author: ASHWORTH, J.,

text:
    Citibank (S.D.), N.A. v. Rhineer

      April 26, 2013
   ASHWORTH, J.,

— This matter is before the court on defendant Brian K. Rhineer’s preliminary objections to the complaint filed by plaintiff Citibank (South Dakota), N.A. For the reasons set forth below, these objections will be sustained and plaintiff will be permitted to file an amended complaint.

I. Procedural and Factual Background

Plaintiff filed a complaint on March 25, 2011, seeking to collect past due payments on a credit card allegedly issued to defendant Rhineer. Attached to the complaint as exhibit “A,” is a two-page document, which purports to be a monthly billing statement of an account with respect to a Citi Dividend Platinum Select Card. The document, which indicated a statement closing date of August 4, 2010, shows a “New Balance” of$20,059.12, a “Minimum Payment Due” of $20,059.12, a “Past Due Amount” of $1,931.96, and the “Interest Charged” as $74.77. (See complaint, exhibit “A.”) The statement describes the “Payment Due Date” as September 1, 2010. Id. No other billing statements are attached to the complaint.

Plaintiff’s eight-paragraph complaint includes the following relevant averments:

4. Plaintiff furnished consumer credit to the defendant by means of a(n) CITI MASTERCARD credit card with account number ending in 5819 hereinafter referred to as the credit card account.
5. Plaintiff kept accurate running records of all debits and credits to the account.
6. Plaintiff mailed to defendant monthly statements for the account including the billing statement attached hereto as Exhibit A. The monthly statements accurately stated the previous balance, the debits and credits to the account for the prior billing period.
7. Before plaintiff mailed Exhibit A, defendant had for many months made payments on the account of the billing statement or retained the statement without payment.
8. Defendant’s actions as set forth above constituted an account stated between parties for the sum of $20,043.12 which sum reflects the Exhibit A statement balance less credits, if any, which were applied subsequent to the date of Exhibit A.

(See complaint at ¶¶ 4-8 (emphasis in original).) It is with these bare allegations that plaintiff purports to establish an account stated relationship with defendant entitling it to accrue an interest rate of 29.99%. (Id., exhibit “A.”)

Defendant filed preliminary objections to the complaint based upon the following purported deficiencies in the pleading: (1) no averment is made as to whether the alleged agreement between the parties is oral or written; (2) no copy of the underlying agreement or writing was attached to the complaint; (3) the complaint fails to plead or allege with specificity averments of time, place and items of special damage, or to attach documentation in support thereof; and (4) the complaint improperly pleads account stated. (See preliminary objections at ¶¶ 2-10.) Based upon these objections, defendant asks this court to dismiss the complaint with prejudice, or in the alternative, to order plaintiff to file an amended complaint.

Plaintiff filed an answer to the preliminary objections asserting, inter alia, that: (1) the cause of action is based on an account stated theory and not a breach of contract, as a consequence of which it was not required to attach to the complaint any documentation other than the last billing statement; (2) exhibit “A,” a copy of defendant’s August 2010 billing statement, properly sets forth the total balance due and owing; and (3) “[t]he majority of the courts of common pleas throughout the Commonwealth that have decided on similar preliminary objections to plaintiff’s 11 [sic] paragraph complaint have ruled that plaintiff’s complaint is sufficient to allege the account stated cause of action on a consumer credit account and have ruled that the account stated can be applied to consumer credit accounts.” (See plaintiff’s answer to preliminary objections at ¶¶ 1-10.) Thus, this matter raises the now familiar issue of whether a credit card collection case may proceed on an account stated theory “upon the pleading of facts too anemic to support a breach of contract cause of action.” Citibank, N.A. v. Hull, #380-2012CV, slip op. at 4 (Clinton Co., Aug. 23, 2012) (Miller, J.). Regrettably, our appellate courts have not yet answered this question and there is disagreement among the courts of common pleas on this issue.

Based upon areading of the relevant appellate precedent, and in accordance with the better-decided common pleas decisions, and the holdings of other members of this bench, this court continues to adhere to what appears to be the minority position in this Commonwealth that a plaintiff in a credit card collection case cannot escape the pleading formalities described in Atlantic Credit and Finance, Inc. v. Giuliana, 829 A.2d 340, 345 (Pa. Super. 2003), by characterizing its claim as one based on an account stated. See, for example, Citibank (South Dakota) N.A., Bank v. Ananiev, 13 Pa. D.&C.5th 557 (Monroe Co. 2010); Arrow Financial Services LLC v. Witmer, 59 Cumb.L.J. 154 (2010) (Ebert, J.); Target National Bank/Target Visa v. Samanez, 156 Pitts. Leg. J. 76 (2007) (Wettick, J.); Calvary Portfolio Services, LLC v. Mostyn, No. 2010-3233 (Centre Co, Feb. 2011) (Lunsford, J.); Citibank (South Dakota), N.A. v. Knepp, No. 2010-1161 (Clearfield Co. 2010) (Ammerman, J.); Citibank, N.A. v. Hull, #380-2012CV (Clinton Co, Aug. 23, 2012) (Miller, J.); Arrow Financial Services LLC v. Witmer, No. 2009-6197 (Cumberland Co., May 13, 2010) (Ebert, J.); Citibank (South Dakota), N.A. v. Ross, No. 2010-5668 (Cumberland Co., April 18, 2011) (Masland, J.); Citibank, N.A. v. Wadas, No. 2012-1705 (Cumberland Co., June 14, 2012) (Peck, J.); Barclay Bank Delaware v. Kmetz, No. 1385 of 2011 G.D. (Fayette Co., April 4, 2012) (Warman, J.); Citibank (South Dakota), N.A. v. Opitz, No. 207-2010-C (Fulton Co., Sept. 17, 2010) (Van Horn, J.); Velocity Investments, LLC v. Kahanic, No. 11 CV 6995 (Lackawanna Co., May 1, 2012) (Nealon, J.); Citibank (South Dakota), N.A. v. Quick, No. CI-11-00954 (Lane. Co, Nov. 9, 2011) (Cullen, J.).

II. Discussion

Under Pennsylvania law,

an ‘account stated’ is just a variety of contract. It is an agreement between debtors and creditors. The parties agree to a consolidated statement of debt, give up their right to bring suit on any of the underlying debts, and create a duty to pay. Restatement (Second) of Contracts § 282 (1981); Restatement of Contracts § 422(1) (1932). The ‘account stated’ is ‘a debt as a matter of contract implied by law. It is to be considered as one debt, and a recovery may be had upon it without regard to the items which compose it.’ 29 Williston on Contracts § 73:58 (2007).

Richburg v. Palisades Collection LLC, 247 F.R.D. 457, 464-65 (E.D. Pa. 2008) (applying Pennsylvania law). Thus, “an action for ‘account stated’ still sounds in contract just like an action for quasi-contract or unjust enrichment, and is no more ‘independent’ from contract actions generally than a negligence action is independent of tort actions generally.” Id. at 465. Because an action on account is founded upon contract, the plaintiff must prove the necessary elements of a contract action. See Worldwide Asset Purchasing LLC v. Stern, 153 Pitt. L.J. 111 (2004).

Defendant initially objects to plaintiff’s failure to allege whether the agreement between debtor and creditor upon which this action is based is either oral or written, in contradiction of Rule 1019(h), and that if the agreement is written, plaintiff fails to conform to Rule 1019(i) by its failure to attach to the complaint the cardholder agreement, including its terms and conditions. In the seminal decision in Atlantic Credit, the Superior Court held that in compliance with Pa. R.C.P. 1019(i), the plaintiff in a credit card debt collection case must attach to the complaint (1) a copy of the contract or cardholder agreement between the parties, (2) a statement of account, and (3) evidence of the assignment of the account from the credit card issuer to the alleged assignee. 829 A.2d at 345. That tripartite pleading requirement remains the controlling standard in Pennsylvania. See Discover Bank v. Stucka, 33 A.3d 82, 87 (Pa. Super. 2011); Commonwealth Financial Systems, Inc. v. Smith, 15 A.3d 492, 500-01 (Pa. Super. 2011).

While the Superior Court has held that a signed credit card agreement is not necessary to satisfy Rule 1019(i), a plaintiff must still attach a customer agreement sufficient to establish its claim. Stucka, 33 A.3d at 87. Moreover, whenever a claim involves a period of time in which the initial terms and conditions of a credit card agreement apply and other periods of time in which amended terms and conditions apply, the plaintiff must attach both the original and amended terms and conditions with the dates on which they are applicable. See FIA Card Services, N.A. v. Kirasic, 156 Pitt.L.J. 39 (2007). “Regardless of whether the debt collection suit is labeled as an ‘account stated’ or breach of contract action, the plaintiff must attach the relevant writings which substantiate the elements of that cause of action.” Velocity, No. 11 CV 6995, slip op. See also Ross, No. 2010-5668, slip op.; Opitz, No. 207-2010-C, slip op.; Citibank (South Dakota) v. Sabovic, No. 2940CV2011, slip op. (Monroe Co., June 17, 2011) (Vican, J.).

In the instant case, plaintiff has failed to attach a copy of the terms and conditions of the original agreement between defendant and Citibank, as well as any amendments to the original terms and conditions. Further, plaintiff has failed to set forth in writing why the terms and conditions of the agreement are not accessible to it. Instead, plaintiff has attached a single monthly billing statement. This monthly billing statement alone is not a sufficient substitute for the original agreement.

Credit card contracts are complicated and detailed; interest rates vary according to transaction type, market rate changes, and the amount of debt incurred. Further, fees and penalties are charged for late payments, charges that exceed the credit limit, payments made by phone, and various other services. These terms and conditions are not reflected in the attached billing statement despite the fact that the interest rates and fees they set forth affected the amount of debt allegedly owed by Defendant. Thus, Plaintiff’s claim is based on these terms and conditions and they must be attached to the complaint pursuant to Pa.R.CP. 1019(i).

Main Street Acquisition Corp. v. Lenzie, No. 9351-CV-2010, slip op. at 5 (Monroe Co., June 28, 2012) (Sibum, J.). See also Quick, No. CI-11-00954, slip op. at 4 (In a credit card collection case, “it would be difficult to see how a cardholder could intelligently agree to the finance charges, interest and fees which may be included in a statement such as Exhibit A without access to Plaintiff’s accounting procedures.”).

The account statement which Citibank has attached to the complaint reflects that Rhineer is being assessed interest at a rate of 29.99% per annum. {See complaint, exhibit “A.”) Since Citibank’s proffered “account stated” includes interest charges at that rate, it is incumbent upon Citibank to attach the provision(s) in the cardholder agreement which authorizes the assessment of 29.99% interest. See Atlantic Credit, 829 A.2d at 345 (“We decline to editorialize about the current state of consumer debt, but the facts remain that an APR of 29.99% and the associated monthly late fees represent extraordinary damages and a debtor’s acceptance of such conditions must be established by some documentation.”). See also Commonwealth Financial Systems v. Hartzell, 17 Pa. D.&C.5th 176, 183 (Lawrence Co. 2010); Velocity, No. 11 CV 6995, slip op. at 9.

Next, defendant objects to plaintiff’s failure to attach the billing statements documenting the charges and credits. Plaintiff counters that exhibit “A,” a copy of defendant’s August 2010 billing statement, properly sets forth the total balance due and owing and is all that is required for an account stated cause of action. Plaintiff correctly notes that itemized charges are not generally necessary in an action for an account stated because, in such an action, the parties have previously agreed to the balance due to the creditor. However, in order to agree to the balance, the debtor must be presented with sufficient information as to how the balance was computed.

An account stated “traditionally arises when two parties, who engage in a series of transactions with one another, come together to balance the credits and debits and fix upon a total amount owed,” and “[t]his final tally, once assented to, becomes the ‘account stated’....” Richburg, 247 F.R.D. at 464 (citing David, 348 Pa. at 341-42, 35 A.2d at 349). See also L. R. McCoy & Co.. Inc. v. Beiler, 2011 WL 925410, at * 3 n. 8 (E.D. Pa. 2011). The hallmark of an account stated “is that both parties examine the amount and agree that the computed amount is correct.” Id. (citing 29 Williston on Contracts 73:55 (4th Ed. 2007) (emphasis added)). The Restatement (Second) of Contracts, § 282, provides: “An account stated is a manifestation of assent by a debtor and creditor to a stated sum as an accurate computation of an amount due the creditor.” (Emphasis added.) Our Supreme Court in Mellon v. Campbell, 11 Pa. 415, 418 (1849), explained that “[to] make an account stated, there must be a demand on the one side, which is acceded to on the other; and it usually consists of an account of mutual transactions, drawn up by one party and exhibited to the other.” (Emphasis added.)

Applying these principles, the Honorable Craig P. Miller of Clinton County concluded in Hull that a “computation” for purposes of an account stated cause of action in a credit card collection, case entails, at a minimum, “the inclusion of constituent figures and mathematical functions applied thereto, which demonstrate how the balance achieved was calculated.” Hull, #380-2012CV, slip op. at 7. See also C-E Glass v. Ryan, 70 Pa. D.&C.2d 251, 254 (Beaver Co. 1975) (“Proper pleading in an action upon an open book account . . . requires that the attached account be more than an unintelligible list of figures, but must be clear and definite charges, not lumped but itemized, showing the nature of the transactions.”); Ryon v. Andershonis, 42 Pa. D.&C.2d 86, 87 (Schuylkill Co. 1967) (in an account stated lawsuit “Defendant is entitled to a more informative statement of the account, with items not in issue eliminated, and debits and credits properly identified, itemized and segregated”). Thus, in order to adequately plead an account stated, the creditor must provide “factual averments which support Defendant’s assent to the correctness of a computation of a liquidated debt, ¿rising from the parties’ history of dealings or mutual transactions and which has been provided to him.” Hull, #380-2012CV, slip op. at 5. In the instant case, the parties did not come together and agree upon the liquidated debt due the creditor, Citibank.

The August 2010 billing statement attached to plaintiff’s complaint as “Exhibit A” bears defendant’s name and sets forth a “Previous Balance” of $19,992.35, “Payments” of $8.00, and also sets forth line items of “Other Credits,” “Purchases,” and “Cash Advances,” each respectively reading $0.00 next to each line. (See complaint, Exhibit “A.”) There was “Interest Charged” in the amount of $74.77. (Id.) This results in a “New Balance” and “Minimum Payment Due” of $20,059.12. (Id.) A next “Payment Due Date” of September 1, 2010 is also noted on the statement. (Id. )

Absent from this single billing statement is any calculation of the “mutual transactions,” i.e., the addition of debits for purchases or cash advances and subtraction of credits for payments, by which plaintiff arrived at the “previous balance” of $19,992.35. While a creditor might not be required to attach every single statement detailing each transaction to properly plead an action to collect on an outstanding consumer credit card account, the contents of the instant complaint are insufficient to support a cause of action for an account stated.

Even assuming, arguendo, that no itemization of the underlying transactions is required to formulate a “computation” of a liquidated debt in support of an account stated, the addition of interest on exhibit “A” suggests that the alleged account was not yet liquidated but rather constituted an open, unsettled, running account for revolving credit. See Black’s Law Dictionary (9th ed. 2009) (“running account” defined as “[a]n open, unsettled account that exhibits the reciprocal demands between the parties” and “revolving credit” as “[a] consumer-credit arrangement that allows the borrower to buy goods or secure loans on a continuing basis as long as the outstanding balance does not exceed a specified limit”).

Pennsylvania case law supports the position that liquidation of the account is required prior to such an account being “stated” in the legal sense. See Rush’s Service Center Inc. v. Genareo, 10 Pa. D.&C.4th 445, 447 (Lawrence Co. 1991) (“The idea behind an action upon account stated is that a preceding contract has been discharged and merged into a stated account which is based upon the earlier contract.). See also Richburg, 247 F.R.D. at 464-65 (quoting Telebase Systems, Inc. v. Gateway Comm’ns. Inc., 1988 WL 21845 at 3 (E.D.Pa. March 2, 1988) (“The effect of an account stated is that ‘the amount or balance so agreed upon constitutes a new and independent cause of action, superseding and merging the antecedent causes of action represented by the particular items. It is a liquidated debt, as binding as if evidenced by a note, bill or bond.”); Donahue, 157 Pa. Super, at 128-29, 41 A.2d at 880-81 (noting that the predecessor Restatement of Contracts, § 422, states the applicable rule that “[m]atured debts are discharged by a manifestation of assent in good faith by debtor and creditor to a stated sum as an accurate computation of the amount of the matured debt or debts due the creditor....”).

In response to averments similar to those in this action, the court in Hull concluded:

Taking all of Plaintiff’s well-pleaded facts and the inferences deducible therefrom as true and assuming that the billing statement constitutes prima facie evidence of prior dealings between Plaintiff and Defendant, it appears in the instant case that, even if Plaintiff transmitted and Defendant received the Exhibit ‘A’ billing statement, such receipt would constitute no more than an expected regular occurrence, within the scope of an ongoing revolving credit relationship.

Hull, #380-2012CV, slip op. at 13. Accordingly, the complaint must be examined in order to ascertain “whether the credit card account was ever liquidated or finalized, thereby triggering a reasonable expectation in defendant that he was no longer being asked to pay according to the alleged revolving credit relationship but was, instead, acquiescing to a final settlement of the alleged account.” Id.

Plaintiff’s complaint in the instant matter is devoid of any factual averment or attached writing indicating that defendant was ever put on notice that plaintiff intended to finalize the alleged credit card account, thereby converting it from an open, running account for revolving credit to a liquidated money demand. Nor is there any averment or writing to suggest that plaintiff ever sought defendant’s assent in the correctness of the sum stated on this single billing statement, which was simply part of a regular pattern of monthly billing statements. See plaintiff’s complaint at ¶ 6 (“Plaintiff mailed to defendant monthly statements for the account including the billing statement attached hereto as Exhibit A....”). Thus, plaintiff has failed to provide a computation of a liquidated debt, which, if agreed to, would be sufficient to form the basis of an account stated.

The additional requirement of the debtor’s assent must be addressed. It is well-settled that the plaintiff in an account stated complaint must include an allegation that the defendant “assented to the correctness of the account submitted to him.” Ryon, 42 Pa. D.&C.2d at 88. Our case law does provide that acceptance of the written account may be manifested expressly or may be implied from the circumstances. See Donahue, 157 Pa. Super, at 129, 41 A.2d at 881; Rush’s Service Center, 10 Pa. D.&C.4th at 447.

Plaintiff makes no allegation in the complaint that defendant expressly consented to the debt. Nor does plaintiff aver in the pleading that defendant even impliedly assented to the correctness of the account submitted to him. Rather, plaintiff contends in its brief that “defendant’s prior conduct by making payments and retaining the statement without payment demonstrates a manifestation of assent (Complaint ¶8, ¶9, ¶ 10 and exhibit A establishing that the defendant assented to the account by using the account, making payments on the account, and retaining the statements for the account without payment).” (See plaintiff’s brief in opposition at 4.)

Plaintiff here advocates a catch-22 position; if Defendant had made a payment in response to the ‘Exhibit A’ billing statement, under Plaintiff’s formulation, Defendant would have, by virtue of doing so, verified the correctness of the balance owed as set forth thereupon. On the other hand, according to Plaintiff’s allegations, Defendant has failed to act and has, likewise, in Plaintiff’s view, verified the correctness of the balance owed by not objecting for nearly two years prior to Plaintiff’s filing of this lawsuit.
We outright reject Plaintiff’s contention that Defendant’s having made a payment on the alleged account, at some indefinite point of time in the past, could constitute Defendant’s assent to the correctness of the account balance as set forth in a more or less lump sum as of March 29, 2010, in ‘Exhibit A’. We can perceive no circumstances under which a debtor’s payment on a revolving credit line, at some undefined point in the past, could constitute the debtor’s assent to the correctness of a ‘computation’ which had, at the time of such payment, not yet been computed. The nature of an open running account for revolving credit is that the balances change from period to period due to new charges and/or new payments. Plaintiff’s suggestion both lacks specificity in that it fails to state when the payment alluded to was made, as is required by Rules 1019(f) and 1028(a) and, worse, it smacks of temporal impossibility. Even if a specific date, upon which Defendant allegedly made such payment were supplied by Plaintiff, such information could do no more than support that there were pre-existing dealings between Plaintiff and Defendant. We already admit as true, for the purpose of ruling on Defendant’s Preliminary Objections, that Plaintiff and Defendant had some history of dealings pursuant to Plaintiff’s averments and in light of the attached ‘Exhibit A’ billing statement, however Plaintiff’s once-upon-a-time payment averment is not a well-pleaded fact, from which we could reasonably infer that Defendant has assented to the correctness of the balance reflected on ‘Exhibit A’ in support of an ‘account stated’ cause of action.

Hull, #380-2012CV, slip op. at 14 (footnote omitted). I agree with this analysis by the Clinton County Court and similarly reject plaintiff’s assertion in its brief and suggestion in its complaint that defendant’s implied assent to the account balance is manifested through the prior conduct of defendant in making payment on the account. See Citibank v. Knepp, No. 2010-1161 (holding plaintiff’s attachment of one monthly statement to the complaint, along with allegation defendant made “many payments,” was not sufficient to properly demonstrate assent).

Alternatively, plaintiff relies on the inference of implied assent to the account balance from defendant’s silence in response to receipt of the billing statement attached as exhibit “A.” Case law provides that a party’s retention of a statement of account for an unreasonably long time, without objection, may be a manifestation of assent. Donahue, 157 Pa. Super. at 128, 41 A.2d at 881. However, I agree with the view stated by the Court of Common Pleas of Beaver County in C-E Glass v. Ryan, that when presenting allegations of a defendant’s assent to the amount owed, “something more than mere acquiescence by failure to take exception to a series of statements of accounts received in the mail is required.” 70 Pa. D.&C.2d at 253. Accord, Braverman Kaskev v. Toidze, 2011 WL 4851069, at *4 (E.D.Pa. 2011) (“Under Pennsylvania law, [plaintiff’s] allegation that [defendant] never contested its bills is not sufficient to show acquiescence in the correctness of the account.”). See also Target National Bank v. Kilbride, 10 Pa. D.& C.5th 489, 493 (Centre Co. 2010) (holding defendant’s mere failure to respond to monthly credit card statements insufficient to establish assent required to maintain account stated claim); Quick, No. CI-11-00954, slip op. at 4 (same). As explained by the court in Hull:

Adopting Plaintiff’s suggested formulation would force mail-receiving credit consumers to maintain an uncomfortably high level of aloofness regarding every invoice received within the paradigm of an ongoing credit relationship for fear that, assuming such invoice constitutes a legitimate expression of dealings between recipient and sender, any snapshot indicia of ongoing transactions might somehow mature, without their knowledge, and, by the mere passage of time, metamorphosize into their assent to its correctness as a debt enforceable absent any showing of the underlying negotiations, bargain, or transactions which culminated in the account. Such a rule is entirely unfair and ignorant of modem realities attendant to consumer credit relationships. We are mindful of the age-old statement by the Pennsylvania Supreme Court that '[a]ny contract or instrument by which it is intended to diminish legal rights which normally accme as a result of a given legal relationship or transaction must spell out the intention of the parties with the greatest of particularity, since such contracts or instruments are construed strictly against the party seeking their protection’. See Morton v. Borough of Ambridge, 375 Pa. 630, 635, 101 A.2d 661, 663 (1954).

Hull, #380-2012CV, slip op. at 15-16. Similarly, in Samanez, the Honorable R. Stanton Wettick observed:

It is the position of [the creditor] that in litigation instituted by an issuer to recover money allegedly due, a cardholder cannot question the correctness of the claim unless the cardholder previously questioned the correctness of the invoices upon which the claim is based. If I were to accept [the creditor’s] position, I would be creating a rule of law that imposes an obligation on the part of any person receiving an invoice to respond to the issuer of the invoice. There is no body of law which supports this position. If this were to become the law of Pennsylvania, every lawsuit to recover money allegedly due in which invoices were sent would include two counts — a breach of contract count and an account stated count based on the invoices that the plaintiff furnished the defendant.

156 Pitts. L.J. at 80.

In the instant case, Citibank’s complaint merely avers that plaintiff mailed Rhineer monthly billing statements, including the statement attached as exhibit “A”, and “[bjefore plaintiff mailed Exhibit A, defendant had for many months made payments on account of the billing statement or retained the statement without payment.” (See Complaint at ¶¶ 6-7.) As our sister courts above have found, the mere failure to lodge an objection to a single account statement is insufficient to constitute an acceptance of the amount owed, as is required for an account stated claim. See Capital One Bank v. Clevenstine, 7 Pa. D.&C.5th 153, 157 (Centre Co. 2009) (relying on defendant’s silence to prove acquiescence to an account stated is not permissible); Wadas, No. 2012-1705, slip op. at 5 (something more than silence and retention of monthly statements must be averred to demonstrate acquiescence to the correctness of the number appearing on the “single isolated and uninformative billing statement” ); Velocity, No. 11 CV 6995, slip op. at 10 (retaining a statement without payment is not tantamount to an assent to or acquiescence in the accuracy of the account amount).

Moreover, I must draw attention to the relatively brief time between the sending of the billing statement and the date on which the instant complaint was filed. Exhibit “A” shows a “Statement Closing Date” of August 4, 2010, and a “Payment Due Date” of September 1, 2010. The instant complaint was filed on March 25, 2011, a mere six months later. “While the court certainly does not condone silence between a creditor and a debtor, the court cannot interpret the debtor’s failure of communication to equate to prima facie evidence of acquiescence in an account stated.” Wadas, No. 2012-1705, slip op. at 8.

III. Conclusion

Based on the case law set forth above, I find that plaintiff is not relieved of the pleading requirements by claiming default by defendant on an account stated. In the present case, while plaintiff has alleged an amount due, the complaint is devoid of any averment or attached writing indicating that defendant was ever put on notice that plaintiff sought to finalize the alleged account, thereby converting it to a liquidated money demand or that plaintiff ever sought defendant’s consent in the correctness of the sum stated in the billing statement. Moreover, upon review of the pleadings, there are no factual allegations that would support the finding of an express or implied agreement that defendant owes the amount set forth in the billing statement which plaintiff attached to the complaint. As a result, plaintiff has failed to set forth the necessary averments to establish a claim for account stated and defendant’s preliminary objections must be sustained.

Accordingly, I enter the following:

ORDER

And now, this 26th day of April, 2013, upon consideration of defendant’s preliminary objections to plaintiff’s complaint, plaintiff’s response thereto, and the briefs filed by the parties, it is hereby ordered that defendant’s preliminary objections are sustained.

It is further ordered that plaintiff’s complaint is dismissed without prejudice and plaintiff is granted leave to file a legally sufficient amended complaint in accordance with this court’s opinion within 30 days of the date of this order.

      .1 agree that plaintiff’s complaint in this case is presently factually deficient to support a breach of contract cause of action.

      . Plaintiff has attached to its brief copies of court decisions from 33 of the 67 counties in Pennsylvania. These cases are all trial court orders and opinions and, while they may be persuasive, they certainly are not binding on this court. Additionally, at least half a dozen of the identified counties have issued contrary decisions.

      . Traditionally, a breach of contract cause of action was employed in consumer credit card collection cases. However, with the recent increase in credit card defaults, creditors that have failed to retain the paperwork necessary to maintain a breach of contract cause of action have rediscovered the account stated.

      . Pennsylvania courts have long recognized and given effect to accounts stated. See, for example, David v. Veitscher Magnesitwerke Actien Gesellschaft, 348 Pa. 335, 35 A.2d 346 (1944); Leinbach v. Wolle, 211 Pa. 629, 61 A. 248 (1905); Pierce v. Pierce, 48 A. 689 (Pa. 1901); Tully v. Felton, 36 A. 285 (Pa. 1896); Johnston v. Thumm, 7 A. 739 (Pa. 1887); Verrier v. Guillou, 97 Pa. 63 (Pa. 1881); Donahue v. City of Philadelphia, 157 Pa. Super. 124, 41 A.2d 879 (1945). However, this court was unable to find one appellate court decision discussing an “accounts stated” action involving credit card collection.

      . Pennsylvania Rule of Civil Procedure 1019(i) states that “when any claim or defense is based upon a writing, the pleader shall attach a copy of the writing.” In the alternative, “if the writing or copy is not accessible to the pleader, it is sufficient so to state, together with the reason, and set forth the substance of the writing.” Pa. R.C.P. 1019(i).

      . The monthly billing statement attached to plaintiff’s complaint did not indicate a single charge made by the alleged account holder.

      . Curiously, plaintiff cites the court to ¶¶ 8-10 of a complaint which only has 8 paragraphs, suggesting that this was a sloppy job at a “cut and paste” brief. The important point being that the required element of assent is mentioned nowhere in the pleading.


source: Caselaw Access Project

author: MASSIAH-JACKSON, J.,

license: Public Domain

text:
    Ferraro v. Turner Construction Company

      Robert J. Mongeluzzi, Andrew R. Duffy, Robert W. Zimmerman and Jeffrey P Goodman, for plaintiff.

      Joseph W. Gibley and Pamela J. Devine, for defendant Turner Construction Company.

      Joseph M. DeMarco, for defendant Lift, Inc.

      Jane A. North, Matthew J. Junk and Francis J. Deasey, for defendant Perrotto Builders, Ltd.

      Jonathan D. Herbst, for additional defendant Riegel Engineering, Inc.

      Joseph Connor and Sharon F. Harvey, for additional defendant Gallen Insurance Inc.
    May 13, 2013
   MASSIAH-JACKSON, J.,

I. FACTUAL BACKGROUND and PROCEDURAL HISTORY

In 2008, the Reading School District was building a new Intermediate High School. Turner Construction Company was the construction manager. Perrotto Builders, Ltd. (“Perrotto”) was the general contractor on the project. Riegel Engineering, Inc. (“Reigel”) was responsible to furnish and install structural steel at the high school project.

On October 30, 2008, Ralph Ferraro, an employee of Riegel, was working with two other men inside a five story stairway tower. He was standing on a scissor lift platform installing steel stairways in the tower. When Mr. Ferraro attempted to secure a 300 pound steel staircase stringer, he lost his balance and fell 30 feet to the ground, causing him to suffer catastrophic injuries.

In August, 2010, Mr. Ferraro initiated this civil action against Turner Construction Company, Lift, Inc., and Perrotto. Thereafter, Perrotto filed a joinder complaint against Mr. Ferraro’s employer, Riegel Engineering, Inc.

In 2012, after discovery was closed Perrotto Builders, Ltd. filed a motion for summary judgment against additional defendant Riegel Engineering, Inc. seeking judgment as a matter of law stating, inter alia, that Riegel is contractually mandated to defend, indemnify and hold harmless Perrotto, based on their sub-contract agreement. Riegel opposed the motion.

The sub-contract agreement states in pertinent part:

“SUB-CONTRACT AGREEMENT
AGREEMENT made as of the 31st day of December in the year 2007.
BETWEEN the Contractor: Perrotto Builders, Ltd. and the Subcontractor: Riegel Engineering, Inc.
The Project: Reading Citadel Intermediate high school Areas A & B The Owner: The Reading School District
11. INDEMNITY. To the fullest extent permitted by law, the Subcontractor shall indemnify and hold harmless the Owner, the Architect and the Contractor and all of their agents and employees from and against all claims, damages, losses and expenses, including but not limited to the attorney’s fees, arising out of or resulting from the performance of the Subcontractor’s work under the Subcontractor including faulty or defective materials and workmanship of the Subcontractor, provided that any such claim, damage, loss or expense is attributable to bodily injury, sickness, disease, or death or injury to or destruction of tangible property including the loss of use resulting therefrom, to the extent caused in whole or in part by any negligent or omission ofthe Subcontractor or anyone directly or indirectly employed by him or anyone for whose acts he may be liable, regardless of whether it is caused in part by a party indemnified hereunder. The Subcontractor also agrees to indemnify Contractor from liability for Contractor’s negligence, which results in harm to Subcontractor’s employees. The Subcontractor’s obligation under this section shall not be limited in any way by any limitations from the amount or type of damages, compensation or benefits payable by or for the subcontractor under Workers’ Compensation acts, disability benefit acts or other employee benefit acts, (emphasis added)

While Riegel appeared to concede that indemnity is owed when it, as the subcontractor, was negligent, Riegel opposed summary judgment on the basis that the indemnity paragraph was “legally insufficient to require that Perrotto Builders be indemnified for its own negligence.” Riegel memorandum, unpaged.

This court considered the memoranda filed by the parties, and Pennsylvania’s “Perry-Ruzzi” rule which requires clear, specific and express language in the terms of the agreement to support indemnification by an indemnitee which is itself negligent. See generally, Ruzzi v. Butler Petroleum Co., 588 A.2d 1 (Pa. 1991); Bethlehem Steel Corporation v. MATX, Inc., 703 A.2d 39 (Pa. Superior Ct. 1997); Snare v. Ebensburg Power Company, 637 A.2d 296 (Pa. Superior Ct. 1993); Hackman v. Moyer Packing, 621 A.2d 166 (Pa. Superior Ct. 1993).

Paragraph 11 of Perrotto-Riegel agreement expressly stated that Riegel shall indemnify for harm it caused to others:

“. . . . to the extent caused in whole or in part by any negligent or omission of [Riegel] or anyone directly or indirectly employed by him or anyone for whose acts he may be liable, regardless of whether it is caused in part by a party indemnified hereunder”

That paragraph goes even further than the agreement presented in Greer v. City of Philadelphia, 795 A.2d 376 (Pa. 2000), because Riegel also expressly agreed to indemnify Perrotto for harm caused by Perrotto to Riegel’s employees:

“[Riegel] also agrees to indemnify [Perrotto] from liability for [Perrotto’s] negligence which results in harm to [Mr. Ferraro].”

This court recognized, however, that before there has been actual payment of damages a claim for indemnity is premature. See generally, Kelly v. Thackray Crane Rental, Inc., 874 A.2d 649 (Pa. Superior Ct. 2005), affirming grant of summary judgment since all necessary facts of indemnity determination had not been set forth, “because Kelly’s claims against Driscroll were still pending”; McClure v. Deerland Corporation., 585 A.2d 19 (Pa. Superior Ct. 1991), claims for indemnification arise only when the party seeking indemnity has made payment on the underlying claim; Beary v. Container General Corp., 568 A.2d 190 (Pa. Superior Ct. 1989), the party seeking indemnification must pay the claim or verdict damages before obtaining any rights to pursue an indemnification recovery; Schindler Equipment Company v. Raymond Company, 418 A.2d 533 (Pa. Superior Ct. 1980), an action for indemnification before payment of damages is premature.

On July 2, 2012, an order was filed:

“AND NOW, this 2nd day of July, 2012, upon consideration of the motion for summary judgment of the Defendant, Perrotto Builders, Ltd., on its claim for indemnity against Riegel Engineering, Inc., it is hereby ordered that said motion is Granted in Part and Denied in Part. Perrotto is entitled to be indemnified by Riegel as per express terms of subcontract. However, the right to pursue indemnification is contingent upon the outcome of the underlying claims.
By the Court:
Massiah-Jackson, J.”

Prior to trial, Mr. Ferraro resolved his claims against Turner Construction Company and Lift, Inc. On December 3, 2012, after jury selection and opening statements, plaintiff- Ferraro entered into a settlement with Perrotto Builders. Thus, Perrotto’s right to recover indemnity from Riegel became ripe for decision.

Phase II of this litigation commenced when a new jury was selected by counsel for Perrotto and Riegel on December 4,2012. After two days of trial, the jury rendered a verdict finding that Perrotto’s negligence was a factual cause of harm to Mr. Ferraro, that Perrotto’s settlement with Mr. Ferraro was reasonable, and, that the attorneys fees spent in defense of Perrotto were reasonable. The jury also determined that RiegePs negligence was a factual cause of harm to Mr. Ferraro.

Riegel filed a motion for post-trial relief. Counsel and the court coordinated a briefing schedule. Oral argument was held on April 29, 2013. For all the reasons set forth herein, RiegePs motion for post-trial relief is denied.

II. LEGAL DISCUSSION

A. Judgment Notwithstanding the Verdict (JNOV) Is Not Appropriate Because Perrotto Established That It Is Entitled To Indemnification.

In order to establish the claim for indemnification when an underlying case is resolved by settlement, the party seeking indemnification must demonstrate that the underlying claim was valid against it; that the settlement was reasonable; and, that any counsel fees were reasonable. County of Delaware v. J.P. Mascaro & Sons, Inc., 830 A.2d 587, 593 (Pa. Superior Ct. 2003); McClure v. Deerland Corporation, 585 A.2d 19, 23 (Pa. Superior Ct. 1991).

In Martinique Shoes, Inc. v. New York Progressive Wood Heel Company, 217 A.2d 781 (Pa. Superior Ct. 1966), the Superior Court stated at 783:

“In Tugboat Indian Company v. A/S Ivarans Rederi, 334 Pa. 15, 21, 5 A.2d 153, 156 (1939), our Supreme Court said, “To recover indemnity where there has been such a voluntary payment, however, it must appear that the party paying was himself legally liable and could have been compelled to satisfy the claim.’ This rule is more strict than that found in 18 P.L.E., Indemnity, § 11, relied on by the lower court, ‘Where a claim against the indemnitee has been satisfied by a voluntary settlement, the burden is upon the indemnitee to prove that the settlement was reasonable, or, in lieu thereof, to prove the actionable facts.’ The general rule as stated in 42 C.J.S., Indemnity, § 25, is, ‘Thus, while a person who is liable for injuries caused by the negligence or wrongful act of another may adjust and pay the claim therefor and need not wait the result of a suit in order to be entitled to indemnity from the wrongdoer, the amount claimed must be reasonable and just, and the payment must have been made in good faith, after notice to the indemnitor; and a person so paying assumes the risk, in an action against the wrongdoer for indemnity, of being able to prove the actionable facts on which his liability depends as well as the reasonableness of the amount which he pays. ’ Tugboat Indian Company v. A/S Ivarans Rederi, supra. See also Pittsburgh Steel Company v. Patterson-Emerson-Comstock, Inc., 404 Pa. 53, 171 A.2d 185 (1961), where this practice was followed, and Lehigh Valley R. Co. v. Hertz, 38 Luzerne L.R.R. 5 (1944).” (Emphasis in original)

In order to be entitled to indemnification, it was not sufficient for Perrotto to simply settle its litigation with Mr. Ferraro if it did not have a legal obligation to pay. For example, in Willard v. Interpool, Ltd., 758 A.2d 684 (Pa. Superior Ct. 2001), the appellate court determined that because the party making the settlement payment was not able to establish its liability in the underlying case then it was not entitled to recover.

Perrotto’s burden of proof was to show that Mr. Ferraro’s claim was valid in the underlying case, that is, “the actionable facts on which its liability depends.” Perrotto presented Robert Mongeluzzi, Esquire, Mr. Ferraro’s attorney, who provided the jury with the background of the construction case. He articulated the plaintiff’s legal theories relating to the law, the contract, and the custom and practice in the industry. Dec. 5, 2012, A.M., N.T. 129-136. Perrotto also called its superintendent on the job, Mr. Ross Radwanski, who stated that neither Perrotto nor Riegel ever coordinated a job hazard analysis in anticipation of the iron workers responsibilities. Dec. 5, 2012, P.M., N.T. 14-16. Mr. Radwanski was unaware that the scissors lift truck was being used improperly as a work platform by Mr. Ferraro. Dec. 5, 2012, P.M., N.T. 17-20. Mr. Radwanski explained to the jury that after Mr. Ferraro’s accident, Perrotto and Riegel prepared and implemented new guidelines for the work site so that no one else would be injured. Dec. 5, 2012, P.M., N.T. 35-39.

The phase II trial jury saw the video testimony ofRichard Hilsop, an expert in construction site safety. Mr. Hilsop opined to a reasonable degree of professional certainty that Perrotto Builders breached its standard of care, inter alia, by failing to fulfill its contractual obligations for safety, by failing the OSHA standards for safety, and by failing to monitor or enforce oversight and safety compliance among the workers. Video, N.T. 36-37. Mr. Hilsop opined that Perrotto’s lack of due care “absolutely” caused or contributed to Mr. Ferraro’s accident. Video, N.T. 38-42, 55-56. When considering all of the above and more, Perrotto did present sufficient evidence to establish that Mr. Ferraro’s underlying claim against it was valid.

Riegel’s post-trial argument that Perrotto must prove to an absolute certainty what the jury in the underlying case would have done without an actual jury verdict is a legal fiction. The phase II trial established the “actionable facts” upon which Perrotto’s liability was based. The phase II jury did not and could not assess causal negligence of co-defendants Turner Construction Company or Lift, Inc. The phase II jury did not assess Mr. Ferraro’s comparative negligence. The phase II juiy did hear testimony that juries can surprise litigants when the verdict is rendered. The jury in the underlying case would have been free to believe all or part or none of Mr. Ferraro’s claims. Riegel Engineering did not present any expert witnesses or fact witnesses to challenge or dispute Mr. Ferraro’s tort claims. Riegel Engineering did not present any witnesses to contradict Perrotto’s negligent causation of the construction accident. Perrotto met its burden of proof to establish the basis of its liability in the underlying tort action. JNOV is not warranted.

B. Riegel is Not Entitled to a New Phase II Trial.

Atrial court has broad discretion to grant or deny a new trial. See, e.g., Criswell v. King, 834 A.2d 505, 512 (Pa. 2003), a new trial based on weight of the evidence only “in truly extraordinary circumstances”; Armbruster v. Horowitz, D.D.S., 831 A.2d 698, 703 (Pa. 2000), a new trial only when the verdict shock one’s sense of justice; Gunn v. Grossman, M.D., 748 A.2d 1235, 1243 (Pa. Superior Ct. 2000), to constitute reversible error, an evidentiary ruling must not only be erroneous, but also harmful to the complaining litigant. In reviewing evidentiary challenges, this post-trial court will consider whether Riegel has demonstrated the rulings were erroneous, and then whether the error, if any, prejudiced Riegel.

Riegel asserts that it was error for the jury to hear evidence of negligence by Riegel and also respond to those jury interrogatories on the verdict sheet. Dec. 6, 2012, A.M., N.T. 6-7; 16-36. This court does not agree. The purpose of the phase II Trial was to litigate Perrotto’s joinder complaint and to determine whether it could secure indemnification under the indemnity paragraph of the subcontractor agreement.

The definition of indemnification was agreed upon by the parties, at Dec. 5, 2012, A.M., N.T. 117:

“Indemnification occurs when a party is compelled by law or contract, to reimburse another party for monetary payments it has made.”

The contractual indemnification paragraph provides two machanisms for reimbursement to Perrotto for monetary payments it made to Mr. Ferraro. First, if Riegel was causally negligent. Second, if Perrotto itself was causally negligent for Mr. Ferraro’s harm.

In this litigation, Riegel’s causal negligence could not have been decided in the underlying case due to the Workers’ Compensation Act, 77 P.S. § 481(a). Mr. Ferraro was a Riegel employee. The only way to reach a determination of Riegel’s negligence was through this phase II trial. Similarly, because of the settlement in the underlying case, the only way to reach a determination of Perrotto’s negligence was through this phase II trial. The verdict rendered, finding Perrotto causally negligent and Riegel causally negligent is supported by all of the evidence presented.

The notion set forth at page 9 of Riegel’s post-trial brief, that the July 2,2012 order somehow limits Perrotto’s rightto indemnification solely to the second alternative (Perrotto’s own causal negligence) is unfounded. Neither the motion for summary judgment nor the response in opposition to the motion challenged or addressed the first mechanism — permitting Perrotto to recover indemnification when Riegel is liable in whole or in part. The sole pre-trial issue presented was whether the clear and unequivocal language in the indemnification paragraph included a provision that covered losses due to the indemnitee’s own negligence.

Riegel’s related argument that the jury should have apportioned its percentage of causal negligence is not the law nor is it part of the contractual agreement. So long as Perrotto has been deemed liable, then the subcontractor agreed to indemnify the contractor from liability for the contractor’s negligence where as here the harm was caused in whole or in part by Riegel. See, Deskiewicz v. Zenith Radio Corporation, 561 A.2d 33 (Pa. Superior Ct. 1989).

Next, Riegel contends that it was error for an expert witness who is a lawyer to express an opinion about Perrotto’s exposure to liability in the underlying case. This contention is baseless. Joseph Gibley, Esquire, has been an attorney since 1988. He has developed a specialty as defense counsel in personal injury matters involving construction and heavy highway accidents. He serves as an arbitrator with the federal courts and with the court of common pleas as a Judge Pro Tern. He has also worked as a private arbitrator. He was presented by Perrotto as an eminently qualified expert on valuating liability, reasonableness of settlements and reasonableness of attorneys fees when defending construction litigation action. Dec. 6, 2012, A.M., N.T. 61-68.

Rule of Evidence 702 states that when technical knowledge “beyond that possessed by a layperson will assist the trier of fact” then a qualified expert may testify. In this case, the jurors were expected to understand the factors which are considered by parties and counsel when making a decision to settle a case—a complex construction accident. See also, Bernstein, 2012 Pa. Rules of Evidence, Pa. R.E. 702 (Gann). It would have been error for the jurors to engage in speculation about the likelihood of Perrotto’s liability. The expert assisted the triers of fact to evaluate and valúate the liability of Perrotto and reasonableness of the settlement. See, County of Delaware v. J.P. Mascaro & Sons, Inc., supra, 830 A.2d at 593-594, where the County Solicitor testified.

In Martinique Shoes, Inc. v. New York Progressive Wood Heel Co., supra, the Superior Court held that in the case of settlements, arguments or opinion by counsel for the indemnitee (Perrotto) is not sufficient to establish liability. In Ridgeway Court, Inc. v. Caravan Insurance Associates, 502 A.2d 684 (Pa. Superior Ct. 1985), the Superior Court held that where the underlying case settled and there was no record to establish liability, the phase II trial required non-hearsay proof of liability. The appellate court held that the indemnitor must have an opportunity to challenge the facts which resulted in the settlement. 502 A.2d at 687. Riegel did have a full and fair opportunity to vigorously cross-examine Mr. Gibley. Dec. 6, 2012, A.M., N.T. 100-156; 160-161.

Riegel also asserts that the trial court should have instructed the juiy that if Perrotto settled with Mr. Ferraro simply to avoid a trial then Perrotto was not entitled to be reimbursed for its voluntary payment. A trial court is not obligated to instruct a jury on legal principles which have no applicability to the facts presented. In the absence of any showing of a relationship between the requested charge and the evidence at trial, the trial court decision was appropriate. Commonwealth v. Tervalon, 345 A.2d 671 (Pa. 1975).

Finally, Riegel claims as error jury instructions which are “contradictory and misleading.” Riegel is unable to point to any place in the trial record where this objection was made. At no time during the charging conference on December 6, 2012, did counsel object to the instructions on the verdict sheet. No challenge was expressed that the verdict sheet was “inconsistent” with the court’s charge to the jury. Nor was there any objection raised to the order of the interrogatories on the verdict sheet — that the jury was asked to consider Perrotto’s negligence (Questions 1 and 2) before they considered Riegel’s negligence (Questions 3 and 4). Counsel and the court discussed the draft of the verdict sheet before it was typed. Dec. 6,2012, A.M., N.T. 48-57. Riegel made no timely or specific objection to the format of the verdict sheet. Harmen v. Borah, 765 A.2d 1116 (Pa. 2000); Hinkson v. Commonwealth, 871 A.2d 301, 303 (Commonwealth Ct. 2005).

III. CONCLUSION

For all of the reasons set forth above the motions for post-trial relief filed by Riegel Engineering, Inc. are denied. The record supports the jury verdict that Perrotto Builders, Ltd. was liable to Ralph Ferraro, that Perrotto’s settlement was reasonable and that Perrotto is entitled to attorneys fees and costs.

JUDGMENT ORDER

And now, this 13th day of May, 2013, Judgment is entered in favor of Perrotto Builders, Ltd. and against Riegel Engineering, Inc. on Perrotto Builders, Ltd.’s indemnification claim in the amount of One Million Dollars ($1,000,000.00) as the amount paid in settlement of the claim of Ralph Ferraro vs. Perrotto Builders, Ltd., et al., and

Judgment is entered in favor of Perrotto Builders, Ltd., and against Riegel Engineering, Inc., in the amount of One Hundred Seventy Seven Thousand Two Hundred Seventy Two Dollars and Seven Cents ($177,272.07) as the attorneys fees and expenses incurred by Perrotto Builders, Ltd. in defense of the claim of Ralph Ferraro vs. Perrotto Builders, Ltd., et al.


author: PICCIONE, J.,

text:
    Loomis Global, Inc. v. Ollie’s Bargain Outlet, Inc.

      John E. Quinn, for plaintiff

      James P. DeAngelo, for defendants
    May 13, 2013
   PICCIONE, J.,

— Before the court for disposition are preliminary objections filed on behalf of the defendant, Ollie’s Bargain Outlet, Inc. (hereinafter, “defendant”) in response to an amended complaint filed by the plaintiff, Loomis Global, Inc. (hereinafter, “plaintiff’).

The current action stems from an auction bid made by defendant with respect to merchandise auctioned by plaintiff at a consignment sale in Las Vegas, Nevada on July 30, 2011. At the consignment sale, defendant purchased 12,400 “Bike Club Junior” safety locks and 2,880 “Door Clubs” (hereinafter collectively referred to as “safety locks”) from plaintiff. Plaintiff announced at the auction and prior to the sale that the successful bidder of the safety locks could not advertise or identify the safety locks as being manufactured and distributed by Winner International (hereinafter, “Winner”) in subsequent sales of the safety locks. The safety locks were additionally labeled with a tag indicating “No Advertisement Permitted.” Subsequent to defendant’s successful purchase of the safety locks, defendant issued a printed advertisement, which indicated that it had over 15,000 safety locks for sale. The advertisement inferred that the safely locks were purchased from Winner.

On December 13, 2011, Winner contacted plaintiff via e-mail to indicate that it would no longer offer its merchandise for sale at plaintiff’s auctions because defendant advertised the safety locks as being manufactured by Winner and sold at plaintiff’s auction. Plaintiff consequently initiated this current action by filing a complaint on October 8, 2012. Defendant responded by filing preliminary objections on October 29, 2012, and plaintiff filed an amended complaint on November 27, 2012. Defendant filed preliminary objections to the amended complaint, and the parties requested defendant’s preliminary objections be decided on the arguments set forth in their briefs without oral argument. After considering the briefs filed on behalf of the respective parties, defendant’s preliminary objections to plaintiff’s amended complaint are properly before the court for a determination.

Defendant asserts three objections to plaintiff’s amended complaint. Defendant’s first preliminary objection is raised in the nature of a demurrer and contends that plaintiff failed to establish factually the existence of a contract. Defendant requests this court to dismiss plaintiff’s amended complaint as legally insufficient.

Pennsylvania Rules of Civil Procedure, Rule 1028(a) (4) allows for preliminary objections based on the legal insufficiency of a pleading. It is well established in Pennsylvania law that a preliminary objection in the nature of a demurrer can be sustained and a complaint dismissed when the complaint is clearly insufficient on its face to establish the pleader’s right to relief. Cooper v. Franford Health Care System, Inc., 960 A.2d 134, 143 (Pa. Super. 2008); see, e.g., Mazzagatti v. Everingham, 512 Pa. 266, 516 A.2d 672 (1986); County of Allegheny v. Commonwealth, 507 Pa. 360, 490 A.2d 402 (1985); Cianfrani v. State Employees’ Retirement Board, 505 Pa. 294, 479 A.2d 468 (1984).

In testing the legal sufficiency of a complaint, a court may only look to the pleadings itself, and may not consider testimony or other evidence outside of the complaint. Cooper v. Franford Health Care System, Inc., 960 A.2d 134, 143 (Pa. Super. 2008). However, all well-pled allegations and material facts averred in the complaint, as well as all reasonable inferences deducible therefrom, must be accepted as true. Hess v. Fox Rothchild, LLP, 925 A.2d 798, 805 (Pa. Super. 2007); Tucker v. Philadelphia Daily News, 757 A.2d 938, 941-42 (Pa. Super. 2000). “To sustain preliminary objections in the nature of a demurrer, it must appear with certainty that, upon the facts averred, the law will not permit recovery by the plaintiff.” Harkins v. Zamichieli, 405 A.2d 495, 497 (Pa. Super. 1979), quoting Schott v. Westinghouse Electric Corporation, 259 A.2d 443, 445 (Pa. 1969). The sustaining of a demurrer results in the denial of a claim or the dismissal of a suit, and should therefore be sustained only in cases that are clear and free from doubt. R. W. v. Manzek, 888 A.2d 740, 749 (Pa. 2005); Bourke v. Kazara, 746 A.2d 642, 643 (Pa. Super. Ct. 2000).

A breach of contract action involves (1) the existence of a contract, (2) a breach of a duty imposed by the contract, and (3) damages. J.F. Walker Co., Inc. v. Excalibur Oil Group, Inc., 792 A.2d 1269 (Pa. Super. 2002). While every element must be pled specifically, “it is axiomatic that a contract may be manifest orally, in writing, or as an inference from the acts and conduct of the parties.” Id. at 1272. However, clarity of the pleadings is “particularly important where an oral contract is alleged.” Pennsylvania Supply, Inc. v. American Ash Recycling Corp. of Pennsylvania, 895 A.2d 595, 600 (Pa. Super. 2006) (citing Snaith v. Snaith, 422 A.2d 1379, 1382 (Pa. Super. 1980). Additionally, the Restatement (Second) of Contracts sets forth the standard for the creation of a contract in an auction setting, and provides in relevant part as follows:

(1) At an auction, unless a contrary intention is manifested,
(a) the auctioneer invites offers from successive bidders which he may accept or reject;
***
(2) Unless a contrary intention is manifested, bids at an auction embody terms made known by advertisement, posting or other publication of which bidders are or should be aware, as modified by any announcement made by the auctioneer when the goods are put up.

Restatement (Second) Contracts § 28 (emphasis supplied).

Comment “e” to Section 28 of the Restatement (Second) of Contracts provides specific insight to the standard practice employed by auctioneers when goods are placed for auction with specific provisions attached to the invitation for offers. Comment “e” states:

Published and announced terms. The terms on which goods are to be sold at auction are often made known in advertisements or catalogues or posted at the place where the auction is to be held. When the goods are put up, the auctioneer commonly refers to such terms, and sometimes he announces a modification of the published terms. Ordinarily bidders are or should be aware of terms so published or announced. A bid need not repeat such terms; it is understood as embodying them. Hence the bidder is held to the published or announced terms, even though he may have neglected to read them or may have arrived at the auction after the announcement was made. Theoretically, a bidder could make an offer on terms different from those announced, but bidders seldom or never do so.

Restatement (Second) of Contracts §28, Cmmt. e (emphasis supplied).

In plaintiff’s amended complaint, plaintiff avers that on July 30, 2011, plaintiff placed 12,400 “Bike Club Junior” safety devices and 2,880 “Door Club” security devices up for auction. Plaintiff announced prior to accepting bids for the security devices that the successful bidder could not advertise the merchandise as being made and/ or manufactured by Winner. Additionally, as previously stated, the security devices were labeled with a tag saying “No Advertising Permitted.” Applying the standard law of contracts pertaining to an auction style transaction, the defendant’s bid on the safety locks is considered an offer, which included those terms made known by the auctioneer, here the plaintiff, through announcements or advertisement. Therefore, defendant’s offer included plaintiff’s restriction on advertising the safety locks with Winner name brand. Plaintiff further avers that it delivered the safety locks to defendant, thus plaintiff accepted defendant’s offer. The amended comment indicates that defendant provided plaintiff with the sums of money promised upon delivery of the safety locks, which the court determines to be adequate consideration. Based on the foregoing averments, the court concludes that plaintiff’s amended complaint sets forth sufficient facts to establish the existence of a contract, ie: an offer, acceptance and consideration. Defendant’s first preliminary objection is, therefore overruled.

Defendant’s second preliminary objection, also raised in the nature of a demurrer, contends that plaintiff’s amended complaint fails to establish recoverable damage resulting from the alleged breach of contract. Defendant bases his second preliminary objection on the following premises: that plaintiff’s alleged damages were not reasonably foreseeable, and cannot be proved with reasonable certainty; and, that plaintiff is not entitled to consequential damages, as a seller of goods, pursuant to 13 Pa.C.S.A. § 1305.

Defendant correctly argues that in order for damages to be recoverable, the breaching party must have reason to foresee that, as a result of the breach, the loss would be incurred by the non-breaching party. Restatement (Second) Contracts §351 (1). However, a loss may be foreseeable “as a probable result of a breach because it follows from the breach...as a result of special circumstances, beyond the ordinary course of events, that the party in breach had reason to know.” Restatement (Second) Contracts, §351(2)(b).

Additionally, Pennsylvania law provides that damages need not be proved with mathematical certainty, but only with reasonable certainty, and evidence of damages may consist of probabilities and inferences. Delahanty v. First Pennsylvania Bank, N.A., 464 A.2d 1243, 1256 (Pa.Super. 1983) (citing E.C. Ernst, Inc. v. Kroppers Co., Inc., 626 F.2d 324 (3rd Cir. 1980) on remand 520 F.Supp. 830 (W.D. Pa. 1981). A plaintiff need not allege damages with “mathematical precision”, he must plead sufficient facts so that the trier of fact can determine an appropriate estimation of damages without speculation. Id. at 1257. Plaintiff must only establish his evidence “afford a reasonable basis from which the fact-finder can calculate [his] loss.” Id.

In reviewing plaintiff’s amended complaint, the court determines that plaintiff’s amended complaint sets forth sufficient facts to establish that defendant was put on notice of the specific circumstances surrounding the auction of the safety locks. Plaintiff avers that in addition to announcing the specifications prior to commencing the sale, it attached a printed notice on the safety locks which stated “No Advertising Permitted.” Furthermore, plaintiff avers that it was contacted by the president of Winner Inc., and informed that Winner would no longer “association with the Plaintiff in consignment auctions of [Winner’s] excess inventory.” Plaintiff alleges that it had a longstanding business relationship with Winner for over twenty years, and that plaintiff earned approximately $50,000.00 per year from its business relationship with Winner.

With respect to defendant’s assertion that the plaintiff is not entitled to consequential damages because plaintiff is a seller of goods; defendant cites Atlantic Paper Box Co. v. Whitman’s Chocolates, 844 F. Supp. 1038 (E.D. Pa. 1994) in support of its argument. In Atlantic Paper Box, Co., the plaintiff specialized in manufacturing candy boxes, especially heart shaped boxes typically utilized by a chocolatier for the Valentine’s Day session. 844 F. Supp. at 1041-42. Plaintiff and defendant, a chocolate manufacturer, had a short history of business dealings, whereby defendant and plaintiff conversed eighteen months in advance regarding defendant’s expected needs for the following Valentine’s Day holiday. Id. at 1041. In October 1992, plaintiff and defendant discussed the quantity of paper boxes defendant would need for the 1994 session, which ultimately totaled over $500,000.00 worth of heart shaped paper boxes. Id. When plaintiff heard rumors that defendant was selling its business and that Russell Stover was a potential buyer, who plaintiff knew manufactured its own chocolate boxes, plaintiff contacted defendant to obtain assurances for its upcoming paper box order. Id. Defendant initially assured plaintiff that Russell Stover was not a potential buyer, but later, defendant contacted plaintiff and stated that Russell Stover had, in fact, purchased defendant’s company. Id. Plaintiff initiated a civil action asserting claims for breach of contract, promissory estoppel and loss of business opportunity. Id.

Upon reaching the merits of defendant’s motion to dismiss plaintiff’s loss of business opportunity claim, wherein plaintiff sought consequential damages, the Atlantic Paper Box court defined consequential damages as those which “stem from losses incurred by the non-breaching party in its dealings, often with third parties, which were a proximate result of the breach, and which were reasonably foreseeable by the breaching party at the time of contracting.” Id. at 1046 (citing Hadley v. Baxendale, 9 Ex. 341, 156 Eng.Rep. 145 (1854)). The Atlantic Paper Box court determined that the plaintiff, like the plaintiff in the present case, sustained damages that were outside the scope of the buyer-seller transaction, and consequently, those damages could only be awarded if they appeared in the sellers list of remedies. Id.

The Atlantic Paper Box court determined that pursuant to 13 Pa.C.S.A. § 2702-2710, a seller’s remedies are limited to the following: (1) withhold delivery of goods; (2) stop delivery by a bailee; (3) identify goods to the contract notwithstanding breach or salvage unfinished goods; (4) resell and recover the difference between the contract price and the resale price; (5) recover damages for nonacceptance or repudiation, which is measured in terms of either lost profit or lost volume as a result of the canceled sale; (6) seek an action for the price of the goods; (7) cancel the contract; or (8) recover incidental damages defined as “any commercially reasonable charges, expenses or commissions incurred... resulting from the breach. Id.; See also 13 Pa.C.S.A. § 2703. Although a buyer is entitled to seek consequential damages, the Uniform Commercial Code, which has been adopted in Pennsylvania and applied to all contracts for the sale of goods, see Feingold v. Win-Vent, Inc., 562 A.2d 830, 831 (Pa.Super. 1989), a seller of goods is not entitled to seek consequential damages. Atlantic Paper Box, supra, at 1046 (emphasis supplied). Defendant’s second preliminary objection is therefore sustained.

Given the court’s disposition of defendant’s second preliminary objection, as set forth above, the court finds no need to address the merits of defendant’s third preliminary objection, wherein defendant challenges the specificity of plaintiff’s amended complaint, and references Rules 1019(a) and 1028(a)(3) Pennsylvania Rules of Civil Procedure. Therefore, defendant’s third preliminary objection is overruled.

ORDER OF COURT

And now, this 13th day of May, 2013, with this matter being before the court for a determination on defendant’s preliminary objections, with the parties indicating to the court that defendant’s preliminary objections may be decided by the court after considering briefs filed on behalf of the respective parties, and with the court considering the briefs submitted, it is hereby ordered and decreed as follows:

1. Defendant’s first and third preliminary objections are denied, pursuant to the attached opinion.

2. Defendant’s second preliminary objection is süstained, pursuant to the attached opinion, and plaintiff’s amended complaint is dismissed.

3. The prothonotary shall properly serve notice of this order of court and attached opinion upon counsel of record for the parties.

      . Plaintiff argues that defendant erroneously cited the Atlantic Paper Box case because that case is a federal district court case, which according to plaintiff, is not binding on this court. After a careful review of the Atlantic Paper Box case, this court determines that the federal district court was sitting in diversity and applied Pennsylvania law when considering defendant’s motion to dismiss. 844 F. Supp. at 1041-42 Therefore, this court finds it appropriate to consider the district court’s holding in disposing of defendant’s preliminary objections.


author: NEW, J.,

text:
    Swope v. CBS Corporation

      Robert E. Paul, for plaintiff

      William A. Jones, for defendant Cantex Corporation

      Lisa Beth Flickstein, for defendant SOS Products Company

      Dawn Dezii and Jeanine D. Clark, for defendant BF Goodrich Company

      Mitchell S. Pinsly, for defendant Old Orchard Industrial Corporation

      Stewart R. Singer, for defendant Metropolitan Life Insurance Co.

      Sandy Gropper, for defendant Kentile Floors

      John P McShea, for defendants General Electric Company and CBS Corporation (formerly Westinghouse Electric Corporation)

      Paul F. Lantieri and David A. Damico, for defendant USX Corporation

      Jacqueline M. Carolan, for defendant GATX

      Mark A. Lockett, for defendant Railroad Friction Products Corporation

      Daniel J. Ryan, Jr., for defendants Kaiser Gypsum Company and Trane US Inc. f/k/a American Standard Inc.

      Daniel T. Fitch, for defendant Griffin Wheel Co. n/k/a Amsted Rail Company.

      John C. McMeekin, for defendant ACF Industries.

      John J. Dugan, for defendant Universal Refractories, Division of Theim Corp.

      Basil A. Disipio, for defendant Minnesota Mining and Manufacturing

      R. Thomas McLaughlin, for defendant Riley Stoker Corporation

      Michael J. Stack Jr. and Peter V. Marks, Sr., for defendant Crown Cork and Seal Company

      Michael L. Turner, for defendant Goulds Pumps Inc.

      Tiffany J. Giangiulio and Robert P Corbin, for defendant Union Tank Car Company

      Timothy D. Rau, for defendant Clark Equipment Company, a Division of Ingersoll Rand

      Patrick J. Sweeney, for defendant Walworth Company

      Michael J. Block and Barbara J. Buba, for defendant Certain Teed Corporation

      Christopher N. Santoro, for defendants Aireo Welders Supply and Hobart Brothers Company

      Alyson M. Sciacca and Mark G. Lionetti, for defendant Keeler Dorr Oliver, Inc. Edward T. Finch

      William R. Adams, William J. Smith and Tiffany F. Turner, for defendant John Crane Inc.

      Norman L. Haase, for defendants Resco Holding LLC

      M. Douglas Eisler, for defendant Goodyear Tire and Rubber Co.

      Joseph Cagnoli and Douglas J. Gush, for defendant Weil McLain, a Division of The Marley Company

      Barbara J. Buba, for defendant DAP Inc.

      John A. Turlik, for defendant BW/LP Inc.

      G. Daniel Bruch, for defendants Crane Co., Thyssen Krupp Budd f/k/a The Budd Company, Compudyne Corp, Federal Mogul Asbestos Personal Injury Trust

      Christopher N. Santoro, for defendant Lincoln Electric & Welding Co.

      Thomas J. Bradley, for defendant Railtech Matweld Inc.
    April 25, 3013
   NEW, J.,

— Plaintiff, Daniel L. Swope, appeals the November 21, 2012 orders granting summary judgment in favor of defendants CBS Corporation (formerly Westinghouse Electric Corporation) (“CBS/ Westinghouse”), GATX, Pneumo Abex, LLC (“Abex”), and Railroad Friction Products Corporation (“RFP”) (collectively, “defendant-appellees”), based on federal preemption. As discussed herein below, the orders should be affirmed since plaintiff’s claims are federally preempted by the Locomotive Inspection Act (LIA), 49 U.S.C.S. §§ 20701 et seq., as interpreted in Kurns v. R.R. Friction Prods. Corp., 565 U.S. _, 132 S. Ct. 1261 (2012).

I. FACTS AND PROCEDURAL POSTURE

Plaintiff commenced suit against several defendants on July 28,2010, alleging he contracted lung cancer as a result of his exposure to various asbestos-containing products throughout his career as a trackman and welder at CBX Transportation, a cargo railroad company. (Pl.’s complaint ¶¶ 6, 10, 11) Plaintiff’s claims include allegations he was exposed to asbestos fibers shed from locomotive brake products and insulation products manufactured and distributed by defendant-appellees.

Specifically, plaintiff alleges he was exposed to asbestos dust from brakes, motors, and door panels applied to locomotive engines designed and manufactured by defendant-appellee CBS/Westinghouse. (Pl.’s answer to CBS/Westinghouse’s mot. for sum. j., p. 3) Plaintiff’s claims against defendant-appellees GATX, Abex, and RFP relate to plaintiff and his coworkers’ use of allegedly asbestos-containing brake products to perform brake changes on locomotives at CBX Transportation. (Pl.’s answer to GATX’s mot. for sum. j. Based on Eckenrod, p. 2; pl.’s answer to Abex’s mot. for sum. j. Based on Eckenrodp. 2; pl.’s answer to RFP’s mot. for sum. j. Based on Eckenrod, p. 2 (collectively attached as exhibit A))

On September 11, 2012, all defendant-appellees filed motions for summary judgment arguing plaintiff’s claims against them are federally preempted by the LIA and the Supreme Court of the United States’ decision in Kurns, 132 S. Ct. 1261. Defendant-appellee Abex also postulates the Safety Appliance Act (SAA), 49 U.S.C.S. §§ 20301-20306, provides an additional basis for preemption of plaintiff’s claims. (Abex’s mot. for sum. j., p. 1-5)

All of plaintiff’s answers to defendant-appellees’ motions are virtually the same, word-for-word. Plaintiff argues his claims are not preempted by the LIA for two (2) reasons. First, plaintiff argues the LIA and Kurns only apply to claims for injuries caused by “parts and appurtenances of locomotives.” (Pl.’s answer to Abex’s mot. for sum. j., p. 1-2) Second, plaintiff claims the LIA cannot preempt his claims in light of the Federal Railroad Safety Act (FRSA) of 1970, 49 U.S.C.S. § 20102 et seq. (Pl.’s answer to Abex’s mot. for sum. j., p. 4-5)

Additionally, apparently in response to defendantappellee Abex’s SAA argument, plaintiff argues, in all of his answers, the SAA does not preempt his claims. (Pl.’s answer to Abex’s mot. for sum. j., p. 2-4)

Plaintiff concludes by urging his case could provide the Supreme Court of the United States an opportunity to abandon the doctrine of implied field preemption in favor of what plaintiff refers to as the “express preemption” analysis adopted in Wyeth v. Levine, 555 U.S. 555 (2009). (Pl.’s answer to Abex’s mot. for sum. j., p. 5-7)

On November 21, 2012, we granted all defendantappellees’ motions based on federal preemption. Plaintiff filed a notice of appeal of the orders on december 18, 2012.

II. DISCUSSION

The orders granting summary judgment should be affirmed since plaintiff’s claims are federally preempted by the LIA.

Federal preemption of state law occurs through the operation of the Supremacy Clause of Article VI of the United States Constitution, which provides federal law “shall be the supreme Law of the Land . . . any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.” U.S. Const, art. VI, cl. 2. Preemption may be express, i.e. by congressional provision, or it may be implied in one of two ways. Crosby v. Nat’l Foreign Trade Council, 530 U.S. 363, 372 (2000). First, the doctrine of “conflict preemption” provides state law is preempted to the extent it conflicts with federal law. Id. The second type of implied preemption, “field preemption,” occurs where Congress intends a federal law to occupy an entire field. Id.

The federal law at issue in this case, the LIA, provides, in pertinent part:

A railroad carrier may use or allow to be used a locomotive or tender on its railroad line only when the locomotive or tender and its parts and appurtenances—
(1) are in proper condition and safe to operate without unnecessary danger of personal injury

49 U.S.C.S. §20701.

The Supreme Court of the United States considered the LIA’s preemptive scope and effect in Napier v. Atl. Coast Line R.R. Co., 272 U.S. 605 (1926). The court found the LIA confers broad regulatory power upon the Interstate Commerce Commission (ICC), the agency vested with the authority to carry out the LIA’s requirements. Id. at 611-13. Only the ICC may regulate “the design, the construction and the material of every part of the locomotive and tender and of all appurtenances.” Id. at 611. Stated simply, under the doctrine of field preemption, the LIA preempts any state law or regulation pertaining to the fitness of locomotive equipment. Id. at 611.

Of particular relevance to plaintiff’s case, the Supreme Court of the United States recently held the LIA’s preemptive scope, as defined in Napier, extends to state law tort claims based on the manufacture and distribution of asbestos-containing products used in locomotive repair and maintenance. Kurns, 132 S. Ct. 1261. The Kurns plaintiff-petitioners (husband and wife) originally filed suit in the Philadelphia Court of Common Pleas. Id. They asserted state law tort claims based on the defendant-respondents’ alleged manufacture and sale of asbestos-containing engine valves and brake shoes, which the plaintiff-petitioner husband allegedly applied to and removed from locomotive engines at the Chicago, Milwaukee, St. Paul & Pacific Railroad. Id. at 1264-65. The defendant-respondents removed the case to the Eastern District of Pennsylvania and moved for summary judgment based on federal preemption. Id. at 1265. The district court granted summary judgment. Kurns v. Chesterton, 2009 U.S. Dist. LEXIS 7757 (E.D. Pa. Feb. 3, 2009). The Court of Appeals for the Third Circuit affirmed on appeal. Kurns v. A.W. Chesterton, Inc., 620 F.3d 392 (3d Cir. Pa. 2010). The Supreme Court of the United States granted certiorari. Kurns v. R.R. Friction Prods. Corp., 131 S. Ct. 2959 (2011).

The plaintiff-petitioners asked the Supreme Court to find their claims were outside the LIA’s preempted field, as defined by Napier, since none of their claims related to “on the road injuries,” and their failure to warn claims, in particular, did not relate to locomotive “design.” Kurns, 132 S. Ct. 1261. The Supreme Court rejected the plaintiff-petitioners’ arguments. Id. The claims were all directed at the same subject matter as the LIA, “the equipment of locomotives”; even the failure to warn claims related to locomotive design and manufacturing considerations. Id. Accordingly, the court ruled, whether the plaintiff-petitioner husband was exposed to the allegedly unfit locomotive equipment during repair and maintenance, or while the locomotives were in use on the railroad line, the plaintiff-petitioners’ state tort claims were preempted by the LIA. Id. at 1267-68.

Turning to the case at bar, defendant-appellees argue plaintiff’s claims are preempted by the LIA because plaintiff’s claims are similar to if not exactly the claims addressed in Kurns.

Plaintiff’s claims, like the claims in Kurns, are based on the use of asbestos-containing products in the performance of locomotive repairs and maintenance. The claims in Kurns related to brake products and engine valves; Mr. Swope’s claims relate to brake products, motors, and door panels. In both cases, the alleged asbestos exposures occurred when the products at issue were installed on and/or removed from locomotive engines. Like Kurns, liability in this case is premised on the manufacture and distribution of the allegedly asbestos-containing products. Despite these similarities, plaintiff argues his claims are not preempted.

The crux of plaintiff’s first argument is the LIA does not apply since his claims do not pertain to “locomotives” or “parts and appurtenances” of locomotives. State law is only preempted if it regulates the fitness of “locomotives [or] parts and appurtenances thereof.” Napier, 272 U.S. 605 at 607; see also, S. Ry. Co. v. Lunsford, 297 U.S. 398, 402 (1936) (“Whatever in fact is an integral or essential part of a completed locomotive, and all parts or attachments definitely prescribed by lawful order of the [ICC], are within the statute.”).

Plaintiff would have this court find the LIA does not apply on the basis that neither defendant-appellees’ products, nor the actual asbestos dust to which plaintiff was exposed, were parts and/or appurtenances of locomotives at the time(s) of exposure. Plaintiff argues:

[O]nce the asbestos dust leaves or never reaches the locomotive the asbestos was not an appurtenance when it caused the injury... [W]here the asbestos product was not involved with a locomotive at all the Kurns opinion does not affect the claims at all.

(Pl.’s answer to Abex’s mot. for sum. j., p. 1)

There is no basis for the court to conclude defendantappellees’ brake products, motors, door panels, and locomotive engines were anything other than locomotives and/or parts and appurtenances of locomotives at the relevant time(s). The Kurns court clearly referred to the products in that case as “equipment of locomotives” at the time they were used in locomotive repairs and maintenance. 132 S. Ct. 1261 at 1268. Significantly, the fact the plaintiff-petitioners’ claims were “aimed at the equipment of locomotives,” and thus “directed to the same subject as the LIA,” was dispositive of the entire case. Id. Given the similarities between plaintiff’s claims and those at issue in Kurns, defendant-appellees’ products cannot reasonably be considered anything but locomotive equipment, or in other words, locomotives and parts and appurtenances thereof. To the extent plaintiff alleges defendant-appellees’ products were “not involved with a locomotive at all,” plaintiff fails to establish any basis in fact. In sum, plaintiff’s claims are preempted since they stem from plaintiff’s use of products which Kurns deemed “locomotive equipment” within the LIA’s scope.

We also reject plaintiff’s argument his claims are not preempted since the asbestos dust which caused his harm was not a locomotive part or appurtenance.

Kurns also precludes plaintiff’s argument the FRSA limits the LIA’s preemptive effect on his claims. Plaintiff relies on Atwell v. John Crane, Inc., 2009 Pa. Super 246 (2009), where the Superior Court of Pennsylvania interpreted the FRSA’s preemption provision, § 20106(b) (1), as an indication the LIA was not intended to preempt state tort law, especially in strict liability asbestos cases. Plaintiff somehow overlooks the fact the Supreme Court of the United States vacated Atwell in light of Kurns. 132 S. Ct. 1712 (2012). Indeed, the Kurns court held, “Because the LIA was already in effect when the FRSA was enacted, we conclude that the FRSA left the LIA, and its pre-emptive scope as defined by Napier, intact.” 132 S. Ct. 1261 at 1267. Accordingly, the FRSA does not affect plaintiff’s claims.

Having found the LIA preempts plaintiff’s state claims, we will not address plaintiff’s argument pertaining to the SAA’s preemptive effect on the same claims.

Plaintiff’s proposal that implied field preemption should be abandoned also fails. Plaintiff urges, “To the extent that lower courts have erred by interpreting Napier in its broadest sense, that error can be cured by the abandonment of the doctrine of federal field preemption...” in favor of what plaintiff refers to as the “express preemption” analysis adopted in Wyeth, 555 U.S. 555. (Pl.’s answer to Abex’s mot. for sum. j., p. 5-6) Plaintiff’s argument reflects a misreading of Wyeth and a misunderstanding of federal preemption as a whole. The issue in Wyeth was one of implied conflict preemption; the court considered whether the state and federal regulations at issue were actually in conflict. 555 U.S. 555. Plaintiff characterizes the Wyeth analysis as substitute for the implied field preemption analysis exemplified in Napier and Kums. Plaintiff claims, under the so-called Wyeth approach, the LIA would not preempt his claims. Plaintiff fails to realize the Wyeth approach and the implied field preemption approach are part of the same doctrinal scheme; a state regulation will be preempted if it is directed at a field occupied by federal law, or if it conflicts with federal law. Crosby, 530 U.S. 363 at 372. The Wyeth court approached preemption solely through the lens of implied conflict preemption simply because there was no field preemption issue presented. 555 U.S. 555 at 560. Even if the high court found plaintiff’s claims not preempted under a conflict preemption analysis, plaintiff’s state claims are still preempted under a field preemption analysis.

III. CONCLUSION

For the foregoing reasons, this court respectfully requests that our orders granting summary judgment based on federal preemption and dismissing plaintiff’s claims against CBS/Westinghouse, GATX, Abex, and RFP be affirmed.

      . Prior to the filing of defendant-appellees motions in this case, this court considered the issue of LIA preemption, following Kurns, in the case of Joe R. Perry and Marlene Perry v. General Electric, et al. (October Term 2010 No. 1927), where the plaintiff alleged exposure to asbestos-containing brakes which he applied to General Electric locomotives. After hearing oral argument, this court ruled, by order dated May 31, 2012, that Kurns preempted the plaintiff’s claims.

      . The plaintiff-petitioners in Kurns were represented by the same counsel presently representing plaintiff.


author: ROBINSON, /,

text:
    DiPaolo v. MacDonald

      Thomas W. Harrity, for plaintiff.

      Jordan Koko, for defendant State Farm Mutual Automobile Insurance Company.

      Lee H. Rosenau, for defendants Stewart L. McDonald and John R. McDonald.
    April 30, 2013
   ROBINSON, /,

FACTUAL AND PROCEDURAL HISTORY

On July 2,2009, plaintiff, Ronald DiPaolo, was driving his 1979 Chevrolet pickup truck on Baltimore Pike in Springfield, Pennsylvania, when he was struck in the rear by defendant John McDonald. DiPaolo sustained back and neck injuries from this accident, including disc bulges and disc herniations.

On October 9,2009, DiPaolo was driving a 1986 GMC pickup truck near the intersection of Springfield Road and Aldan Avenue in Aldan, Pennsylvania; immediately after he made a right-hand turn onto Springfield Road, he was struck in the rear by defendant Abuline Jaidah. This accident caused further back and neck injuries to DiPaolo and aggravated previous injuries.

F olio wing a consolidated trial, the jury awarded plaintiff $130,416.00 for the Jaidah case and $87,624.00 for the McDonald case. This court denied defendants’ post-trial motions with respect to both cases. This appeal followed.

DISCUSSION

Motion in Limine

Defendants’ first claim of error on appeal is that this court erred in agreeing to hear plaintiff’s motion in limine, which was filed the day before trial.

The facts forming the basis of the motion had to do with a lawsuit filed by a group of chiropractors against State Farm Insurance Company in which it was alleged that State Farm engaged in practices designed to lessen money paid on certain patients’ claims. State Farm filed a counterclaim alleging violations of the Racketeer Influenced and Corrupt Organizations (RICO) Act, 18 U.S.C. §§ 1961-1968, and naming Dr. Ray Wisdo as a party. Dr. Wisdo was a treating doctor of the plaintiff.

Plaintiff’s counsel explained that he became aware of the facts that formed the basis for his motion on the Saturday prior to the beginning of trial. He filed the motion and provided it to defense counsel the next day. Defense counsel’s objection to the motion has always been simply that it was filed out of the time limits imposed by the case management order. Defense counsel has never suggested that plaintiff could or should have discovered this issue earlier.

It has always been understood by courts “that procedural rules are not ends in themselves, and that the rigid application of [the] rules does not always serve the interests of fairness and justice.” Womer v. Hilliker, 908 A.2d 269, 276 (2006). This understanding is reflected in the Rules of Civil Procedure, which provide that a court “may disregard any error or defect of procedure which does not affect the substantial rights of the parties.” Pa.R.C.P. 126.

It is clear from the record that defendants suffered no prejudice at all as a result of this court agreeing to hear plaintiff’s motion. The record reflects that defense counsel agreed that it would be inappropriate to question Dr. Wisdo about the issues outlined in the motion. Defense counsel did argue that he should be permitted to question all of the doctors about their practices; this court agreed and ruled simply that “pending lawsuits involving plaintiff’s witnesses will not be mentioned during the questioning. And the matter of insurance coverage or pending lawsuits against the insurance carrier will not be mentioned.” N.T. 8/21/12 at 36.

This court also indicated that it would wait until trial to rule upon questions regarding fraudulent billing practices. Id. at 37. Defendants do not assert in their 1925(b) statement, nor have they ever argued, that this court precluded any evidence relating to this issue during the questioning of Dr. Wisdo. For that reason, defendants are not entitled to relief on this theory.

Future Medical Expenses

Defendants’ second claim of error on appeal appears to contain three allegation of related error. Defendants’ claims are: first, that Dr. Ray Wisdo should have been prohibited from testifying about future medical expenses; second, that future medical expenses should not have been included on the verdict sheet; and third, that the claims “inflated any pain and suffering awards to the plaintiff.”

There was some confusion as to the issue of future medical expenses as they related to a statutory rule against double recovery in some instances where insurance covered expenses; this court clarified its ruling during the jury charging conference by telling counsel that “you may argue [future medical expenses], but I’m not going to give the charge.” N.T. 8/24/12 at 140. This was the final clarification given by this court about the issue and at no point following this did this court tell counsel that it would be impermissible to present argument about future medical expenses.

As for defendants’ claim that the issue of whether future medical expenses should have been reflected on the verdict sheet, that claim is waived because defendants did not lodge an objection to this during the conference where the verdict sheet was discussed.

When presented with a draft of the verdict sheet, defense counsel did object to the format in that it contained several lines for past and future economic and noneconomic damages instead of one line for the jury to award a lump sum. Counsel made no objection relating to the inclusion of future medical expenses, and in fact noted during the conference that “none of these items are ignored. They are all covered and the jury can decide to award whatever they see fit. They don’t have to break it down to how much for humiliation.” N.T. 8/24/12 at 152-153. This objection came mere seconds after plaintiff’s counsel reminded this court that future medical expenses were part of the case. Id. at 153.

Defendants’ third argument, that the testimony about and/or inclusion on the verdict sheet of future medical expenses “inflated any pain and suffering awards to the plaintiff’, is both unsupported by the record and not preserved at any level, and defendants are not entitled to relief on the basis of this argument.

UIM Benefits

Defendants’ next claim on appeal is that this court erred in refusing to mold the verdict as it related to defendant Jaidah to reflect DiPaolo’s receipt of underinsured motorist benefits stemming from that accident.

Although defendants have never cited any legal authority in support of the argument that DiPaolo’s receipt of UIM benefits and a jury award would amount to prohibited double recovery, this court presumes that defendants rely on 75 Pa.C.S. § 1722, which states:

Preclusion of recovering required benefits

In any action for damages against a tortfeasor, or in any uninsured or underinsured motorist proceeding, arising out of the maintenance or use of a motor vehicle, a person who is eligible to receive benefits under the coverages set forth in this subchapter, or workers’ compensation, or any program group contract or other arrangement for payment of benefits as defined in section 1719 (relating to coordination of benefits) shall be precluded from recovering the amount of benefits paid or payable under this subchapter, or workers’ compensation or other arrangement for payment of benefits as defined in section 1719.

The Pennsylvania Superior Court examined § 1722 in a nearly identical case to the instant one and concluded that UIM benefits do not appear in the list of “first-party benefits” in subchapter B (the “subchapter” referenced above) and therefore are not subject to the rule against double recovery despite the fact that they are occasionally and colloquially referred to as “first-party benefits.” Smith v. Rohrbaugh, 54 A.3d 893 (Pa. Super. 2012). In the absence of any other case or law that would authorize this court to mold the verdict as requested by defendants, this court properly refused to do so and defendants are not entitled to relief.

Sequestered Witness/Trial Conduct

Defendants’ next issue surrounds the fact that Tracy DiPaulo, the plaintiff’s wife, testified on cross-examination that despite being sequestered, she spoke to her husband during breaks and at night. She testified that her interactions with DiPaolo were limited to greeting each other in the hallway and discussions about how he was feeling. Tracy DiPaolo did not speak with her husband about his testimony. N.T. 8/24/12 at 31. She also did not speak to plaintiff’s counsel at all during trial.

Whether or not these a short conversation between a husband and wife, unrelated to the testimony either gave, could possibly amount to reversible error, defendants have waived this issue because defense counsel took no action following his examination of Tracy DiPaolo. He did not move for a mistrial, make a record of his objection, or do anything else that would have given this court an opportunity to cure whatever error he now alleges occurred.

Defendants’ fourth claim of error also includes vague assertions relating to “misconduct” of plaintiff’s counsel. Pa.R.A.P. 1925 requires that:

(ii) The Statement shall concisely identify each ruling or error that the appellant intends to challenge with sufficient detail to identify all pertinent issues for the judge. The judge shall not require the citation to authorities; however, appellant may choose to include pertinent authorities in the Statement.

P.A.R.A.P. 1925(b)(4)(h). When a court has to guess what issues an appellant is appealing, that is not enough for meaningful review. Commonwealth v. Butler, 756 A.2d 55, (Pa. Super. 2000). A vague 1925(b) Statement hampers appellate review and renders the issue claimed on appeal waived. Commonwealth v. Dowling, 778 A.2d 683, (Pa. Super. 2001).

Here, this court notes that there were numerous instances where this court found it necessary to bring both attorneys to sidebar to discuss their conduct during trial. Defense counsel does not identify any specific incident or incidents that might form the basis for an argument of reversible error; for this reason, this court can not guess what “misconduct and obstruction” on the part of plaintiff’s counsel is the basis for this issue on appeal.

Jury Verdict

Defendants’ final claim on appeal is that although this court’s order denying post-trial motions inadvertently only included the amount of the jury verdict as it related to defendant McDonald, plaintiff’s counsel was “permitted” to enter judgment on the entire amount of the jury verdict.

Defense counsel also took no action at the lower court level that would have preserved this issue for appeal. The post-trial motions were denied on December 4, 2012. Counsel filed a praecipe to enter judgment two days later, on December 6, 2012. This gave defense counsel nearly a month during which he could have raised this issue with this court and still filed a timely appeal. Rather than raising this issue with the court, counsel filed a Notice of appeal on December 14, 2012.

Because defendants did not raise this issue at the lower court level, it is waived. A 1925(b) statement can never be used to raise a claim in the first instance. Pa. R.A.P. 302. Because the 1925(b) statement is the first place where counsel identifies this argument, it is waived.

CONCLUSION

For the above reasons, it is respectfully requested that this court’s denial of defendants’ post-trial motions be affirmed.

      . Although defendants assert that this court limited the “combined” verdict to $88,144.34, the word “combined” does not appear anywhere on the order and it would be ridiculous to conclude that in denying defendants’ post-trial motions, this court also reduced the verdict by $130,416.00.