OPINION BY SHOGAN, J.:
This is an appeal by Appellant, JGB Enterprises, Inc. ("JGB"), defendant below, from the judgment entered March 16, 2012,
JGB, located in Liverpool, New York, is an industrial hose distributor owned and operated by Jay Bernhardt. N.T., 12/1-2/11, Vol. II, at 305. JGB receives about 10,000 contracts per year, which is approximately eighty percent of JGB's business, from the United States Department of Defense ("DoD"). Id, at 306-307. The DoD uses a scoring system to evaluate contractors' on-time deliveries and selects contractors based upon the combination of technical ability, price, and score. Id, at 307-308. JGB attributes its frequent contracting with the DoD to its superior on-time delivery score. Id.
Keystone, located in Carnegie, Pennsylvania, is a national freight logistics company that negotiates, services, and manages freight contracts for clients at a cost savings. N.T., 12/1-2/11, Vol. I., at 37-38, 137-138. Keystone, through its former national sales manager, Michael Wagner, contacted JGB in September of 2007, offering it the possibility of freight savings through Keystone's logistic services. Id., at 75, 78-79. Mr. Bernhardt, who received the call, was interested in the possibility of cost reduction with continued service quality and sent prior freight invoices to Keystone for its analysis. Id, at 80.
On October 30, 2007, Mr. Wagner traveled with a Keystone sales representative to JGB's headquarters where they met with Mr. Bernhardt to discuss Keystone's proposed Transportation Services Agreement ("Agreement"). N.T., 12/1-2/11, Vol. I, at 81-82; Agreement, 10/7/07. Randall Tomasino, JGB's production and traffic manager, and JGB's president also were present at the meeting. N.T., 12/1-2/11, Vol. I, at 82; N.T., 12/1-2/11, Vol. II, at 331. During the meeting, Mr. Wagner explained the procedure Keystone would follow if JGB signed the Agreement. N.T., 12/1-2/11, Vol. I, at 85. Keystone would make a bid request with freight carriers, prepare a Benchmark Rate Calculation ("Benchmark") based on JGB's current rates for comparison to the submitted bids, and subsequently meet with JGB to select the carrier. Id. at 85-86, 88, 93. Any savings below this Benchmark would be split between JGB and Keystone. Agreement, 10/7/07, at Schedule A, ¶ 4. Mr. Wagner also noted that Keystone provided a one-year trial period to new clients. N.T., 12/1-2/11, Vol. I, at 85; N.T., 12/1-2/11, Vol. II, at 342-343. Throughout this process, JGB representatives emphasized the importance of service and their preference to continue with UPS Freight, if possible. N.T., 12/1-2/11, Vol. I, at 138-140; N.T., 12/1-2/11, Vol. II, at 309-314, 340. After Mr. Wagner's presentation and without further review, Mr. Bernhardt signed and dated the Agreement. N.T., 12/1-2/11, Vol. I, at 85; Agreement, 10/7/07, at 2. The parties did not enter the effective date in paragraph four. Agreement, 10/7/07, at 1.
The Agreement's language relevant to this appeal is as follows:
Agreement, 10/7/07, at 1-2 (emphasis in original).
The Agreement continues on "Schedule A," which provides as follows:
Agreement, 10/7/07, at Schedule A, ¶¶ 2, 4. Below these paragraphs, Schedule A delineates the saving distribution at fifty percent to each party. Id. at Schedule A, ¶ 4.
After the initial meeting, there was some delay in acquiring the materials from JGB necessary to prepare the bid request and the Benchmark. N.T., 12/1-2/11, Vol. I, at 88-90. Once Keystone acquired these materials, attained carrier bids, and prepared the Benchmark, the companies' representatives met again. Id, at 90-92. On March 11, 2008, JGB's representative, Mr. Tomasino, signed the Benchmark documentation, and despite his prior stated preference to utilize UPS Freight, he agreed to use FedEx Freight as its carrier. N.T., 12/1-2/11, Vol. I, at 87; Agreement, 10/7/07, at Appendix B. This decision was based on FedEx Freight's low bid combined with Keystone's demonstration of FedEx Freight's service quality. N.T., 12/1-2/11, Vol. I, at 94, 100-101.
On July 22, 2008, Mr. Tomasino, in his capacity as production and traffic manager, sent an e-mail
N.T., 12/1-2/11, Vol. II, at 386.
JGB immediately ceased shipments with FedEx Freight, transferring all business back to UPS Freight. N.T., 12/1-2/11, Vol. II, at 374. Mr. Tomasino testified that he did not accept rates lower than the Benchmark prior to October 30, 2008, declining to take advantage of the better rates negotiated by Keystone on JGB's behalf. Id. at 375, 380-383. This testimony is called into question, however, by invoices from UPS Freight that utilized Keystone's pricing system and reflected a discount rate which matched that of FedEx Freight. N.T., 12/1-2/11, Vol. I, at 235; N.T., 12/1-2/11, Vol. II, at 412-414.
Keystone filed a complaint against JGB on October 7, 2008, alleging breach of contract, unjust enrichment, and quantum meruit. Complaint, 10/7/08, at 3-4. A jury trial followed, during which Keystone focused solely on the breach of contract claim. N.T., 12/1-2/11, Vol. I, at 8-9, 289. To demonstrate damages, Keystone presented UPS Freight invoices showing cost savings after JGB's termination, which the court admitted into evidence over objection. Id. at 208-219. Keystone also presented testimony of its Vice President of Operations, Richard Coyner, regarding the contents of the invoices, which the court also allowed over objection. Id.
On December 2, 2011, the jury found that JGB breached its contractual obligations
JGB raises the following four issues on appeal:
JGB's Brief at 4-5.
When faced with questions of contractual interpretation, the applicable standard and scope of review is well settled.
Ruby v. Abington Memorial Hospital, 50 A.3d 128, 132 (Pa.Super.2012) (internal quotations omitted). Moreover, we have stated:
Missett v. Hub International Pennsylvania, LLC, 6 A.3d 530, 541 (Pa.Super.2010). "Where the language of the contract is ambiguous, the provision is to be construed against the drafter." State Farm Fire and Casualty Company v. PECO, 54 A.3d 921, 928 (Pa.Super.2012).
JGB first argues that the parties' intent regarding the plain language of the Agreement was clear: "JGB only had to use [FedEx Freight] if it met the expected service levels as defined by JGB." JGB's Brief at 13. This argument is preceded, however, with an outline of the legal standard to be applied in the case of an ambiguity and succeeded with a discussion of extrinsic evidence ordinarily inadmissible as parol evidence where an ambiguity is not present. Id. at 9, 13-14. JGB's argument is inconsistent, and it is unclear whether JGB maintains that the Agreement is unambiguous or that an ambiguity exists that should be construed in its favor.
Keystone responds that JGB essentially argues that the jury's verdict was not supported by the evidence. Keystone's Brief at 7. Keystone posits that factual questions existed regarding this evidence, and because these questions were properly put to the jury to resolve, this Court "simply has no basis for re-examining facts determined by a jury." Id. at 9.
It is clear to us that the language of the Agreement regarding "Standard of Services provided — General Termination" ("General Termination Clause") is not, itself, ambiguous. Agreement, 10/7/07, at 2. The Agreement unequivocally states that it may be terminated for cause by providing written notice of the default and allowing thirty days for the default to be remedied. Id. When read in conjunction with paragraph two of "Schedule A," however, the Agreement is ambiguous, and it is reasonably susceptible to differing interpretations as to what constitutes "cause" for which the Agreement can be terminated. Schedule A states that JGB agreed to use freight companies that met expected service levels as defined by JGB. Id. at Schedule A. JGB's definition of these service levels, however, is not ascertainable from the writing; we, therefore, are required to look beyond it to resolve the ambiguity.
The record reveals that conflicting parol evidence exists as to the parties' understanding of JGB's expected service levels. Through testimony, JGB demonstrated Mr. Bernhardt's and Mr. Tomasino's concerns regarding freight service and cited JGB's repeated service problems with FedEx Freight. N.T., 12/1-2/11, Vol. I, at 138-140; N.T., 12/1-2/11, Vol. II, at 309-314, 364-365. Keystone, however, demonstrated that FedEx Freight's performance was above industry standards and showed that JGB would experience service problems with all carriers, including UPS Freight. N.T., 12/1-2/11, Vol. I, at 94, 100-101; N.T., 12/1-2/11, Vol. II, at 327-328. Such matters must be resolved by the trier of fact. Missett, 6 A.3d at 541.
Instantly, the jury found that JGB breached the Agreement; thus, it is evident that the jury resolved these conflicts in Keystone's favor. Verdict Sheet, 12/2/11, at 1. This jury determination ensued notwithstanding the proper instruction to the jury to construe ambiguities against Keystone as the drafter of the Agreement. N.T., 12/1-2/11, Vol. II, at 461. JGB challenges this finding, arguing that the evidence clearly showed that FedEx Freight did not meet expected service levels defined by JGB. Thus, JGB suggests there was no basis for the jury to conclude that JGB breached the Agreement with Keystone. JGB's Brief at 15.
Winschel v. Jain, 925 A.2d 782, 788 (Pa.Super.2007). Based on the record, which reveals the conflicting testimony discussed above, it is clear that the trial court did not abuse its discretion in upholding the jury's finding that JGB did not have grounds to terminate the Agreement for cause. We will not substitute our judgment for that of the jury.
Furthermore, even if JGB had valid grounds for termination, such termination would have been ineffective because "conditions precedent to a contract termination must be strictly fulfilled.... `To be effective, a notice for the rescission or termination of a contract must be clear and unambiguous, conveying an unquestionable purpose to insist on the rescission.'" International Diamond Importers, Ltd. v. Singularity Clark, L.P., 40 A.3d 1261, 1271 (Pa.Super.2012) (citing Wright v. Bristol Patent Leather Co., 257 Pa. 552, 101 A. 844, 845 (1917)). Herein, the Agreement required JGB to provide written notice of the default and allow thirty days for Keystone to attempt to remedy the default. Although JGB's initial e-mail, see footnote 3, constituted written notice because Keystone assented to it, JGB did not insist on immediate rescission, did not identify the default, and did not give Keystone thirty days to remedy the default. N.T., 12/1-2/11, Vol. II, at 374, 386. To the contrary, Mr. Tomasino stated that JGB would honor the Agreement through October 30, 2008, indicating that JGB was terminating under the "One Year Trial Period — Early Termination" Clause ("Early Termination Clause"). JGB immediately changed shipping providers rather than wait thirty days for service defaults to be remedied. Id. JGB, therefore, did not fulfill the conditions precedent delineated in the General Termination Clause.
JGB next argues that if it did not effectively terminate the Agreement under the General Termination Clause, it did so under the Early Termination Clause. JGB's Brief at 15-17. Once again, JGB is unclear in its argument. JGB first suggests that the evidence at trial was clear "that JGB intended to terminate the Agreement in July 2008." N.T., 12/1-2/11, Vol. I, at 16. JGB later represents that Mr. Tomasino of JGB told Mr. Wagner of Keystone that JGB considered the Agreement "to be terminated effective October 30, 2008, one year following its execution." Id. Despite the gap between July 22, 2008, when JGB ceased shipments through FedEx Freight, and October 30, 2008, when JGB was allowed to terminate under the Early Termination Clause, JGB contends that "there was no basis for the jury to award damages to [Keystone]." Id. at 17.
In response, Keystone adopts the position of the trial court, which stated, "The award of $70,000.00 in favor of [Keystone]
We are persuaded that the Agreement also is ambiguous regarding the process of early termination under the Early Termination Clause. It provides that JGB may, at will, elect to terminate the Agreement "after twelve months (365 days) of this Agreement" provided notice is sent prior to the completion of the fifteenth month. Agreement, 10/7/07, at 1. This notice must be sent in writing to Keystone expressing JGB's intention to terminate, and JGB must provide an opportunity to meet with Keystone in person to discuss the termination. Id. If, after this meeting, JGB still desires to terminate, the contract will be cancelled ninety days after the meeting. Id.
Two ambiguities exist regarding the early termination process. The first ambiguity arises from the absence of a designation indicating the date on which the 365-day timeline begins. Agreement, 10/7/07, at 1. If the timeline began on the effective date of the Agreement, which itself was not explicitly identified because the parties did not enter it in paragraph four, the earliest date on which early termination could occur was October 29, 2008.
The second ambiguity arises from the unclear language regarding when the ninety-day post-meeting waiting period began. If the waiting period did not begin until after 365 days of the Agreement, termination could occur, at the earliest, after 455 days of the Agreement regardless of when the termination meeting took place. If the waiting period began immediately after the termination meeting, however, termination could occur after 365 days, provided the meeting took place ninety or more days earlier, i.e., on day 275 or earlier. See Agreement, 10/7/07, at 1.
Again, the record demonstrates that there was conflicting parol evidence presented at trial that was properly left to the jury to resolve. Regarding the first ambiguity, JGB presented testimony that the parties intended the 365-day timeline to begin on the original date of signing, October 30, 2007, an understanding that Keystone did not correct. N.T., 12/1-2/11, Vol. II, at 373-374. Keystone alternatively presented testimony that the parties intended the timeline to begin on the date on which the parties selected a carrier, which was March 11, 2008. N.T., 12/1-2/11, Vol. I, at 109-110.
Regarding the second ambiguity, JGB demonstrated that the Agreement placed no restriction on the time of the meeting, evidenced by the fact that Keystone requested that the meeting take place via conference call, which it hosted on July 22, 2008; the waiting period began to run
The jury resolved both of these ambiguities in JGB's favor,
Although JGB effectively terminated the contract under the Early Termination Clause, Keystone is not precluded from receiving compensatory damages for services rendered between July 22, 2008 and October 30, 2008, for which it was not paid. The question to be resolved by the jury was whether Keystone rendered any services between those dates where JGB changed shipping providers immediately following the July 22, 2008 termination meeting. If JGB was benefitting from the rates which Keystone secured on JGB's behalf, Keystone was rendering services and is owed compensation for JGB's savings. If, however, JGB was receiving the rates it was receiving prior to Keystone's involvement, an assertion by JGB called into question by UPS Freight invoices, Keystone was not rendering services because JGB was not receiving any savings. While the jury attempted to resolve this question at trial, its findings were based on evidence which JGB challenged below and challenges on appeal.
At trial, JGB objected to the admission of UPS Freight invoices reflecting charges to JGB. N.T., 12/1-2/11, Vol. I, at 208-219. The invoices were offered into evidence during the testimony of Keystone's Vice President of Operations, Richard Coyner. JGB requested an offer of proof, to which Keystone responded that Mr. Coyner's testimony would be based upon his analysis of UPS third-party invoices that had been submitted to JGB over a four-year period and were provided to Keystone by JGB during discovery. Id, at 207. JGB objected on the basis that the invoices were not authenticated and were "classic hearsay" to which no exception applied. Id. at 208-209. JGB also objected to the testimony of Mr. Coyner and the admission
JGB maintains its position on appeal, submitting that the trial court improperly admitted unauthenticated UPS Freight invoices. It suggests that if the trial court properly had ruled that the invoices were inadmissible due to a lack of proper authentication, Keystone would have lacked any proof of its alleged damages. JGB's Brief at 19. JGB also asserts that "information contained in the UPS invoices was hearsay" and, therefore, inadmissible. Id, at 20. JGB suggests that since no hearsay exception applied, Mr. Coyner's testimony and exhibit, being based entirely on hearsay evidence, should not have been admitted. JGB's Brief at 20-23.
Keystone responds that the trial court did not abuse its discretion in admitting the evidence where the documents were produced to it by JGB in discovery and because other witnesses could have been called to authenticate them. Keystone's Brief at 12. Keystone posits, "The Court recognized that this cumbersome process was not necessary, and properly allowed the documents into evidence." Id. at 13.
Questions concerning the admissibility of evidence lie within the sound discretion of the trial court, and we will not reverse the court's decision absent a clear abuse of discretion. Commonwealth Financial Systems, Inc. v. Smith, 15 A.3d 492, 496 (Pa.Super.2011) (citing Stumpf v. Nye, 950 A.2d 1032, 1035-1036 (Pa.Super.2008)). "An abuse of discretion may not be found merely because an appellate court might have reached a different conclusion, but requires a manifest unreasonableness, or partiality, prejudice, bias, or ill-will, or such lack of support so as to be clearly erroneous." Grady v. Frito-Lay, Inc., 576 Pa. 546, 839 A.2d 1038, 1046 (2003).
We examine the authentication of the invoices that were submitted at trial. Rule 901 of the Pennsylvania Rules of Evidence provides, in pertinent part:
Pa.R.E. 901 (emphasis in original).
In response to JGB's claim that the freight invoices were not properly authenticated, the trial court determined that the documents were properly admitted into evidence merely because JGB had provided them during discovery, suggesting in its Pa.R.A.P. 1925(a) opinion that Keystone had "every right to rely upon JGB's representations when it responds to a discovery request by referencing documents that it makes available for inspection and copying...." Trial Court Opinion, 5/18/12, at 6. Such a conclusion ignores that the discovery of documents and proof of their reliability at trial are two different matters.
In the case sub judice, we conclude that the trial court abused its discretion in ruling that the freight invoices were properly authenticated. As noted above, for a document to be admissible into evidence at trial, it must first be authenticated by "evidence sufficient to support a finding that the item is what the proponent claims it is." Pa.R.E. 901(a). See Zuk v. Zuk, 55 A.3d 102, 112 (Pa.Super.2012) ("The requirement of authentication or identification as a condition precedent to admissibility is satisfied by evidence sufficient to support a finding that the matter in question is what its proponent claims.").
In this case, freight invoices were offered into evidence during the testimony of Keystone Vice President of Operations, Richard Coyner. In chambers, prior to Mr. Coyner's testimony, JGB requested an offer of proof, and Keystone responded that Mr. Coyner's testimony would be based on his analysis of the invoices submitted by UPS to JGB that were provided to Keystone during discovery. N.T., 12/1-2/11, Vol. I, at 207. JGB objected to their admission because they were not properly authenticated, and they constituted inadmissible hearsay. Id. at 208-209.
Clearly, as the invoices were prepared by UPS and received by JGB, Mr. Coyner, as a vice president of Keystone, lacked any personal knowledge that the invoices were what they were represented to be. Undeniably, Keystone could have admitted them into evidence through the testimony of a relevant UPS witness. Keystone makes a hollow representation that it could have presented the testimony of JGB manager, Randall Tomasino, and JGB owner, Jay Bernhardt, to authenticate the invoices, without making any proffer on the content of their potential testimony. The fact remains that Keystone chose not to call any authenticating witness. The invoices were not authenticated at trial, and the trial court abused its discretion in permitting their admission.
Authentication, however, is not the only factor to assess regarding the admission of the invoices. JGB also contends that the UPS invoices were hearsay, no exception applied, and they therefore were inadmissible. Hearsay is defined as "an extra judicial declaration offered to prove the truth of the matter asserted." Aldridge v. Edmunds, 561 Pa. 323, 750 A.2d 292, 296 (2000); Pa.R.E. 801(c). A document itself qualifies as hearsay when it contains such hearsay statements. See, e.g., Rissi v. Cappella, 918 A.2d 131, 138-139
In objecting to the admission of the invoices, JGB underscored that the invoices were "not a business record," and "[n]obody is here to authenticate the documents." N.T., 12/1-2/11, Vol. I, at 209. The trial court merely rejected the challenges in conclusory fashion, stating, "[As] to the authenticity issue, I'm not sure how you establish authenticity in the absence of a stipulation." Id. Very little was discussed regarding the alleged hearsay of the documents, and the trial court ruled them admissible based only upon the fact that JGB had produced them in discovery. The trial court utilized an estoppel analysis of sorts, asserting that Keystone had "every right" to conclude the invoices were "what JGB purport[ed] them to be." Trial Court Opinion, 5/18/12, at 6.
The business records exception is found in Pa.R.E. 803, which provides, in pertinent part:
Pa.R.E. 803(6). While a qualified witness need not have personal knowledge, the individual must be able to "provide sufficient information relating to the preparation and maintenance of the records to justify a presumption of trustworthiness...." Boyle v. Steiman, 429 Pa.Super. 1, 631 A.2d 1025, 1032 (1993).
We find guidance in this Court's recent decision in Commonwealth Financial Systems, Inc. v. Smith, 15 A.3d 492, 499 (Pa.Super.2011). Therein, the appellant, Commonwealth Financial Systems, purchased the appellee's debt to Citibank from NCOP Capital. Id. at 493-494. To verify the transfer of debt ownership, the appellant attempted to admit records of business transactions between Citibank and NCOP Capital, both separate entities from the appellant, through the testimony of its own vice president of portfolio collection. Id. at 494. The trial court denied admission, finding the documents to be improperly authenticated under the business records exception to the rule against hearsay, Pa.R.E. 803(6). Id. at 495. This Court affirmed, holding that the appellant's vice president of portfolio collection did not have sufficient knowledge of the records and could not establish the documents' trustworthiness. Id. at 499-500.
Herein, the invoices from UPS Freight to JGB qualify as hearsay. They contain out-of-court statements regarding the cost of freight charged to JGB, and Keystone offered the invoices to prove those freight charges. As outlined above, the business record exception may have applied if Keystone were able to meet all of the factors. Keystone, however, failed to bring a custodian or other qualified witness to testify. Instead, it presented Richard Coyner to testify regarding their contents. He did not attempt to testify to the preparation or maintenance of the records; indeed, he did not have the necessary knowledge to do so. This Court has repeatedly emphasized that there is a need for trustworthiness in applying the business record exception. See, e.g., Birt v. Firstenergy Corp., 891 A.2d 1281 (Pa.Super.2006). The business records exception is inapplicable, and the invoices were inadmissible hearsay.
As the invoices are hearsay for which no other exception is asserted, and no other exception applies, Mr. Coyner's testimony and his demonstrative exhibit, which both were based on the invoices, also qualify as hearsay. See, e.g., Commonwealth v. Robertson, 874 A.2d 1200, 1210 (Pa.Super.2005) (holding that testimony based on hearsay is hearsay). This evidence was the only evidence on which the jury could have based its damages calculation. The trial court clearly abused its discretion in allowing its admission.
For the foregoing reasons, we are constrained to vacate the judgment and remand for a new trial, limited to damages, consistent with this Opinion.
Judgment vacated. Case remanded. Jurisdiction relinquished.
