Justia Pennsylvania Supreme Court Opinion Summaries

Articles Posted in Construction Law
by
In 1997, Suffolk Construction Company entered into a contract with the University of Connecticut (“UConn”) for the construction of several buildings on UConn’s campus. UConn secured insurance policies from Reliance Insurance Company for the Project, naming Suffolk (and other contractors) as an insured. Suffolk completed the work in January 2001. The Reliance insurance policy was extended until January 2004. However, in late 2001, however, Reliance went into liquidation. In 2013 and 2014, UConn complained of defects in the construction that resulted in damage to its buildings. UConn initiated legal proceedings against Suffolk and other contractors. In 2016, Suffolk submitted a proof of claim to the Insurance Commissioner of Pennsylvania, as the statutory liquidator of Reliance. At issue before the Pennsylvania Supreme Court in this case involved the Pennsylvania Commonwealth Court's interpretation of certain contract language using Connecticut law. The Commonwealth Court found that the language of the contract was clear and unambiguous, thus precluding consideration of extrinsic evidence of the parties’ intent. The Supreme Court determined, however, a Settlement Agreement between the parties could have been construed as nothing more than a mutual general release between UConn and Suffolk: "The ambiguity stems not from Suffolk’s 'subjective perception' of the terms of the Settlement Agreement, but from the terms of the agreement itself, as the language releasing claims for 'insurance coverage' and 'indemnification' does not have a single, clear meaning." As such, the Commonwealth Court erred by failing to consider extrinsic evidence, outside of the terms of the Settlement Agreement, to discern the parties’ intent. The Supreme Court therefore vacated the Commonwealth Court decision and remanded for further proceedings. View "Suffolk Constr. v. Reliance Ins." on Justia Law

by
Appellant, Joseph Petrick, contracted with a homeowner, Donna Sabia, to perform remodeling work. Sabia paid Appellant a deposit of $1,750.00 plus $300.00 to cover the cost of city permits. Appellant began some of the contracted work at which time Sabia paid an additional $1,750.00 to Appellant. That same day, Appellant and Sabia’s son, Carmen Fazio, who also resided in the home, entered into a second contract for Appellant to do some painting in the home. As consideration, Fazio purchased a $600.00 saw for Appellant. Appellant and Fazio entered into a third contract to install siding on the exterior of the home. Fazio paid Appellant $2,300.00 to purchase materials. Appellant did not finish the work; Appellant eventually advised Sabia and Fazio that he could not complete the jobs but would refund $4,950.00 within a week. Appellant never refunded any money or the saw, nor did he ever purchase the siding materials or obtain the permits from the city. Appellant filed for Chapter 7 bankruptcy. In his petition, Appellant listed Sabia and Fazio as creditors. The bankruptcy court issued a discharge order in March 2016. In October 2015, a City of Scranton Police Detective filed a criminal complaint charging Appellant with theft by deception and deceptive business practices. After a bench trial, the court found Appellant guilty of theft by deception and not guilty of deceptive business practices. The court sentenced Appellant to a term of incarceration of three to eighteen months. Appellant was also ordered to pay $6,700.00 in restitution. Appellant filed a motion for reconsideration of his sentence, which the trial court denied. On appeal, the Superior Court affirmed the trial court’s judgment of sentence. On appeal to the Pennsylvania Supreme Court, Appellant argued that the portion of his sentencing order requiring him to pay restitution was illegal because the debt was discharged in bankruptcy. Appellant argued that the Bankruptcy Code specified that the filing of a petition operated as an automatic stay of any action to recover a debt that preceded the filing. The Supreme Court found the mandatory restitution order served criminal justice goals, and were distinct from civil debt liability with respect to discharge in bankruptcy. “This distinction is unaffected by the temporal relationship between the proceedings in the bankruptcy court and the criminal prosecution. Additionally, it is unaffected by a creditor’s participation in the bankruptcy proceedings.” The Court determined there was no indication in this case the restitution award was improperly sought by the prosecutor or awarded by the sentencing court. Accordingly, it affirmed the Superior Court. View "Pennsylvania v. Petrick" on Justia Law

by
In 1999, Appellant Leo Dolan, Jr. and Cherie Dolan entered into an agreement of sale with Bentley Homes, Ltd., Garvin Mitchell Corporation, Chadwell Associates, L.P., Chadwell Realty, Inc. and Harrison Community Association (hereinafter “Bentley”) for a new custom house. Hurd Millwork Company, Inc. (Hurd) provided many of the windows used in the construction of Appellant’s home. Within a year, the house developed substantial defects, including air and water leaks around the windows. Hurd filed an action against Bentley for unpaid invoices related to the construction of Appellant’s home and other homes in the same development. Bentley filed a counterclaim against Hurd for providing defective windows. In October 2002, Bentley and Hurd entered into a settlement containing admissions that numerous homes in the development suffered from extensive defects and leaks. During the pendency of the litigation between Hurd and Bentley, Appellant experienced additional problems with his home including severe leaks, rotted wood and issues with a stucco wall. Bentley made some repairs to the home, but the leaks continued to worsen. Appellant hired a civil engineer to assess the home and determine what repairs were required to fix the problems with the house. The repairs and associated costs amounted to $826,695.99. The house was purchased for $1,941,669.00. In this appeal by permission, the issue presented for the Pennsylvania Supreme Court's review was the proper role of an appellate court when reviewing a non-jury decision where it deems the trial court’s opinion pursuant to Pennsylvania Rule of Appellate Procedure 1925(a) inadequate, but the trial judge is no longer available to provide a supplemental opinion. The Supreme Court concluded that where a Rule 1925(a) opinion is deemed inadequate and the trial judge is unavailable to provide a supplemental opinion, the appellate court should review the legal issues raised in the appellant’s Rule 1925(b) statement of errors complained of on appeal. When deciding issues of law an appellate court is not required to defer to the conclusions of a trial court. Applying this standard and scope, the Superior Court will be able to review the entire record and ultimately determine whether the trial court correctly decided the legal issues raised in Bentley’s appeal. View "Dolan v. Hurd Millwork Co., Inc." on Justia Law

by
In this appeal, the Pennsylvania Supreme Court was asked to determine whether a trial court erred by denying a motion to recuse the entire bench of the Court of Common Pleas of Montgomery County. Appellant James Kravitz was the sole officer, director, and shareholder of several companies known as the Andorra Group, which included Appellants Cherrydale Construction Company, Andorra Springs Development, Inc., and Kravmar, Inc., which was formally known as Eastern Development Enterprises, Incorporated (“Eastern”). Kravitz also owned a piece of property known as the Reserve at Lafayette Hill (“Reserve”). Andorra Springs was formed to develop residential housing on sections of the Reserve. In 1993, Andorra Springs hired Cherrydale as the general contractor to build the homes on the Reserve. Eastern operated as the management and payroll company for the Andorra Group. Appellee Roy Lomas, Sr., d/b/a Roy Lomas Carpet Contractor was the proprietor of a floor covering company. Cherrydale and Lomas entered into a contract which required Lomas to supply and install floor covering in the homes being built by Cherrydale. Soon thereafter, Cherrydale breached that contract by failing to pay. Lomas demanded that Cherrydale submit Lomas’ claim to binding arbitration as mandated by the parties’ contract. The parties arbitrated the matter, and a panel of arbitrators entered an interim partial award in favor of Lomas, finding that Cherrydale breached the parties’ contract. Following Kravitz’s unsuccessful attempt to have the interim award vacated, the arbitrators issued a final award to Lomas. Judgment was entered against Cherrydale in the Court of Common Pleas of Montgomery County. Important to this appeal, then-Attorney, now-Judge Thomas Branca represented Lomas throughout the arbitration proceedings. Since the entry of judgment, Kravitz actively prevented Lomas from collecting his arbitration award by, inter alia, transferring all of the assets out of Cherrydale to himself and other entities under his control. In March 2000, Lomas commenced the instant action against Appellants. Then-Attorney Branca filed the complaint seeking to pierce the corporate veil and to hold Kravitz personally liable for the debt Cherrydale owed to Lomas. Approximately one year later, then-Attorney Branca was elected to serve as a judge on the Court of Common Pleas of Montgomery County. Prior to taking the bench, then Judge-Elect Branca withdrew his appearance in the matter and referred the case to another law firm. After several years of litigation, the parties agreed to a bifurcated bench trial. Although Appellants acknowledged that they were unaware of any bias or prejudice against them on the part of Judge Rogers or any other judge of the Court of Common Pleas of Montgomery County, Appellants maintained that Judge Branca’s continued involvement and financial interest in the case created an “appearance of impropriety” prohibited by the Code of Judicial Conduct. Specifically at issue before the Supreme Court was whether the moving parties waived their recusal claim and, if not, whether the claim had merit. The Court held that the recusal issue was untimely presented to the trial court and, thus, waived. View "Lomas v. Kravitz" on Justia Law

by
In this appeal, the issue presented for the Supreme Court's review was whether a contractor could maintain an action under the Contractor and Subcontractor Payment Act (CASPA) against a property owner’s agents. Beginning in 2005, Appellant Scungio Borst & Associates (SBA) entered into a series of written and oral construction contracts with Appellee 410 Shurs Lane Developers, LLC (410 SLD), which 410 SLD’s part-owner and president, Appellee Robert DeBolt, executed on 410 SLD’s behalf. Therein, SBA agreed to improve real property owned by 410 SLD in connection with the development of a condominium complex, and did so until November 2006, when SBA’s contracts were terminated with approximately $1.5 million in outstanding payments due. SBA requested payment, but 410 SLD, again through DeBolt, refused. Accordingly, SBA sued 410 SLD; its alleged successor corporation, Appellee Kenworth II, LLC; and DeBolt in his personal capacity. SBA asserted, among other claims, violations of CASPA. After careful review, the Supreme Court held that a contractor could not maintain an action under CASPA, and, accordingly, affirmed the order of the Superior Court. View "Scungio Borst & Assoc. v. 410 Shurs Lane Developers, LLC" on Justia Law

by
Appellant City of Allentown (City) contracted with appellee A. Scott Enterprises, Inc. (ASE), to construct a new public road. After arsenic-contaminated soil was discovered at the worksite, the City suspended work on the project. Following testing, it was determined construction could resume if precautions were taken. Accordingly, the City instructed ASE to obtain revised permits and proceed with the project. However, the existing contract did not include terms regarding the potential for contaminated soil, despite the fact the City was aware there might be contamination prior to entering into the contract, and ASE declined to proceed, explaining it would incur substantial additional costs due to the contaminated soil. The parties made several attempts to reach an agreement in which ASE would continue the construction, but to no avail. Consequently, ASE sued the City to recover its losses on the project, alleged breach of contract, and sought compensation under theories of quantum meruit and unjust enrichment, as well as interest and a statutory penalty and fee award for violations of the prompt pay provisions of the Procurement Code. After a trial, a jury found the City breached its contract with ASE and also withheld payments in bad faith. In this discretionary appeal, the issue this case presented for the Supreme Court's review was whether an award of a statutory penalty and attorney fees under the prompt payment provisions of the Commonwealth’s Procurement Code was mandatory upon a finding of bad faith, irrespective of the statute’s permissive phrasing. The Court held such an award was not mandatory, and therefore reversed the order of the Commonwealth Court and remanded the case to the trial court for further proceedings. View "A. Scott Enterprises v. City of Allentown" on Justia Law

by
In 2010, the United States Department of the Navy entered into an agreement with Contracting Systems, Inc. II ("CSI"), per which CSI served as the general contractor for the construction of an addition to, and renovations of, the Navy/Marine Corps Reserve Training Center in the Lehigh Valley. CSI, in turn, subcontracted with Appellee, Clipper Pipe & Service, Inc. for the performance of mechanical and heating, ventilation, and air conditioning work. Clipper filed suit against CSI and its surety, the Ohio Casualty Insurance Company (collectively "Appellants"), in the United States District Court for the Eastern District of Pennsylvania, asserting that CSI had failed to pay approximately $150,000 to Clipper, per the terms of their agreement. Among other claims, Clipper advanced one under the Contractor and Subcontractor Payment Act (CASPA). Appellants moved for summary judgment, arguing that CASPA did not apply to public works projects, because a governmental entity does not qualify as an "owner" under the statutory definition, as such an entity is neither a "person" nor an "other association." The federal district court denied relief on Appellants' motion. Among other aspects of its holding, the court followed "Scandale Associated Builders & Eng'rs, Ltd. v. Bell" which held that a governmental entity may be an "owner" under CASPA, since the statutory definition of "person" does not exclude the federal government, and the purpose of CASPA is to protect contracting parties. Clipper prevailed at the subsequent jury trial, and the district court awarded interest, penalties, and attorney fees. Appellants appealed to the United States Court of Appeals for the Third Circuit. The Pennsylvania Supreme Court accepted certification from the Third Circuit to determine whether a CASPA applied to the public works project in this case. After review, the Supreme Court concluded that CASPA did not apply to a construction project where the owner was a governmental entity. View "Clipper Pipe v. Ohio Casualty Ins." on Justia Law

by
In September 2003, appellant The Cutler Group, Inc. sold a new house in Bucks County to Davey and Holly Fields. After living in the house for three years, the Fields sold the house to appellees Michael and Deborah Conway. In 2008, Appellees discovered water infiltration around some of the windows in the home, and, after consultation with an engineering and architectural firm, concluded that the infiltration was caused by several construction defects. In 2011, Appellees filed a one-count complaint against Appellant, alleging that its manner of construction breached the home builders' implied warranty of habitability. Appellant filed a demurrer, arguing, inter alia, that, as a matter of law, the warranty rextended from the builder only to the first purchaser of a newly constructed home because there was no contractual relationship between the builder and second or subsequent purchasers of the home. Recognizing that courts have traditionally required a showing of privity of contract before permitting a party to proceed with a warranty claim, the trial court concluded that the question presented was "one of policy as to who will bear the burden for damages caused by latent defects [in] relatively new residential dwellings." The trial court sustained Appellant's demurer based on lack of privity, and dismissed Appellees' complaint with prejudice. After an unsuccessful appeal to the Superior Court, appellees petitioned the Supreme Court. Finding no reversible error, the Supreme Court affirmed, holding that a subsequent purchaser of a previously inhabited residence may not recover contract damages for breach of the builder's implied warranty of habitability. View "Conway v. The Cutler Group, Inc." on Justia Law

by
In August, 2010, Appellants, Washington County residents Raymond and Donna Mantia, hired Appellee, West Virginia contractor Shafer Electric & Construction, to build a 34 foot by 24 foot, two-car garage addition onto their house. The proposals for the garage did not comply with several requirements of Section 517.7 of the Home Improvement Consumer Protection Act. Specifically, any home improvement contract, in order to be valid and enforceable against the owner of real property, had to be legible, in writing, and contain thirteen other specific requirements. Despite the detail in the specifications for the work to be completed, the contract here only complied with subsections (5), (7), and (8) of Section 517.7(a). Notwithstanding these deficiencies, work on the project began in October, 2010, when Appellants, who owned their own excavation business, began the foundation excavation. When Appellee commenced construction of the addition, it contended that problems surfaced because of Appellants' failure to complete the excavation work properly. During the subsequent months, Appellants eventually reexcavated the foundation area for the addition and, in the process (according to Appellee), changed the design of the addition several times. Negotiations into these design changes and other necessary alterations as a result of the excavation problems occurred, but ultimately failed when Appellants apparently refused to enter into a new contract with Appellee. Upon the breakdown of the negotiations, the parties mutually agreed that Appellee would invoice Appellants for the work completed, and that Appellee would discontinue efforts on the project. Appellants refused to pay the bill. Appellee responded by filing a mechanic's lien in the Washington County Court of Common Pleas. When Appellants still had failed to satisfy the outstanding balance, Appellee filed a civil action in the common pleas court, alleging both breach of contract and quantum meruit causes of action. The Supreme Court granted allowance of appeal in this matter to determine whether the Act barred a contractor from recovery under a theory of quantum meruit in the absence of a valid and enforceable home improvement contract as defined by the Act. The Superior Court held that the Act did not bar a cause of action sounding in quantum meruit and, for slightly different reasons, the Supreme Court affirmed. View "Shafer Electric & Construction v. Mantia" on Justia Law

by
The issue before the Supreme Court in this case was whether the Mechanics' Lien Law of 1963 authorized a union employee benefit trust to file a lien on behalf of union members who performed work for a construction contractor. Developer raised a preliminary objection in the nature of a demurrer as to each complaint, alleging that the Trustees lacked standing to assert a mechanics' lien claim on behalf of the unionized workers because such workers were employees of Contractor and, as such, were neither "contractors" nor "subcontractors." The Supreme Court concluded that the union workers were not subcontractors, and the Trustees, by corollary in their representative capacity, were not entitled file a lien claim on the workers' behalf. Although the 1963 Act was intended to protect subcontractors who suffer harm occasioned by the primary contractor’s failure to meet its obligations, we have determined that the Legislature did not intend the term "subcontractor" to subsume employees of the primary contractor. Furthermore, the Superior Court erred in overturning the demurrers based on an implied-in-fact contract theory. The order of the Superior Court was reversed, and the case is remanded for reinstatement of the county court’s order. View "Bricklayers of Western PA v. Scott's" on Justia Law