because neither [ ] Shah
      nor [ ] Patel was involved. The sole fraudulent individual owner of
      Cigar Wala is former additional defendant Dhanji Desai, but
      [Chhaya’s] complaints did not name him as a party.

           [Chhaya] is also appealing our decision to dismiss
      defendants [GMI] and 733 Associates, the corporate landlord of
      the Chestnut Smoke Shop.     [GMI] was not a party to the
      Management Agreement at the heart of this case . . . .

            An arithmetical error in our calculation of the amount of
      damages needs to be corrected. We are requesting a remand to
      enter an amended judgment or alternatively, we are requesting
      the Court enter a final judgment with the correct amount.

      Facts




                                      -7-
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           In 2014, the Honorable Pamela Pryor Dembe of this
     Commerce Court was assigned an ownership dispute concerning
     Cigar Wala. The case was captioned Kamal Patel and Maulik
     Shah v. Desai Dhanji and Akash Investment, LLC (Phila. No.
     120702814). On June 18, 2014, Judge Dembe entered declaratory
     judgment awarding Kamal Patel 50% ownership of Cigar Wala,
     25% to [ ] Shah and 25% to Dhanji Desai.

           Several weeks before this Judgment, Dhanji Desai had, on
     his own, signed the Management Agreement binding Cigar Wala to
     a contract with [Chhaya]. This Management Agreement gave
     [Chhaya’s] owner, Nehal Desai, broad authority and responsibility
     to operate the Chestnut Smoke Shop for five years. The contract
     contains many terms including how compensation is to be paid to
     [Chhaya] by Cigar Wala and instructions on how to calculate
     damages in the event of breach. We found Dhanji Desai had
     apparent authority to bind the Cigar Wala corporation at the time
     the Management Agreement was executed.

           Within a year, Cigar Wala terminated the Management
     Agreement for reasons explained in detail [ ] at Exhibit A. Our
     Findings and Conclusions also explain why Dhanji Desai had
     apparent authority to bind Cigar Wala.

           [Chhaya’s] evidence proved Cigar Wala’s termination of the
     Management Agreement with [Chhaya] was a breach of contract.
     Evidence also showed that Dhanji Desai had misappropriated
     Chestnut Smoke Shop revenues without the knowledge of either [
     ] Shah, [ ] Patel or [Chhaya’s] Nehal Desai. Much of the skimmed
     money was cash from Pennsylvania State Lottery sales but Dhanji
     Desai also mishandled cash proceeds from the sale of tobacco and
     candy products. Ultimately, Dhanji Desai’s fraud caused Cigar
     Wala to fall behind in rent and landlord [GMI] filed an eviction
     action in Philadelphia’s Municipal Court in July 2014.

           Unfortunately for them, [ ] Shah and [ ] Patel discovered the
     extent of Dhanji Desai’s fraud only after Judge Dembe’s decision
     awarding them majority ownership of Cigar Wala. Not only was
     Cigar Wala behind on rent but it had also defaulted on monies owed
     to the Pennsylvania Lottery.

          We found both defaults were due to the sole malfeasance of
     Dhanji Desai.


                                    -8-
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           For the next year through the middle of 2015, [ ] Shah and
     [ ] Patel tried to restore good standing with [GMI] and the
     Pennsylvania Lottery but were unable to regain actual day to day
     control of the store or its finances. Through May 2015, [Chhaya]
     was operating the store under Dhanji Desai’s sole supervision.
     Eventually, [ ] Shah and [ ] Patel exercised their legal majority
     control of Cigar Wala to settle [GMI’s] eviction action. They
     achieved this by paying off the back rent through a new company
     they formed called Cigar Wala New[s] Stand, LLC (“Cigar Wala
     New[s] Stand”). Defendant Cigar Wala News Stand signed a new
     lease with [GMI] for the 8th [Street] and Chestnut [Street] store.
     In addition to restoring the Chestnut Smoke Shop’s good standing
     with [GMI], Cigar Wala News Stand cured the default with the
     Pennsylvania State lottery, doing so through new capital
     investment from its owners.

           This process was not seamless because the changeover
     included Cigar Wala’s breach of its Management Agreement with
     [Chhaya]. This took place on May 11, 2015 when [ ] Shah and [ ]
     Patel entered the store with a representative of [GMI] and
     demanded that Nehal Desai relinquish his operation of the store
     and summarily vacate the premises. The store’s door lock was
     changed and Nehal Desai left the store after loading his car with
     some of the store’s tobacco and candy inventory. Over the next
     several days, [ ] Shah, [ ] Patel and [GMI] completed paperwork
     executing a new lease with Cigar Wala News Stand, and the
     Chestnut Smoke Shop has been operating under its new
     management ever since.

           [Chhaya] filed this lawsuit demanding lost profits and the
     balance of inventory value. Its contractual claim was that its
     Management Agreement with Cigar Wala had been improperly
     terminated. At summary judgment, landlord defendant [GMI] was
     dismissed because [it] was not a party to the Management
     Agreement.

           In pleadings filed by defendants’ former attorney . . . Dhanji
     Desai was brought into the case on fraud claims through joinder
     complaint.    But in pretrial proceedings shortly before trial,
     defendants, now appearing pro se, withdrew all actions against
     Dhanji Desai. He was dismissed from the case before trial began.

     Relevant Procedural History


                                    -9-
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            [Chhaya’s] original complaint averred the following: Count
     I, injunctive relief; Count II, breach of contract; Count III, unlawful
     eviction; Count IV, conversion; Count V, civil conspiracy; Count VI,
     aiding and abetting tortious conduct.

          By stipulation on March 16, 2016, [Chhaya] filed an amended
     complaint to remove [TGG], and substitute [GMI]. Thereafter, all
     defendants filed answers.

           On May 6, 2016, [GMI] filed a summary judgment motion
     which was followed a month later on June 10, 2016 by defendants’
     joinder complaint against Dhanji Desai. Service of process was
     successful but Dhanji Desai never filed an answer. Defendants
     never moved for default judgment and Dhanji Desai remained in
     the case until he was discontinued shortly before trial.

           On July 22, 2016, [Chhaya] filed a summary judgment
     motion against defendants Cigar Wala, Cigar Wala News Stand, [ ]
     Shah and [ ] Patel. Cigar Wala, Cigar Wala News Stand, [Shah]
     and [ ] Patel filed summary judgment motions of their own against
     [Chhaya].

           At summary judgment, we dismissed [Chhaya’s] actions
     against [GMI] and its subsidiary [733 Associates]. We also
     dismissed [Chhaya’s] tort actions against all the remaining
     defendants. Trial was permitted on contractual breach of the
     Management Agreement.

          At pretrial conference in which all remaining defendants were
     unrepresented, a bench trial was scheduled.

          A first bench trial resulted in a mistrial on August 16, 2018.
     A second bench trial took place on November 5, 2018 and
     November 6, 2018.

           Findings of Fact and Conclusions of Law were entered on
     December 10, 2018 in favor of [Chhaya] and against Cigar Wala in
     the amount of $667,116. There was no finding of liability against
     [ ] Shah, [ ] Patel, or Cigar Wala News Stand.

           After trial, [Chhaya] filed motions for post-trial relief on
     December 17, 2018. [Chhaya] filed a Notice of Appeal on January
     9, 2019 which was docketed at 259 EDA 201[9]. The appeal was
     quashed with leave for [Chhaya] to file a new notice of appeal after

                                     - 10 -
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      entry of judgment. This court denied post-trial motions without an
      opinion and entered judgment on April 1, 2019.

Trial Ct. Op., 1/27/20, at 1-6 (footnotes and references to the record omitted).

The trial court did not order a statement per Pa.R.A.P. 1925(b), as Chhaya

detailed its claims in its notice of appeal.

      Chhaya raises the following issues on appeal:

      1. Did the Trial Court err when it granted summary judgment and
      dismissed all the claims against defendants [733 Associates] and
      [GMI] when it: (1) disregarded an affidavit which created a
      genuine issue of material fact regarding whether [Chhaya] enjoyed
      a possessory right to occupy the Chestnut Street Smoke Shop; and
      (2) determined that [Chhaya’s] conversion claim failed solely
      because defendants [733 Associates] and [GMI] never “[owned]
      the Smoke Shop’s inventory” and therefore could not have
      converted it?

      2. Did the Trial Court err when it granted summary judgment, in
      part, in favor of defendants [Cigar Wala], Cigar Wala News Stand,
      [ ] Shah, and [ ] Patel and dismissed [Chhaya’s] causes of action
      for unlawful eviction, conversion, conspiracy, and aiding and
      abetting on the basis of being barred by the gist of the action
      doctrine when: (1) the Trial Court improperly raised the gist of the
      action sua sponte and (2) the Trial Court’s rationale for applying
      the gist of the action doctrine was contradicted by defendants’
      challenge as to the validity of a Management Agreement?

      3. Did the Trial Court err when it declined to pierce the corporate
      veil of [Cigar Wala] and find defendants Cigar Wala News Stand, [
      ] Shah, and [ ] Patel liable as alter-egos, or individually when: (1)
      the record supported that [Cigar Wala] was undercapitalized and
      was non-operational; (2) the cause of the breach of contract was
      based on the actions of the individual defendants; and (3) when
      Cigar Wala News Stand [ ] was substantially a continuance of
      [Cigar Wala]?

      4. Did the Trial Court err when it mistakenly failed to award
      $59,947.92 for outstanding inventory owed to [Chhaya] and failed
      to award pre-judgment interest on the breach of contract claim?


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Chhaya’s Brief at 6-7.

        Initially, we note that the trial court has recognized that remand is

appropriate for correction of an arithmetical error. Trial Ct. Op., 1/27/20, at

8.    This renders the “failure to award” portion of Chhaya’s fourth question

moot, as the trial court would add the contested amount to its award on

remand. All that remains of that question is the issue of pre-judgment interest.

We analyze each of Chhaya’s claims seriatim.

        Chhaya argues that the trial court erred in determining that the

Goldenberg Appellees2 could not have unlawfully evicted Chhaya or converted

its property because Chhaya did not enjoy a possessory interest in the shop

and the Goldenberg Appellees never actually owned shop inventory. Chhaya’s

Brief at 36-38. Chhaya says that its affidavit of Dhanji Desai provided that

Chhaya enjoyed a right of possession to the shop, and the Goldenberg

Appellees may have been involved in the lockout.

Id. On this basis,

Chhaya

claims that summary judgment was improper.

        Goldenberg Appellees argue that Chhaya was a mere contractor, and any

right of occupation it had was incidental to its duties under the Management

Agreement. Goldenberg Appellees’ Brief at 19-21. As Chhaya had no interest

in the leasehold itself, the trial court properly granted summary judgment.

Id. One who has

no tenancy cannot be evicted, and one who has no right of




2   GMI and 733 Associates.

                                     - 12 -
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dominion or control over an object cannot suffer conversion by its loss.

Id. at 21-23.

Because the necessary relationship was not established, Goldenberg

Appellees cannot have committed a tortious act under these theories, and thus

accusations of “conspiracy” and “aiding and abetting” in the commission of

torts cannot prevail.

Id. at 23-24.

      The trial court concludes that Chhaya was not a tenant and therefore its

removal could not have been an unlawful eviction. Trial Ct. Op., 1/27/20, at

7.   Further, Chhaya did not prove that any property was taken other than

inventory governed by the Management Agreement.

Id. at 8.

Thus, the gist

of the action doctrine applies and the analysis must be for breach rather than

conversion.

Id. Chhaya challenges decisions

made at summary judgment and after the

bench trial.

      The question of whether summary judgment is warranted is one
      of law, and thus our standard of review is de novo and our scope
      of review is plenary. Summary judgment may be entered only
      where the record demonstrates that there remain no genuine
      issues of material fact, and it is apparent that the moving party is
      entitled to judgment as a matter of law.

City of Philadelphia v. Cumberland County Bd. of Assessment Appeals,

81 A.3d 24

, 44 (Pa. 2013) (citation omitted).

      Our review in a non-jury case is limited to whether the findings of
      the trial court are supported by competent evidence and whether
      the trial court committed error in the application of law . . . . We
      must grant the court’s findings of fact the same weight and effect
      as the verdict of a jury and, accordingly, may disturb the non-jury
      verdict only if the court’s findings are unsupported by competent
      evidence or the court committed legal error that affected the

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      outcome of the trial . . . . It is not the role of an appellate court to
      pass on the credibility of witnesses; hence we will not substitute
      our judgment for that of the factfinder. Thus, the test we apply is
      not whether we would have reached the same result on the
      evidence presented, but rather, after due consideration of the
      evidence which the trial court found credible, whether the trial
      court could have reasonably reached its conclusion.

Hollock v. Erie Insurance Exchange, 

842 A.2d 409

, 413–14 (Pa. Super.

2004) (en banc) (quotation marks and citations omitted).

      Chhaya’s summary judgment arguments pertain to its claims of

conversion and wrongful eviction. The trial court concluded that Chhaya was

not a tenant and therefore could not be evicted; likewise, because Chhaya did

not establish a possessory interest in any property that was arguably converted

except inventory that would be covered by the Management Agreement. The

trial court also reasoned that the gist of the action doctrine barred Chhaya’s

tort claims.

      The gist of the action doctrine acts to foreclose tort claims 1)
      arising solely from the contractual relationship between the
      parties; 2) when the alleged duties breached were grounded in the
      contract itself; 3) where any liability stems from the contract; and
      4) when the tort claim essentially duplicates the breach of contract
      claim or where the success of the tort claim is dependent on the
      success of the breach of contract claim.

Reardon v. Allegheny College, 

926 A.2d 477

, 486 (Pa. Super. 2007). The

primary distinction is that breach of contract claims arise from duties that the

parties have imposed on themselves by mutual consensus pursuant to their

agreement, whereas torts arise from breaches of duties imposed by law as a

matter of policy.

Id. at 486-87.

“When a plaintiff alleges that the defendant


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committed a tort in the course of carrying out a contractual agreement,

Pennsylvania courts examine the claim and determine whether the ‘gist’ or

gravamen of it sounds in contract or tort.”      Freestone v. New Eng. Log

Homes, Inc., 

819 A.2d 550

, 554 (Pa. Super. 2003) (citation omitted). “The

test is not limited to discrete instances of conduct; rather, the test is, by its

own terms, concerned with the nature of the action as a whole.”

Id. (citation omitted). An

eviction is an act by a landlord or a third person that interferes
      with a tenant’s possessory right to the demised premises. See
      Oakford v. Nixon, 

177 Pa. 76

, 81, 

35 A. 588

, 589 (1896). See
      also 49 Am.Jur.2d Landlord and Tenant § 300 (1970). If that act
      is wrongful, the tenant may sue for damages in trespass or
      assumpsit. See Kelly v. Miller, 

249 Pa. 314

, 316–17, 

94 A. 1055

,
      1056–57 (1915) (“[T]here is an implied covenant for the quiet
      enjoyment of the demised premises, and it is settled in this State
      that any wrongful act of the landlord which results in an
      interference of the tenant’s possession, in whole or in part, is an
      eviction for which the landlord is liable in damages to the tenant.”).

Kuriger v. Cramer, 

498 A.2d 1331

, 1338 (Pa. Super. 1985).              Without a

possessory right, there can be no eviction, wrongful or otherwise. Chhaya does

not allege that it ever entered into a lease; rather, its theory is that it had a

right to occupy the space under the Management Agreement, and that it was

an authorized assignee of Cigar Wala’s rights under its lease. It argues that

the affidavit of Dhanji Desai supports its claim and that therefore summary

judgment was inappropriate.

      The Desai Affidavit substantially amounts to Dhanji Desai’s opinion as to

the   proper   interpretation   of   the   Management    Agreement.       Chhaya


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acknowledges, as it must, that it had no lease here. It is for the trial court to

interpret the contract, and to determine the credibility of proffered evidence.

      We can find no error in the trial court’s decision here. A management

agreement is an agreement about performing labor, not about a tenancy or

the transfer or property, unless the terms of the agreement make explicit that

it also encompasses rights of tenancy or some other topic not generally a part

of such agreements.     Chhaya has not cited any term of the Management

Agreement that supports its claim as to unlawful eviction or conversion. Thus,

the claim fails.

      Chhaya also argues that the trial court erred in applying the gist of the

action doctrine sua sponte to bar its tort claims. Further, Chhaya argues that

because Appellees were arguing at summary judgment that no contract

existed, it was inappropriate for the trial court to find that the breach claim

should eclipse the tort claims under the gist of the action doctrine.

      Chhaya’s claims of error put the cart before the horse by placing the

burden on establishing its claims everywhere but on itself. Any party pleading

tort and breach of contract to address the same harm must understand that

they cannot “double prove” their case — the alleged harms and damages are

only what they can establish them to be. The trial court was not mistaken in

prioritizing the breach claim, because where the parties take the time to specify

the terms of their relationship, those terms must take precedent over the more

general “default” terms of relating that the tort regime addresses. This is the


                                     - 16 -
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essence of the gist of the action doctrine. Regardless of the arguments the

parties made in their summary judgment motions, the gist of the action

doctrine is Pennsylvania law, and the trial court did not err in applying it to

prioritize the breach claim. It was not Appellees’ obligation to plead gist of the

action, but Chhaya’s responsibility to establish each of its claims sufficiently to

survive summary judgment, as a matter of Pennsylvania law.

      Further, as stated above, the trial court correctly concluded that

Chhaya’s claims for wrongful eviction and conversion were fatally flawed in any

event, because Chhaya had not demonstrated that it was a tenant or that it

had any right to the allegedly “converted” property that was not covered by

the Management Agreement. Therefore, even without application of the gist

of the action doctrine, Chhaya’s claims fail.

      Chhaya’s argument that the trial court’s ruling was erroneous because it

was inconsistent with Appellees’ argument is curious. Chhaya was bringing a

breach claim, so the fact that Appellees argued that no contract was formed is

no limit on the trial court’s power to find breach, which it eventually did.

Chhaya cites a case where a trial court applied the gist of the action doctrine

to bar tort claims and subsequently found that there was no binding contract,

and this Court reversed.       Chhaya’s Brief at 59, citing Telwell Inc. v.

Grandbridge Real Estate Capital, LLC, 

143 A.3d 421

, 429 (Pa. Super.

2016).    Chhaya ultimately prevailed on its breach claim, so Telwell is

inapposite.


                                      - 17 -
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      Chhaya argues that the trial court should have pierced the corporate veil

or found Shah and Patel liable, because the trial court erroneously viewed the

breach and damages as arising from Dhanji Desai’s actions rather than the

actions of Shah and Patel. Chhaya’s Brief at 61-70.

      The trial court asserts that Chhaya waived this claim by not raising it in

pleadings or otherwise preserving it at trial. Trial Ct. Op., 1/27/20, at 9. As

to the merits of the argument, the trial court points to a paucity of evidence

supporting piercing the veil.

Id. at 9-10.

Because of Dhanji Desai’s fraud and

resistance to relinquishing control, Shah and Patel lacked the requisite control

over Cigar Wala’s finances to support veil-piercing.

Id. The “legal fiction

of a separate corporate entity was designed to serve

convenience and justice, [ ] and will be disregarded whenever justice or public

policy demand and when the rights of innocent parties are not prejudiced nor

the theory of corporate entity rendered useless.” Ashley v. Ashley, 

393 A.2d 637

, 641 (Pa. 1978) (citations omitted). “[T]here is a strong presumption in

Pennsylvania against piercing the corporate veil.” Lumax Industries, Inc. v.

Aultman, 

669 A.2d 893

, 895 (Pa. 1995) (citation omitted).

      Our courts consider the following factors when determining whether to

pierce the corporate veil: undercapitalization; failure to adhere to corporate

formalities; substantial intermingling of corporate and personal affairs, and use

of the corporate form to perpetrate a fraud. Lumax 

Industries, 669 A.2d at 895

. This Court has relied on the elements of common law fraud in applying


                                     - 18 -
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the Lumax Industries factors.          See, e.g., Fletcher-Harlee Corp. v.

Szymanski, 

936 A.2d 87

, 100-01 (Pa. Super. 2007).

      Initially we note Chhaya’s failure to demonstrate that this claim of error

is preserved. A review of the record, including Chhaya’s Amended Complaint,

confirms that the trial court was correct to conclude that this claim is waived.

      On appeal the Superior Court will not consider a claim which was
      not called to the trial court’s attention at a time when any error
      committed could have been corrected. In this jurisdiction . . . one
      must object to errors, improprieties or irregularities at the earliest
      possible stage of the adjudicatory process to afford the jurist
      hearing the case the first occasion to remedy the wrong and
      possibly avoid an unnecessary appeal to complain of the matter.

In re S.C.B., 

990 A.2d 762

, 767 (Pa. Super. 2010) (citation omitted).

      Regardless, this claim is meritless.     Chhaya cites Fletcher-Harlee in

support of its argument, emphasizing the fourth Lumax factor, fraud.

Chhaya’s Brief at 62-63. Chhaya claims that it is Shah and Patel, and not

Dhanji Desai, who are responsible for fraudulent behaviors that allegedly

harmed Chhaya. The trial court disagreed:

      We found that even though [a prior court ruling] awarded legal
      majority ownership of Cigar Wala to [Shah and Patel] on June 18,
      2014, as late as May 11, 2015, they were unable to control Cigar
      Wala’s finances. In reality, Dhanji Desai had failed to relinquish
      control of Cigar Wala and through no fault of [Chhaya], Cigar
      Wala’s rent and lottery bills were unpaid. Clearly, neither [Shah
      nor Patel] benefited from the fraud perpetrated by Dhanji Desai.

Trial Ct. Op., 1/27/20, at 10. It would be inequitable and contrary to the letter

and the spirit of Pennsylvania law to allow veil-piercing where Shah and Patel

had a right to control corporate assets but were unlawfully frustrated in their


                                      - 19 -
J-A17021-20


attempts to do so, to their detriment. Chhaya has not demonstrated an abuse

of discretion in the factfinder’s determination; in addition to being waived, this

claim is meritless.

      Finally, Chhaya argues that the trial court erred in failing to award pre-

judgment interest. Chhaya asserts that such interest is a matter of right under

Pennsylvania law. Chhaya raised this argument in its post-sentence motion,

which was denied. See Order, 4/1/19.

      “We review a denial for pre-judgment interest for an abuse of discretion.”

Davis v. Borough of Montrose, 

194 A.3d 597

, 612 (Pa. Super. 2018)

(citation omitted). Under Pennsylvania law, recovery of pre-judgment interest

may be recovered where:

      (1) a defendant commits a breach of a contract to pay a definite
      sum of money; or

      (2) a defendant commits a breach of contract to render a
      performance the value of which in money is stated in the
      contract; or

      (3) a defendant commits a breach of contract to render a
      performance the value of which is ascertainable by
      mathematical calculation from a standard fixed in the
      contract; or

      (4) a defendant commits a breach of a contract to render a
      performance the value of which in money is ascertainable
      from established market prices of the subject matter[.]

Id. at 613

(citation omitted and emphases added). Otherwise, pre-judgment

interest is a discretionary matter, in light of all relevant circumstances,




                                      - 20 -
J-A17021-20


including   deficiencies   in   the   injured   party’s   performance   and    any

unreasonableness in that party’s demands.

Id. Chhaya’s argument elides

a central weakness. As stated above, courts

considering a claim for pre-judgment interest must begin with contract

interpretation.   

Davis, 194 A.3d at 613

.       Without such a provision in the

contract, it is difficult to make the claim that one is entitled as a matter of law

to pre-judgment interest. Chhaya says first that the trial court accepted its

expert’s findings, adopting the arithmetic therefrom.       Chhaya’s Brief at 71.

Then, Chhaya says “[t]here is no dispute that the [t]rial [c]ourt awarded

damages which were ascertainable by mathematical calculation from a

standard fixed in the Management Agreement.”

Id. However, Chhaya does

not cite this standard, nor the provision in the Management Agreement where

the fixed standard appears. By this reasoning, in any case where a trial court

reaches an appropriate “ascertainable” amount of remuneration for breach

(that is, any definite amount of money), pre-judgment interest would be

mandated. That is not the law. The fourth factor outlined in Davis is not

meant to swallow the rule — this would be a patently absurd result. Without

more, we cannot find that the trial court abused its discretion.

      For these reasons, we largely affirm the trial court. However, we must

remand to afford the trial court an opportunity to correct its arithmetic.

      Judgment vacated. Case remanded for further proceedings consistent

with this memorandum. Jurisdiction relinquished.


                                       - 21 -
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     President Judge Emeritus Ford Elliott joins this Memorandum.

     Judge Bowes concurs in the result.

Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary



Date: 10/14/2020




                                  - 22 -
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