author: SPRECHER, /.,

text:
    Hendricks v. Manor Care of West Reading, Pa., LLC

      C.P. of Berks County,
    No., 13-2028

      Erica C. Wilson, for plaintiff.

      Maria R. Granando Gesty for defendants.
    Oct. 3, 2014
   SPRECHER, /.,

All defendants appeal the order dated August 25, 2014, and docketed on August 27, 2014, which overruled in part and sustained in part defendants ’ preliminary obj ections to plaintiff’s complaint. This opinion is filed pursuant to Pa. R.A.P. 1925.

FACTS

The facts gleaned from the record, including the pleadings and depositions of Esther R. Hendricks, the Plenary Guardian of the person and the estate of Esther Brown, and Beverly Henry, defendants’ employee who is Admissions Coordinator for Manor Care of West Reading, PA, LLC., are as follows.

On February 3, 2011, Ms. Brown was admitted to defendant Manor Care of West Reading, PA, LLC (Manor Care). The remaining defendants own, operate, and/or manage nursing homes, including Manor Care. Plaintiff filed a professional liability action against Manor Care and its corporate owners.

Ms. Brown had a medical history which included dementia, cognitive impairment, depression, agitation, fatigue, weakness, arteriosclerotic heart disease, history of stroke, uncontrolled type II diabetes, and hypertension. She could no longer care for herself and required assistance with her activities of daily living.

Plaintiff’s complaint contains six counts: count one — negligence; count two — negligence per se for violations of neglect of a care-dependent person, 18 Pa. C.S.A. § 2713; count three — negligence per se for violations of the Pennsylvania Older Adults Protective Services Act, 35 P.S. § 10225.101 et seq; count four — battery; count five — negligent hiring; and count six (mistakenly numbered count five again) — negligent retention.

The battery account arose from injuries Ms. Brown received from defendants’ employees, including an incident on January 5,2013, which was reported to the West Reading Police Department. A nurse noted that Ms. Brown was lying in bed with blood on her hands and pillowcase. Nurses identified a laceration above Ms. Brown’s right eyelid. Ms. Brown was unable to state what had caused her condition, and she was sent to the emergency room at a local hospital. A nursing aide who was present when Ms. Brown was injured reported that Ms. Brown had been combative to another nursing aide who had entered her room to change her brief. That aide held Ms. Brown down, hit her on her arm, and then had thrown a can of shaving cream at Ms. Brown’s face, hitting her above the eye. The perpetrator claimed that she had not hit Ms. Brown on the arm and had accidentally hit her on the face.

Defendants filed preliminary objections to the complaint. Preliminary objection I was a motion to enforce the arbitration agreement (agreement) executed by the parties. Preliminary objections II and III were demurrers/ motions to strike counts two and three. Preliminary obj ection IV was a demurrer/motion to strike all allegations and claims for punitive damages. Preliminary objection V was a motion to strike all allegations of scandalous or impertinent matter.

Ms. Brown died on August 31, 2013. The Register of Wills of Berks County, Pennsylvania appointed plaintiff, Esther R. Hendricks, Ms. Brown’s daughter as administratrix of Ms. Brown’s estate. On October 29, 2013, this court granted plaintiff’s motion to substitute parties and amend the caption to reflect this substitution.

On November 19, 2013, this court ordered that the parties engage in discovery relating to the enforceability of the agreement. The following facts were produced through discovery.

Plaintiff was sixty-three years old when deposed. She obtained a GED in 2007 and a nursing assistant certification in 2006 from Stratford University. Plaintiff never worked as a nursing assistant. In 2009, she retired from a candy factory where she had worked as a machine operator or a packer.

Ms. Brown was living with her plaintiff at the time of her admission to Manor Care. During the day, Ms. Brown attended an adult day care facility which was paid through a waiver from the Berks County Area Office of Aging. On February 3, 2011, the day of Ms. Brown’s admission to Manor Care, Ms. Brown’s day nurse waited for her at the bus stop for her return from the day care facility, but Ms. Brown did not disembark. Subsequently, Ms. Brown’s caseworker from the office of aging telephoned plaintiff and informed her that Ms. Brown had wanted to go to a nursing home, so the agency had her admitted to Manor Care directly from the adult day care facility. Plaintiff had not spoken to anyone about her mother’s admission. Ms. Brown had said that she had not wanted to be a bother to plaintiff.

Upon her admission to Manor Care, Ms. Brown could make her needs known and express what she wanted. She did not have any diagnosis of dementia on February 11, 2011, the date of her admission to Manor Care. Her condition deteriorated during her residency at the facility. As of January 5, 2013, Ms. Brown was diagnosed with dementia.

Ms. Brown signed for her admission to Manor Care on February 3,2011; she did not sign all of the other necessary paperwork on that day. Plaintiff signed the remaining paperwork, including the agreement, on February 4,2011. Plaintiff did not have a power of attorney for Ms. Brown, but she thought she had possessed the authority to execute the documents as Ms. Brown’s daughter. She does not remember if she had ever told her mother that she had signed any paperwork on her behalf.

Plaintiff does not understand all the terms of the agreement, including the provision that the arbitration is to be administered by the National Arbitration Forum (NAF). She has no recollection of her meeting with the representative of the nursing home.

The parties also deposed Beverly Henry, who has been employed by defendants since October 2006 as a medical records and admissions coordinator. Ms. Henry has a high school diploma and graduated from LPN school in 1983. Since August 2007, she has been working full-time in the admissions office. The position of admission director requires more training and was vacant on February 3,2011; Manor Care still does not have this position filled. Ms. Henry received training when she had started her job and obtained additional training by webinars when admissions policies changed. Defendants provided Ms. Henry with two major “talking points” to discuss with families.

The office of aging was the referral source for the admission, so Ms. Henry had asked the case manager if anyone had a power of attorney for Ms. Brown or was available to be the emergency contact or responsible party. This caseworker provided plaintiff’s name to Ms. Henry. The case manager had informed her that Ms. Brown had some cognitive issues.

Ms. Henry had met with Ms. Brown upon her arrival at Manor Care. She had Ms. Brown sign the admission document. She found that the patient was agreeable about being at Manor Care, but she had not seemed focused; therefore, she did not present any other documents to her for her signature. She did not explain to Ms. Brown that she was going to ask plaintiff to sign all the other documents.

Ms. Henry met with plaintiff the next day, but she did not have an independent recollection of that meeting. She knows that she met with her to finish the paperwork for Ms. Brown’s admission. Ms. Henry believes that she spent approximately forty-five minutes, the customary time period, with plaintiff to complete the paperwork. Ms. Henry never attempted to go back to Ms. Brown to finish the admission process which consists of a packet of thirty-seven pages.

Henry also testified that there are only four things she highlights in her discussion about the agreement: that the agreement is voluntary; that a traditional court system is not used; that there is a panel of three arbitrators that are either retired judges or lawyers with extensive experience to hear the case; and that arbitration is binding with no appeals. Ms. Henry testified that during the entire time of her employment, she had never read the entire agreement.

Ms. Henry also explained to plaintiff that arbitration is a cost-effective and time-saving method of resolving disputes. Ms. Henry’s basis for the belief that arbitration is cost-effective comes from the paragraph in the agreement that states that there are less expenses concerning depositions and employee expenses. Ms. Henry does not know what the NAF is. She further testified that no one can alter or modify the Agreement.

Based on the evidence gleaned from the record, this court overruled preliminary objections I, II, and III, sustained preliminary objection IV without prejudice for plaintiff to refile if further discovery merits a request for punitive damages, and sustained preliminary objection V to scandalous and impertinent matter. Defendants filed a timely appeal to this order.

ISSUES

Defendants raise the following issues in their concise statement of errors complained of on appeal.

1. Whether this court erred in finding that the agreement was not enforceable even though plaintiff signed the agreement on behalf of her mother, Esther Brown?

2. Whetherplaintiffwas authorized to sign the agreement by virtue of several theories of agency, including direct, implied or apparent authority, and/or agency by estoppel?

3. Whetherplaintiffwas authorized to sign the agreement through a theory of estoppel as she had authority to enter into a contingency fee agreement, retain counsel, and commenced litigation?

4. Whether this court erred in finding that plaintiff, as the authorized agent for Esther Brown, did not knowingly and voluntarily waive the right to trial by jury by signing the agreement?

5. Whether this court erred in finding that the agreement was procedurally and substantively unconscionable?

6. Whether this court erred in finding that the unavailability of the National Arbitration Forum (NAF) to administer any arbitration proceedings rendered the agreement unenforceable, even though the agreement provided for alternatives?

7. Whether this court, in refusing to enforce the agreement, violated the provisions of the Federal Arbitration Act (FAA), and U.S. Supreme Court’s precedent interpreting the FAA, which strongly favors the arbitration of disputes?

8. Whether this court, in refusing to enforce the agreement, violated the long-standing public policy of the Commonwealth of Pennsylvania favoring the arbitration of disputes?

9. Whether this court erred in refusing to enforce the agreement on grounds of lack of consideration?

10. Whether this court erred in refusing to enforce the agreement on grounds that it violated state and federal regulations?

11. Whether this court erred in finding that the agreement was unenforceable because it did not provide for a termination date or a terminating event?

DISCUSSION

This court shall first address the issue of plaintiff’s authority to sign the agreement on Ms. Brown’s behalf. This court found that defendants did not prove that plaintiff had any authority to sign the agreement.

Ms. Brown never granted a power of attorney to anyone, including plaintiff. The office of aging and defendants deemed Ms. Brown capable of deciding to reside at Manor Care. Plaintiff had no part in making this decision and did not even know about it until after the fact. Ms. Henry had Ms. Brown sign the admission document on the day of her arrival. Thus, Ms. Henry deemed Ms. Brown competent to sign the admission, but she stopped the admission process because Ms. Brown was not focused. Ms. Henry never attempted to have Ms. Brown review the remaining documents at a later date.

The office of aging identified plaintiff as the person who would be able to sign the paperwork if Ms. Brown had not been capable. Thus, a third party, not Ms. Brown, submitted plaintiff as the person authorized to handle the paperwork for Ms. Brown. Ms. Henry did not receive authorization from Ms. Brown to discuss anything, including the agreement, with plaintiff. Ms. Brown did not include plaintiff in making her decision to enter the nursing home. It is clearly evident that Ms. Brown did not direct plaintiff to sign any documents on her behalf. Defendants relied entirely on a statement from the office of aging caseworker that plaintiff could handle the admission process. Defendants never confirmed this statement with Ms. Brown whom they had deemed competent to sign admission papers.

Aperson cannot become an agent for a principal without the principal’s consent and/or conduct to show express or implied agency. Defendants cannot grant agency to a party because they want to deal with that person instead of the resident. Moreover, plaintiff had nothing to do with Ms. Brown’s admittance; therefore, it would appear that Ms. Brown had not wanted her daughter involved in the admission process. For these reasons, this court found that plaintiff had no authority from Ms. Brown to sign anything on her mother’s behalf.

Defendants suggest that plaintiff was authorized to sign the agreement through a theory of estoppel because she subsequently entered into a contingency fee agreement, retained counsel, and commenced this litigation. This argument fails. At the time of her admittance to Manor Care, Ms. Brown did not have a diagnosis of dementia. That diagnosis occurred during her residency at Manor Care. After Ms. Brown was diagnosed with dementia and after she was injured by defendants’ employee(s), plaintiff retained counsel and through legal proceedings in the Orphans’ Court was appointed Ms. Brown’s guardian; thus, she had the authority as a guardian to institute these legal proceedings on behalf of Ms. Brown. Her later guardianship does not ratify any prior unauthorized conduct.

Furthermore, this court found that plaintiff did not knowingly and voluntarily waive the right to a jury trial by signing the agreement. Plaintiff testified at her deposition that she had not understood the terms in the agreement (transcript 109). She never read the entire agreement. Even if plaintiff had read and understood the agreement, there is no evidence that she would have understood the repercussions of and limitation of rights to which she was agreeing. Ms. Henry did not explain the entire agreement with plaintiff. Ms. Henry testified at her deposition that no one can alter or modify the agreement (transcript 74). So even if she did explain the entire agreement to plaintiff, the terms were not negotiable.

An “adhesion contract” is a standard form contract prepared by one party, to be signed by the party in a weaker position, usually a consumer, who has little choice about the terms. A contract or term is unconscionable and therefore avoidable, where there is a lack of meaningful choice in the acceptance of the challenged provision and the provision unreasonably favors the party asserting it. Bayne v. Smith, 965 A.2d 265 (Pa. Super. 2009). Agreement in the case sub judice is an adhesion contract, a take-it-or leave-it contract, that defendants offer to every resident on the day of the resident’s admission.

Defendants’ fifth contention is that this court erred in finding that the agreement was procedurally and substantively unconscionable. This complaint is without merit.

Many of the provisions of the agreement are unduly favorable to the defendants, the scriveners of the agreement, and misleading to the residents. The especially grievous provisions are as follows:

A. WHAT IS ARBITRATION?: Arbitration is a cost effective and time saving method of resolving disputes without involving the courts. In using arbitration, the disputes are heard and decided by a private individual called an arbitrator. The dispute will not be heard or decided by a judge or jury.

The plain meaning of this paragraph is that arbitration is certainly beneficial to anyone entering into the agreement. Even the plaintiff wants a “cost-effective and time-saving method.” What person would not want to avoid appearing before a judge or jury in a public arena when given the opportunity to appear before a private individual, especially if both time and money can be saved by doing so?

B. AGREEMENT TO ARBITRATE “DISPUTES”: Any and all claims or controversies arising out of or in any way relating to this agreement, the admission agreement or any of the patient’s stays at this center, or any center operated by any subsidiary of the HCR-Manor Care, Inc., whether or not related to medical malpractice, including but not limited to disputes regarding the making, execution, validity, enforceability, voidability, unconscionability, severability, scope, interpretation, preemption, waiver, or any other defense to enforceability of this agreement or the admission agreement, whether arising out of State or Federal law, whether existing now or arising in the future, whether for statutory, compensatory or punitive damages and whether sounding in breach of contract, tort or breach of statutory duties (including, without limitation except as indicated, any claim based on Patients’ Rights or a claim for unpaid center charges), regardless of the basis for the duty or of the legal theories upon which the claim is asserted, shall be submitted to binding arbitration...

This very long, confusing sentence comprised of 138 words compels the parties in all disputed claims, including malpractice cases, to enter into mandatory binding arbitration. Moreover, it binds the patients to arbitration even if they become patients at any time, regardless of the circumstances, at other centers that are operated by any subsidiary of the HCR Manor Care, Inc.

B.2. Demand for arbitration shall be made in writing, sent to the other party via certified mail, return receipt requested, and filed with NAF (unless NAF is mutually waived).

This section requires that the demand for arbitration be filed with NAF. NAF no longer hears such cases, so the patient is left in limbo on how to proceed.

B.7. Waiver of claim: Any claim shall be forever waived if it arose prior to the arbitration hearing and is not presented in such hearing. A claim that is not served within the statute of limitations period applicable to the same claim in a court of law in the state in which this center is located shall be forever waived.

The patient is forever barred from presenting any future claims if not presented at the arbitration hearing. This means that if a breach of contract claim is raised by the nursing home against the patient, any non-breach of contract claim by plaintiff — be it medical malpractice, or any other unrelated claim — is waived, if not heard at the arbitration hearing, even if the claim is a latent or undiscovered defect, error, or omission that comes to fruition after the hearing.

It is one thing for realistically anticipated legal issues to arise between parties in a business transaction that both sides equally want to be mediated or arbitrated. This is a cost effective resolution of expected litigation; but it is entirely different to have an uneducated consumer enter into a contract for nursing services and find, when it is too late that there can arise totally unanticipated issues — medical malpractice, intentional or negligent tort, or specifically battery, as in the instant matter.

Under the law, every plaintiff has two years from the date of the injury to bring an action in tort. Defendant’s unconscionable contract makes that law inapplicable to plaintiff and his/her heirs. Plaintiff may have two years by law to file a lawsuit, but if an arbitration hearing is held well before that two-year period — for whatever dispute involving the parties — any claim that is not raised by the arbitration hearing is waived; it conveniently ignores the Commonwealth’s laws on the statute of limitations. Defendant, in essence, enacts its own statute of limitations law, by conveniently ignoring the Commonwealth’s statute of limitations laws.

However, on the other hand, the same unconscionable contract, in fact, enforces these very statute of limitation laws when it is beneficial to defendant to do so. As stated before, defendant’s boilerplate terms require that the claim is waived if not filed prior to the hearing despite two years to file. But the claim is also waived even if filed prior to the hearing but after the statute of limitations law, i.e. if after two years from when the claim arose. Defendant uses the statute of limitations law for both a shield and a sword, whenever it is beneficial to defendant and adverse to plaintiff.

E. RIGHT TO CHANGE YOUR MIND: This agreement may be cancelled by written notice sent by certified mail to the center’s administrator within thirty (30) calendar days of the patient’s date of admission. If alleged acts underlying the dispute occur before the cancellation date, this agreement shall be binding with respect to those alleged acts. If not cancelled, this agreement shall be binding on the patient for this and all of the patient’s other admissions to the center without any need for further renewal.

Defendant’s boilerplate language in this instance requires that when a patient’s claim arises on the first day of the admission, and the agreement is cancelled on the second day, the patient is still forced to arbitrate the claim and cannot go to court. In essence, the wording RIGHT TO CHANGE YOUR MIND is not always true even if the agreement is cancelled within thirty days of signing. This also binds the patient not only to his or her current admission to this nursing home, but also to any future admissions to any facility owned by defendants, without the execution of a new Agreement.

F.3. Benefits of Arbitration: The parties’ decision to select arbitration is supported by the potential cost-effectiveness and time-savings offered by selecting arbitration, which seeks to avoid the expense and delay in the court system. The parties recognize that often the patient is elderly and may have a limited life-expectancy, and therefore selecting a quick method of resolution is potentially to a Patient’s advantage. The parties agree that the reasons stated above are proper consideration for the acceptance of the agreement.

According to this misleading clause, arbitration is supposed to be fast and cheap without any reference to the time needed for discovery and the money that is needed for legal representation and the payment of the arbitration fees. This provision also tries to inject fear in the patient by suggesting that a court action takes so much longer than arbitration so unless you elect arbitration, the patient may die before his court case could be finished.

The facts in the case before this court are a perfect example of how misleading this paragraph is. The alleged assault against Ms. Brown occurred in January 2013, the complaint was promptly filed four months later, and Ms. Brown passed away in August 2013 — all within a very short period of seven months. Neither a court trial nor an arbitration hearing logically is able to occur within seven months. Regardless, there is simply no evidence of the accuracy of this representation that arbitration is faster and cheaper than a court of justice. Furthermore, there is absolutely no reason to conclude from any evidence presented that arbitration, rather than court action, will guarantee a quick resolution before the patient dies which is exactly what is represented in this paragraph.

F.5. Binding on Parties & Others: The parties intend that this agreement shall inure to the direct benefit of and bind the center, its parent, affiliates, and subsidiary companies, management companies, executive directors, owners, officers, partners, shareholders, directors, medical directors, employees, successors, assigns, agents, insurers and any entity or person (including health care providers) that provided any services, supplies or equipment related to the Patient’s stay at the center, and shall inure to the direct benefit of and bind the patient (as defined herein), his/her successors, spouses, children, next of kin, guardians, administrators, legal representatives, responsible parties, assigns, agents, attorneys, health care proxies, health care surrogates, third party beneficiaries, insurers, heirs, trustees, survivors and representatives, including the personal representatives or executors of his/her estate, any person whose claim is derived through or on behalf of the patient or relates in any way to the patient’s stay(s) at this center, or any person who previously assumed responsibility for providing patient with necessary services such as food, shelter, clothing, or medicine, and any person who executed this agreement or the admission agreement.

This provision binds the parties and anyone remotely related to the parties to the contract forever because it does not provide for a termination date or a terminating event.

F.6. Fees and Costs: The panels’ fees and costs will be paid by the center except in disputes over nonpayment of center charges wherein such fees and costs will be divided equally between the parties. NAF’s administrative fees shall be divided equally among the parties. To the extent permitted by law, any party who unsuccessfully challenges the enforcement of this agreement shall be required to pay the successful parties’ reasonable attorney fees and costs incurred to enforce such contract (i.e. motion to compel arbitration). The parties shall bear their own attorney fees and costs in relation to all preparation and attendance at the arbitration hearing, unless the panel concludes that the law provides otherwise. Except as stated above, the parties waive any right to recover attorneys’ fees and costs.

This provision attempts to force a patient’s family into accepting only the arbitration of any dispute because it threatens that anyone who unsuccessfully challenges the enforcement of the agreement, i.e. the motion to compel arbitration, will be punished by being forced to pay the fees of the successful parties. Thus, if a family member loses, he or she is penalized by being required to pay the fees and costs of the nursing home. These costs could be extremely high. If anyone can think of challenging the defendant’s motion to compel arbitration, he or she will pay the price. If this is not a perfect example of an “agreement” that is nonnegotiable and that is forced down the throat of the family, what is?

F.7. Confidentiality: The arbitration proceedings shall remain confidential in all respects, including all filings, deposition transcripts, discovery documents, or other materials exchanged between the parties and the panels’ award. In addition, following receipt of the panels’ award, each party agrees to return to the producing party within 30 days the original and all copies of documents exchanged in discovery and at the arbitration hearing.

This paragraph further protects defendants from bad publicity. Residents may suffer grievous injuries and/or death, but the defendants remain unscathed with the use of arbitration except for paying a portion of the damages. Arbitrations are private between the parties, unlike lawsuits which are opened to the public; therefore, arbitrations will not generate bad publicity for defendants. Some injuries alleged are so egregious that if they are proven, they should be made known publicly; a lack of transparency in critical issues may be against public policy. The consumer has the right to be informed.

This provision further requires that all evidence, “including all copies” that could be used to plead or argue the truth of the actual liability/damages shall be returned to defendant. This continuing secrecy guarantee is very disturbing in any legal proceeding, especially when it is designed to bury all proof of bad things that may be alleged to occur in a nursing home that seeks and obtains patients from the general public.

F. 10. No Jury Trial: If this agreement is found to be unenforceable and arbitration is not compelled, then as a default, the parties agree that the disputes shall be resolved solely by a judge via a bench trial. Under no circumstances will a jury decide any dispute.

Residents give up fundamental federal and state constitutional rights to a trial by jury that is guaranteed in both the seventh amendment of the United States Constitution and the Pennsylvania Constitution without a full explanation of what they are forsaking. Even if the motion to compel arbitration is denied and the agreement is found to be unenforceable, defendants still want to prohibit jury trials. Defendants are overreaching with this provision. It is like a hand reaching out from the grave which seeks to continue to control the case, even if the contract is a voidable adhesion contract. If the agreement is found invalid, then the resident is entitled to all the rights guaranteed by the United States and Pennsylvania Constitutions, including trial by jury. A nonjury trial provision is, of course, designed to again minimize defendants’ exposure of bad publicity to the informed public concerning its errors of commission or omission.

Conclusion

Neither plaintiff nor Ms. Brown are sophisticated businesspeople or health services workers. Plaintiff’s nursing aide certification was obtained online, and she never worked in the health profession. She is sixty-three years old and has a GED. She is retired and formerly worked as a laborer in a candy factory. No evidence was produced that showed plaintiff had the business acumen to negotiate with defendants on an equal footing. Furthermore, there is no evidence that either plaintiff or her mother remotely expected that Manor Care employees would harm Ms. Brown intentionally and negligently. Their expectation was for a contract that covered the costs paid for the nursing services rendered. Therefore, a negligence action was not foreseeable; no one had informed either one about the earlier deficiencies for which this nursing home was cited.

Arbitration may be fine for monetary issues in business transactions, but injuries caused intentionally or negligently in tort should not be the subject of routine arbitration unless both parties fully and completely negotiated and agreed to the final terms. Unlike contracts where the issues are relatively clear and a breach can be easily identified, negligence issues are not so obvious.

For all of the above reasons, this court found that the agreement in the instant case is unconscionable. The agreement is procedurally unconscionable because it was presented at an emotionally trying time to plaintiff who was stressed with her mother’s admission. She basically signed the remaining paper work without any authority as if it were her duty to do so, to finish that which was started by her mother, without her knowledge. It was not plaintiff entering into any agreement; she signed simply as a formality.

There was a great disparity in the bargaining positions between the parties. Plaintiff could not negotiate an agreement. She had to take the agreement as is. Plaintiff testified that she had received calls to come to the nursing home to sign the rest of the documents. In fact, in this case, plaintiff was simply told by Ms. Henry to sign it because Ms. Henry told her she had the authority.

The agreement is substantively unconscionable because it violates public policy. In the case sub judice, plaintiff’s voluntary waiver of a right to a jury trial is not a knowing waiver. There is no evidence that this plaintiff realized what she was giving up by waiving a jury trial or even a court proceeding. This plaintiff is not an attorney or a businessperson experienced in the law. This court cannot conclude that plaintiff understood her rights. Therefore, this court concluded that plaintiff lacked informed consent when she agreed to waive the resolution of all future disputes in a court of law in favor of private arbitration.

Defendants contend that this court erred in finding that the unavailability of NAF to administer any arbitration proceedings rendered the Agreement unenforceable even though the agreement provided for alternatives. This complaint is meritless. The alternatives are illusionary. The parties must agree upon an independent entity. Consumers are not in a position to know arbitrators; thus, they must blindly agree to those persons selected by defendants. Moreover, according to section C.5 of the agreement, the code of procedure of the NAF must be applied. This code is not attached to the agreement and must be obtained elsewhere by the consumer.

Defendants also maintain that this court violated policy and state and federal regulations by refusing to enforce the agreement. These assertions are without merit. This court examined this agreement pursuant to state common law principles and found that the agreement was unenforceable due to the reasons stated above. This court did not invalidate all nursing home agreements, just this particular agreement between these parties because it breaches basic contract principles and due process.

In accordance with the foregoing opinion, this court submits that defendants’ appeal should be denied and its order affirmed.


source: Caselaw Access Project

author: SPRECHER, J.,

license: Public Domain

text:
    McLaughlin v. Birdsboro Municipal Authority

      C.P. of Berks County,
    No. 13-16622
    Oct. 3, 2014
   SPRECHER, J.,

The issue before this court is the reasonableness of defendant’s practice of charging the plaintiffs, as owners of multi-residential dwellings, a premium consumption charge. Defendant’s only resolution established that all “Water rates, rents, and charges for use of the Water System by any improved property shall be based upon and shall be computed in accordance with,” in pertinent part, the following:

1. Ready-to-Serve Charge ($15.68 for residents and $23.00 for nonresidents)
2. EDU Charge-Water ($3.50 for domestic establishments, $5,431 for commercial establishments, $8,518 for industrial establishments, and $8,518 for public establishments)
3. Consumption Charges. In addition (sic) the ready-to-serve meter charge and the minimum EDU charge, the following consumption charges are applicable to the excess consumption per meter over that allowable under the minimum charge. ($4,992 per 1000 gallons for residents, $7,371 for nonresidents)

A full review of the testimony, the record of the proceedings, and the briefs shows that the single issue raised by the plaintiffs in this litigation is the consumption charges imposed by defendant on plaintiffs’ properties. The stipulation of counsel of April 4, 2014 confirms this point, as does the testimony of record, including defendant’s expert, Keith Allen Hill. The issue is not the number of equivalent dwelling units (EDU) or the assignment of ready-to-serve charges. The contention is with section 3 Consumption Charges in defendant’s Resolution No._, which as stated, concerns excess consumption. Consequently, this court vacated its July 14, 2014 verdict, finding for the defendant and against the plaintiff based on Chicora Commons Limited Partnership, LLP, v. Chicora Borough Sewer Authority, 922 A.2d 986 (Pa. Cmwlth. 2007).

FINDINGS OF FACT

In the case sub judice, because there is only one (1) meter for the total twenty-one (21) units, waste by any one tenant(s) cannot result in that tenant(s) being penalized because all the tenants are billed collectively. Thus, anyone who chooses not to conserve will not, in turn, pay any penalty. Presently, with only one meter in the entire apartment building, the landlord, not the tenant, pays the increased cost. Not one tenant is motivated to conserve water.

Certainly, if each tenant is responsible (1) for their own water use, as well as (2) being surcharged for any use of water that exceeds a reasonable allocation, the conservation goal will be realized. If anyone wants to use more water than is reasonable, he or she should pay more. That is the motivation of an excess water use rate.

To make this work, the monthly average water usage amount must be reasonable. If the average is not reasonable, tenants will not pay a penalty for water abuse if the average is set at an unreasonably high consumption rate or will be unfairly penalized if the average is set at an unreasonably low consumption rate. In either case, the goal of conserving a natural resource is not properly met — either because, on the one hand, the tenant can use almost as much as he wants without being charged an increased cost or, on the other hand, the tenant is unfairly, prematurely penalized if the average is set at an unreasonably low rate.

Water usage for the first 1,000 gallons is billed by defendant at $4.99 per thousand gallons. After that, the cost jumps to $7.46 per thousand. Clearly the 1,000 gallon average is intended to apply to a single family household consumer. This is not what defendant has done in our case. Plaintiff has only one meter for the entire property from which twenty-one (21) receive their water. Thus, plaintiff is penalized even before the first week’s water consumption is complete. For the remainder of each month, which is by far the majority of the month, plaintiff must pay a much higher consumption usage.

Plaintiff wants to individually meter each of his apartments in which each separate tenant would have an average water usage set at 1,000 gallons or less per month. Plaintiff is willing to install the meters at his own expense. Defendant has refused this request. Thus, plaintiff continues to pay penalty rates each and every month. This is because the average is used within the first week of each month and will thus be exceeded every month; the average obviously is no longer average. The landlord is unfairly penalized even if he and his tenant are conserving water consistent with the goal of the differing rate schedule.

By defendant’s charging increased fees which become applicable after only 1,000 gallons of use, the net effect is that water consumption is not positively controlled. Two of the witnesses called by defendant testified that the conservation of water is the main reason behind the increasing rate structure which is both a logical conclusion and one that is found from the plain reading of the explanation: “the following consumption charges are applicable to the excess consumption per meter...” Plaintiff has twenty-one (21) individual units, and increased fees should go into effect toward the end of each month for those tenants that waste this precious resource.

Defendant does not have any regulation concerning the application of consumption charges for multi-unit buildings with single meters. Defendant has simply chosen to impose significantly higher consumption rates that are not reasonably proportionate to the service rendered or readily available for use on owners of multiunit residences. Although this rate is uniformly applied to all owners of multi-unit dwellings, it does not excuse the discrimination against both the tenants and landlord. Uniformity does not equate with fairness! Plaintiffs and others who are similarly situated are forced to pay premium consumption charges without a corresponding benefit or a reasonable relationship to the value of the service rendered. Landlords are burdened with increased water costs. What choice do the landlords have? If they, in general, pass the costs onto their tenants, all tenants share the burden regardless of their actual water consumption. Moreover, this rate structure is not applicable to all landlords; if a landlord owns a single residence dwelling, that landlord or tenant is charged the actual water consumption and not an artificially inflated rate.

Defendant’s Metered Rate Schedule includes both single family dwellings and multi-family dwellings under the heading of “Domestic Establishment,” therefore, defendant recognizes that the only difference between the two categories is the number of families that are housed within the dwelling. Defendant reflected this knowledge in the ready-to-serve flat charge of $15.68 per consumer unit per quarter and the EDU flat charge of $3.50 per unit per quarter. Hence, it should have applied the same averaging calculation used by the Chicora Borough Water Authority instead of deviating from the single unit assessment used in the other calculations.

In accordance with the foregoing opinion, this court enters the following Verdicts.

AMENDED VERDICT

And now, this day of September, 2014, this court finds in favor of plaintiff and against the defendant.

The parties shall submit within thirty (30) days of the verdict, a proposed order covering, if still applicable, the specific details of

1. A continuing preliminary or permanent injunction;
2. Release of monies held in escrow;
3. Any credits due plaintiffs; and
4. The installation and payment for meters.

If the parties are unable to agree on a stipulated order, then this court will schedule oral argument.


author: VARRICCHIO, J.,

text:
    Parsons v. Rose Valley Partnership, Inc.

      C.P. of Lehigh County,
    No. 2013-C-1579

      Joe L. Thorpe, for plaintiff.

      Christopher Gittinger, for defendant Rose Valley Partnership, Inc.

      Dominic Sbrocchi, for defendant Rusty Smith Excavating & Paving, Inc.

      Anthony Hinkle, for defendant Arc of Lehigh and Northampton Counties.
    Oct. 3, 2014
   VARRICCHIO, J.,

In May of 2011, Rose Valley Partnership, Inc. (“Rose”) was the owner and lessor of a building located in Lehigh County at 2298 Avenue A, Allentown, Pennsylvania. ARC of Lehigh & Northampton Counties a/k/a ARC of Lehigh & Northampton Counties (“ARC”) was an entity registered to do business in Pennsylvania at that location. Rusty Smith Excavating & Paving, Inc. (“Rusty”) was an excavating and paving company who was engaged in the maintenance and management of the property located at the address.

On or about May 6,2011, Lou Ann Parsons (“plaintiff’) was walking on the parking lot in the rear of the mentioned property. Plaintiff claimed that the paved parking lot was several inches higher than an unpaved area that contained no warnings; she fell and had resulting injuries. Plaintiff argues that the unlevel parking lot was in a dangerous and unsafe condition because it was carelessly and negligently permitted to exist beyond the time required for its discovery.

The injury that brought about this case occurred to plaintiff on or about May 6, 2011. Here, plaintiff commenced this action by filing a praecipe for writ of summons on May 3, 2013, three days before the running of the statute of limitations. Thereafter, a praecipe to reissue the writ was filed on May 17,2013; June 17,2013; July 17,2013; August 16,2013; September 16, 2013; October 16, 2013; November 15,2013; December 16, 2013; January 15,2014; February 14,2014; and March 18, 2014. The complaint was finally filed on March 31, 2014. According to testimony of counsel and evidenced by the docket, no attempt to serve the defendants was made for approximately eleven months. Plaintiff did not deliver the writ to the sheriff for service and explained that the delay or lack of service upon the defendants was because counsel needed more time to prepare the case. The defendants argue that plaintiff made no good faith effort to effectuate service of the writ.

Although there was no direct contact with defendants, plaintiff contacted defendants’ liability carriers on or about January 28, 2014, plaintiff’s answer to Rose Valley Partnerships Inc.’s preliminary objections brief at 2-3; see plaintiff’s exhibits 1-4, 16-31. Plaintiff then awaited response from the insurance carriers until February 2014 and then proceeded to file the complaint. Id. Plaintiff argues that defendants had knowledge of the impending suit through their insurance carriers and were not harmed by the delay. Id.

The issues that necessitate this memorandum are the defendants’ preliminary and amended preliminary objections. Namely, these preliminary objections stem from plaintiffs failure to adhere to the Pennsylvania Rules of Civil Procedure. Defendants’ objections include a motion to strike the writ of summons or the complaint as invalid due to lack of effort to serve defendants. The remaining two objections are procedural.

First, this court will examine the delayed service. There has been a long line of cases in which our courts address plaintiffs bringing “an action, but, by not making a good-faith effort to notify a defendant, retain exclusive control over it for a period in excess of that permitted by the statute of limitations” Lamp v. Heyman, 366 A.2d 882,889 (Pa. 1976). Although, a plaintiff may comply with Pennsylvania Rules of Civil Procedure, according to case law, this alone, is not sufficient.

Proper service is necessary for jurisdiction over a party, therefore the rules relating to service must be strictly followed, Cintas Corp, v. Lee’s Cleaning Services, Inc., 700 A.2d 915, 917-918 (Pa. 1997). Original process must be served within thirty days after issuance of the writ or filing of a complaint. Pa.R.C.P. 401(a). When service is not made within the first thirty days, plaintiff must have the writ reissued in order to remain active and valid. Pa.R.C.P.401(b)(l). In addition, “plaintiffs are required to comply with local practice to ensure ... prompt service of process.” Farinacci v. Beaver County Industrial Development Authority, 511 A.2d 757, 759 (Pa, 1986). The filing of the litigation and the issuance of the writ tolls the statute of limitations. Id. at 760.

Under the Rules of Civil Procedure, theoretically, this process of reissuing the writ could go on ad infinitum; nevertheless, a plaintiff must do more than just have the writ reissued. Pennsylvania law requires that a plaintiff make a good faith effort to effectuate service of process in a timely manner from the date when the suit is originally commenced. Ramsey v. Pierre, 822 A.2d 85, 90 (Pa. Super. 2003). The statute of limitation stops running only if the plaintiff makes “a good faith effort to effectuate service of the writ during the life of the writ.” Farinacci, 511 A.2d at 760. Service is an essential requirement to properly toll the statute of limitations. However, the tolling of the statute by way of writ is ineffective “where plaintiffs have demonstrated an intent to stall the judicial machinery.” McCreesh v, City of Philadelphia, 888 A.2d 664, 674 (Pa. 2005); see Lamp v. Heyman, 366 A.2d at 889; Farinacci, 511 A.2d at 759,

“Taking no steps whatsoever to serve the writ of summons once having filed a praecipe for its issuance renders subsequent efforts to initiate the cause of action after the statute of limitations has run a nullity.” Moses v. T.N.T. Red Star Exp., 725 A.2d 792, 797 (Pa. Super. 1999). Essentially, plaintiffs may not merely file a writ of summons and have another period of the statute of limitations to make service; rather, they are required to make a good faith effort to find and serve the defendant. Sheets v. Liberty Homes, Inc., 823 A.2d 1016, 1019 (Pa. Super. 2003).

The Supreme Court of Pennsylvania “sought to end abuses of process by plaintiffs who tolled the statute of limitations by filing a writ of summons, had the writ repeatedly reissued, and deliberately failed to notify the defendant of the pending litigation. This process, while technically compliant with the Rules of Civil Procedure, nonetheless defeated the purpose of the statute of limitations, which is to protect defendants from stale claims. McCreesh, 888 A.2d at 665.

Ultimately, a good faith effort must he made by a plaintiff to serve the defendant with the initial pleading.” Id. at 664. Atimely filing will be nullified where the plaintiff stalls the judicial process by failing to make a good faith effort at service. Lamp, 366 A.2d at 889. Moreover, “it is not necessary [that] the Plaintiffs conduct be such that it constitutes some bad faith act or overt attempt to delay before the rule of Lamp will apply. “[WJhether a plaintiff acted in good faith lies within the sound discretion of the trial court.” McCreesh, 888 A.2d at 677.

In Ferrara v. Hoover, 636 A.2d 1151, 1152 (1994), the plaintiff argued there was no prejudice to service of the writ after the statute of limitations ran, because prior to the statute of limitations running, plaintiff filed a praecipe for a writ of summons and communicated with defendant’s liability carrier, which plaintiff argued did not prejudice the defendant. The Superior Court did not accept the argument stating there is “no merit in the contention [that] communication between [plaintiff] and [defendant’s] insurance adjuster serves as a substitute for actual service of process. [Defendants] have a reasonable expectation to assure that once the statute of limitations has run they will no longer shoulder the burden of possible litigation.” Moses v. T.N.T. Red Star Exp., 725 A.2d 792, 798 (Pa. Super. 1999) (internal citation omitted). In summation, plaintiff may not file a praecipe for a writ in time to toll the statute of limitations and then with impunity by her own inaction place the case in a perpetual suspended status awaiting reactivation at her pleasure.

In the case at hand. Plaintiff sat on her rights for nearly two years after the accident before filing the initial writ three days before the statute of limitations ran. Although there is no technical misstep, there was no effort made to serve original process within the first thirty days, nor the first ten months. There is no reasonable basis why service was not effectuated earlier than approximately eleven months after the running of the statute of limitations. Plaintiff may not stall the judicial machinery for her own benefit. In this case, concerning a slip and fall, plaintiff had nearly a three-year start to collect evidence including photographs of the scene. Undoubtedly, there have been substantial changes in the area of the alleged accident and defendants are prejudiced by the time delay. Although there is no evidence of record that plaintiff acted in bad faith, this alone does not suffice. Plaintiff has the burden to prove a good faith effort to serve defendants within the first thirty days and plaintiff has not met this burden.

Plaintiff further argued, the court’s focus on stale claims prevents settlements, but proper service of the writ or complaint does not preclude plaintiffs efforts at settlement. Plaintiff stalled litigation by utilizing a loophole in the Rules of Civil Procedure and provided no notice to defendants of impending claims. Therefore, based on the above, because plaintiff failed to serve the writ of summons within the statutory period, failed to have the reissued writs served, failed to deliver the writs to the sheriff for service, and did not show a good faith effort at service of original process; the writ of summons is hereby stricken as invalid and the within captioned matter is dismissed. Further, defendants’ remaining objections concerning the lack of plaintiff s verification and improper caption are moot.

ORDER

And now, this 3rd of October, 2014, upon consideration of the preliminary objections of defendant, Rose Valley Partnership, Inc., to plaintiff’s complaint filed May 6,2014 by defendant, Rose Valley Partnership, Inc., the preliminary objections on behalf of defendant, Rusty Smith Excavating & Paving, Inc., to plaintiffs complaint filed May 12, 2014 by defendant, Rusty Smith Excavating & Paving, Inc., the amended preliminary objections of defendant, Rose Valley Partnership, Inc., to plaintiffs complaint filed May 15,2014 by defendant, Rose Valley Partnership, Inc., the preliminary objections of defendant ARC of Lehigh and Northampton Counties filed May 16, 2014 by defendant, ARC of Lehigh and Northampton Counties, and the supplemental preliminary objections on behalf of defendant, Rusty Smith Excavating & Paving, Inc., to plaintiff’s complaint filed May 20, 2014 by defendant, Rusty Smith Excavating & Paving, Inc.; and after argument held June 20, 2014 attended by Joe L. Thorpe, Esquire, counsel for plaintiff, Christopher Gittinger, Esquire, counsel for defendant, Rose Valley Partnership, Inc., Dominic Sbrocchi, Esquire, counsel for defendant, Rusty Smith Excavating & Paving Inc., and Anthony Hinkle, Esquire, counsel for defendant, The Arc of Lehigh and Northampton Counties a/k/a Arc of Lehigh and Northampton Counties and for the reasons set forth in the attached memorandum opinion; it is hereby ordered that:

1. The preliminary objections of defendant, Rose Valley Partnership, Inc., to plaintiff’s complaint are dismissed as moot.

2. The preliminary objections on behalf of defendant, Rusty Smith Excavating & Paving, Inc., to plaintiffs complaint are dismissed as moot.

3. The amended preliminary objections of defendant, Rose Valley Partnership, Inc., to plaintiff’s complaint are sustained.

4. The preliminary objections of defendant, ARC of Lehigh and Northampton Counties, are dismissed as moot.

5. The supplemental preliminary objections on behalf of defendant, Rusty Smith Excavating & Paving, Inc., to plaintiff’s complaint are sustained,

It is further ordered that the writ of summons is stricken and the complaint is dismissed.

      . This is a personal injury tort; there is a two-year statute of limitations on such claim. 42 Pa.C.S.A. § 5524(7).

      . This court notes, procedurally, a party has the right to file preliminary objections raising a defense or objection to another party’s preliminary objection, Ambrose v. Cross Creek Condominiums, 602 A.2d 864, 866-67 (Pa. Super. 1992).

      . A trial court may properly rule on amended preliminary objections filed by defendants even though defendants did not obtain consent of adverse party or leave of court to file amendment, where amended preliminary objections were filed before any action was taken on original preliminary objections and the amended motion did not delay proceedings. Pa.R.C.P. 1028, 1028(b), 1033; Bowman v. Meadow Ridge, Inc., 615 A. 2d 755,757(1992).

      . The second preliminary objection is a motion to strike the complaint for failure to attach proper verification. The complaint was not verified by plaintiff as required by Pa.R.C.P. 1024(c). Plaintiffs counsel contacted plaintiff at work, but was unsuccessful, therefore counsel did not have plaintiff verify the complaint. Plaintiff requests that this court allow her to attach a substituted verification to the complaint.
      The third preliminary objection is a motion to strike plaintiff’s complaint for failure to conform to law or rule of court because plaintiff did not name all the defendants in the caption, but instead used the phrase “et als” to indicate additiona 1 defendants in violation of Pa.R.C.P. 1018. Plaintiff argues since all the parties were properly named in the caption on the writ or summons (which was never served) this apparently should be sufficient.


author: HIGGINS, J.,

text:
    Fromm v. Pocono Auction Gallery Inc.

      C.P. of Monroe County,
    No. 9486 CIVIL 2013

      Nicole Plank, for plaintiff.

      Steven N. Goudsouzian, for defendants.
    Aug. 5, 2014
   HIGGINS, J.,

On November 12, 2013, plaintiffs, Bemie Fromm and Barbara Fromm, commenced the instant action by filing a complaint. Pursuant to our order dated March 3, 2014, and after two rounds of preliminary objections, a second amended complaint was filed by plaintiff, Barbara Fromm (“plaintiff’) on March 20,2014. Bernie From was removed as a plaintiff from the action. Defendants, The Pocono Auction Gallery and Eric Hockman (“defendants”) filed preliminary objections to the second amended complaint on April 7,2014. The court heard oral arguments from the parties on June 2,2014 and we are now prepared to mle on defendants’ preliminary objections.

The instant action arises from the sale of plaintiff’s personal property by defendants at a public auction held on or about June 27, 2013. Prior to auction, plaintiff signed a contract with defendants regarding the sale of her personal property. Defendant Eric Hockman (“Hockman”) drafted the contract and plaintiff argues that he did not advise her of the implications of selling the items without reserve or minimum bid. Plaintiff brought an action for breach of fiduciary duty and breach of Unfair Trade Practices and Consumer Protection Law (UTPCPL), Fraud and Piercing Corporate Veil.

In ruling on preliminary objections, we must accept as true all well-pleaded, material and relevant facts, along with all reasonably deducible inferences therefrom. Schuylkill Navy v. Langbord, 728 A.2d 964, 968 (Pa. Super. 1999). We need not accept as true, however, “conclusions of law, unwarranted inferences from the facts, argumentative allegations or expressions of opinion.” Myers v. Ridge, 712 A.2d 791, 794 (Pa. Cmwlth. 1998). When ruling on a preliminary objection that would dismiss the action, we are mindful to sustain the objection only in the clearest of cases. King v. Detroit Tool Co., 682 A.2d 313, 314 (Pa. Super. 1996). With these standards in mind, we now address defendant’s preliminary objections to plaintiffs second amended complaint.

In their first preliminary objection, defendants contend that plaintiffs claims are barred by the “gist of the action” doctrine. “The gist of the action doctrine is designed to maintain the conceptual distinction between breach of contract claims and tort claims. As a practical matter, the doctrine precludes plaintiffs from re-casting ordinary breach of contract claims into tort claims.” The Brickman Group, Ltd. v. CGU Ins. Co., 865 A.2d 918, 927 (Pa. Super. 2004) (citations omitted). Put another way, “the wrong ascribed to the defendant must be the gist of the action, the contract being collateral.” eToll, Inc. v. Elias/Savion Advertising, Inc., 811 A.2d 10, 14 (Pa. Super. 2002). The word

“[g]ist” is a term of art in common law pleading that refers to the essential ground or object of the action in point of law, without which there would be no cause of action... The “gist of the action” test then, is general test concerned with the “essential ground,” foundation, or material part of an entire “formal complaint” or lawsuit.

eToll, 811 A.2d at 15 (citation omitted).

Accordingly, to resolve this objection we must distinguish between tort and contract actions. An action in tort arises from a breach of duty that is imposed by the law as a matter of social policy, whereas an action in contract arises only from the breach of a duty imposed by a mutual agreement amongst parties. Bash v. Bell Tel. Co., of Pa., 601 A.2d 825, 829 (Pa. Super. 1992) (citation omitted). “In other words, a claim should be limited to a contract claim when the parties’ obligations are defined by the terms of the contracts, and not by the larger social policies embodied by the law of torts.” eToll, 811 A.2d at 14 (citation and internal quotation marks omitted).

Here, the “essential ground” of plaintiffs claim is the auction contract. Without that contract, there is no duty owed to plaintiff by defendants. Defendants’ obligation to act in a fiduciary manner by selling her items at auction arises solely from the contract. Without the terms of the contract, i.e. the sale of plaintiffs personal property at auction, plaintiff could not claim a breach of duty by defendants. The contract is central to their lawsuit, not collateral. Any negligence claim, therefore, is improper.

Since plaintiff’s claim for negligent misrepresentation arises out of a contract, we must review the second amended complaint in light of the preliminary objections. Plaintiff states that Hockman came to her residence and discussed auctioning her items. During the discussion, plaintiff alleges that Hockman represented that he knew the value of the antique items. Plaintiff avers that defendants acted in bad faith when they possessed the knowledge of what the items were worth and sold the items for no reserve and no minimum bid and it was “unlikely to be sold for anything close to the amount of money they were actually worth.” Plaintiffs second amended complaint ¶41. Plaintiff also insists that the terms of no reserve or minimum bid was not explained by Hockman. She alleges that Hockman’s representation that her items were “valuable” induced her to execute the contract, which plaintiff claims ultimately caused her damages when the items only netted her $2,339.25. Again, plaintiffs entire action stems from the contract. Plaintiff is attempting to re-cast this action as a negligent misrepresentation by alleging that Hockman’s representations of the value of the items and his failure to advise of no reserve or minimum bid.

Plaintiff clearly avers, however, that she engaged defendants to sell some of her personal items. Plaintiffs second amended complaint ¶11. Plaintiff signed the contract with defendants after engaging defendants to sell her personal property. Accordingly, we find that the contract is not collateral, but the basis for plaintiffs action. The no reserve and no minimum bid language is contained within the contract and we believe that the averments in plaintiffs second amended complaint fails to set forth any specific averments for negligent misrepresentation. Throughout plaintiffs second amended complaint, plaintiff avers that defendants made misrepresentations and at paragraph 44 plaintiff alleges that defendants’ “lack of loyalty in failing to advise the plaintiff of what would occur in a no reserve, no minimum auction.” Plaintiffs second amended complaint ¶ 44. Since, the contract is clearly central to plaintiffs action, we believe that the “gist of the action” doctrine applies. Therefore, we sustain defendants’ preliminary objections in the nature of a demurrer regarding count I-Breach of Fiduciary Duty.

Defendants also object to count II-Breach of UTPCPL. Under the “catchall” clause un the UTPCPL, it provides that “[e]ngaging in any other fraudulent conduct which creates a likelihood of confusion or of misunderstanding... constitutes an unfair and deceptive act or practice. ” Hammer v. Nikol, 659 A.2d 617, 619 (Pa. Cmwlth. 1995) (citation omitted). “To be actionable under the catchall provision, however, the confusion or misunderstanding created must be fraudulent.” Id (citation omitted). To recover, the elements of common law fraud must be proven, which include, “a material misrepresentation of existing fact, scienter, justifiable reliance on the misrepresentation, and damages.” Id at 620. In order to succeed on a claim under the UTPCPL, plaintiff must prove, by a preponderance of the evidence, the common law elements of fraud. Prime Meats, Inc. v. Yochim, 619 A.2d 769 (Pa. Super. 1993), allocatur denied, 646 A.2d 1180 (Pa. 1994). The specific elements of fraud are as follows: (1) a representation; (2) which is material to the transaction at hand; (3) made falsely, with knowledge of its falsity or recklessness as to whether it is true or false; (4) with the intent of misleading another into relying on it; (5) justifiable reliance on the misrepresentation; and (6) the resulting injury was proximately caused by the reliance. Gibbs v. Ernst, 647 A.2d 882, 889 (1994).

In ruling on the preliminary objections, we must accept as true the well-pleaded material facts contained in plaintiffs second amended complaint. A review of the pleadings in this matter indicates that plaintiff has not included the necessary elements of common law fraud. Although plaintiff sets forth that defendants’ representations were deceptive and distorted the facts, she has not identified any material misrepresentation of an existing fact. For example, plaintiff avers that “defendant Gallery engaged in deceptive conduct when it represented that it knew and appreciated the value ofthe antique items... creating confusion and misunderstanding for the plaintiff when the antique items were sold for an unreasonably low sum of money.” Plaintiffs second amended complaint ¶51. Plaintiff never identifies what was deceptive about defendants’ representation that it knew and appreciated the value of the antique items. Further, plaintiff has failed to identify specifically which representation made by defendant is false or with knowledge of its falsity. Simply because defendants stated that they had knowledge of the value of the antiques items does not render the statement deceptive or false when that value was not achieved at auction. Moreover, plaintiff has not identified any amount stated by defendant or any material misrepresentation of an existing fact.

Plaintiff argues that the “economic loss doctrine” does not bar her from proceeding against defendants under the UTPCPL. The “economic loss doctrine” states that no cause of action exists for negligence that results solely in economic loss. Aikens v. Baltimore & Ohio Railroad Co., 501 A.2d 277 (Pa. Super. 1985). “The economic loss doctrine ‘prohibits plaintiffs from recovering in tort economic losses to which their entitlement flows only from a contract.’” Martin v. Ford Motor Co., 765 F. Supp.2d 673, 684 (E.D. Pa. 2011) (citations omitted). However, there is a fraud exception to this doctrine. The fraud exception states that the doctrine does not apply where plaintiff alleges an intentional tort.

When the intentional misconduct relates to the quality of the good sold, the economic loss doctrine applies independent of the fraud exception and bars recovery in tort for purely economic losses. Said differently, the economic loss doctrine applies to bar tort claims for purely economic loss even where plaintiff alleges an intentional tort such as fraud, if the misrepresentation relates to the quality of the good sold.

Id (citation omitted).

In the instant case, the goods were not sold to plaintiff. Further, the “economic loss doctrine” prohibits recovery in tort economic losses to which plaintiffs entitlement flows only from a contract. As stated above, we determined that plaintiffs action stems from the contract between the parties. In accepting all well-pleaded material and relevant facts, including all reasonably deducible inferences, we conclude that plaintiff has filed to set forth a cause of action under the catchall of the UTPCPL. Hence, we will sustain defendants’ preliminary objection in the nature of a demurrer and dismiss this claim.

Next, defendants object to count III of the plaintiff’s second amended complaint. Pennsylvania is a fact-pleading jurisdiction, accordingly a “complaint must not only give the defendant notice of what the plaintiffs’ claim is and the grounds upon which it rests, but it must also formulate the issues by summarizing those facts essential to support the claim.” Youndt v. First National Bank of Port Allegany, 868 A2d 539, 544 (Pa. Super. 2005) (citation omitted). “In order to protect those against whom generalized and unsupported fraud may be levied, the Pennsylvania Rules of Civil Procedure require that fraud be averred with particularity.” Id, citing Presbyterian Med. Cen. v. Budd, 832 A.2d 1066, 1072 (Pa. Super. 2003). See also Pa.R.C.P. 1019(b).

Plaintiffs second’ amended complaint averred that defendant Hockman represented that he was an experienced in auctions and that this was materially false since he was not experienced or knowledgeable in auctions and that he was not aware of the value of the items and he had no intention of selling the items at a reasonable price. Plaintiffs second amended complaint ¶ 61. In paragraph 51 of plaintiff’s second amended complaint, plaintiff claims that defendants knew the value of her items and here she claims that defendants are not aware of the value of her items. Plaintiff contradictions on Hockman’s knowledge of the value of the items exists throughout. The averment in paragraph 61 is very different than plaintiffs prior averment that Hockman knew ofthe high value of the items. The term “value” is nebulous throughout plaintiffs second amended complaint. “[A]t the very least a ‘[pjlaintiff must set forth the exact statements or actions plaintiff alleges constitute the fraudulent misrepresentations.’” Id at 545, citing McGinn v. Valloti, 363 Pa. Super. 88, 525 A.2d 732, 734 (1987). See also McClellan v. Health Maint. Org. of Pennsylvania, 413 Pa. Super. 128, 604 A.2d 1053, 1059 (1992). Plaintiffs failure to meet this bare minimum renders their claim for fraud arising from defendant Hockman’s alleged misrepresentation insufficient as a matter of law. Defendants’ preliminary objections are sustained on this issue.

Finally, defendant Hockman obj ects to count I V-Piercing the Corporate Veil claim brought against him. Under Pennsylvania law, there is a strong presumption against piercing the corporate veil. Wedner v. Unemployment Compensation Bd. of Review, 296 A.2d 792 (Pa. 1972). There are circumstances under which a court will disregard the corporate entity and hold individuals associated with a corporation personally liable. “Factors which may justify piercing the corporate veil include under-capitalization, failure to adhere to corporate formalities, substantial intermingling of corporate and personal affairs, and use of the corporate form to perpetrate a fraud.” Langnecker v. Commonwealth of Pennsylvania, 596 A.2d 1261 (Pa. Cmwlth. 1991) (citation omitted).

Upon review of the second amended complaint, plaintiff has not alleged sufficient facts, if found to be true, to substantiate the causes of action against Hockman as an individual defendant. Plaintiff has failed to set forth the factors necessary to pierce the corporate veil. For example, plaintiff alleges that Hockman has used and continues to use defendant Gallery for his own purposes. There is no allegation of under-capitalization, that funds were intermingled, that there was no adherence to corporate formalities, or that corporate defendant was a facade behind which Hockman conducted personal business. The allegations in plaintiff’s second amended complaint are insufficient support an action to pierce the corporate veil and hold Hockman individually liable.

Plaintiff has twice amended her complaint. However, where there is the potential to amend the complaint successfully, we will permit the amendment. Accordingly, we permit plaintiff to amend her complaint successfully and we enter the following order:

ORDER

And now, this 5th day of August 2014, after oral argument and upon consideration of defendants’ preliminary objections and plaintiffs response thereto, it is hereby ordered that defendants’ preliminary objections are sustained. It is further ordered that plaintiff is permitted to file a third amended complaint within twenty days from notice of this order.

      . Plaintiffs filed a praecipe to amend caption removing Bemie Fromm as a plaintiff from this action on March 19,2014.


text:
    DS & BH Holdings II, LLC v. Snyder

      C.P. of Monroe County,
    No. 1096 CIVIL 2014

      James A. Doherty, Jr., for plaintiffs.

      Eugene J. Maginnis, Jr. and Anne K Manley, for defendants.
    Sept. 5, 2014
   HIGGINS, J.,

This matter is before the court on additional defendant’s, Angelo C. Terrana, Jr., Esquire (“Terrana”), preliminary objections to joinder complaint filed by defendants, Coldwell Banker Commercial, Pennco Real Estate, Inc. and Susan Mikels (“joinder plaintiffs”). On February 18, 2014, plaintiff DS & BH Holdings, II, LLC (“plaintiff’) filed a complaint against defendants Jeffrey A. Snyder and Linda J. Snyder, individually and as husband and wife (“Snyders”), Coldwell Banker Commercial, Pennco Real Estate, Inc. and Susan Mikels. On May 19, 2014, plaintiff filed an amended complaint seeking to clear a cloud on title and recovery of funds paid to Snyders for purchase of aproperty commonly known as Mini-Storage in Hillside Business Park, Pocono Township, Monroe County, Pennsylvania. Prior to settlement on the Mini-Storage property, plaintiff alleges that Snyders failed to disclose a mortgage in favor of Wayne Bank in the amount of $1,259,103.93. On April 11,2014, Joinder plaintiffs filed a joinder complaint against Terrana. Joinder plaintiffs allege that plaintiff retained Terrana to perform a title search which failed to disclose the Wayne Bank mortgage which makes Terrana jointly liable over to them. On June 30,2014, Terrana filed preliminary objections to joinder complaint.

In ruling on preliminary objections, we must accept as true all well-pleaded, material and relevant facts, along with all reasonably deducible inferences therefrom. Schuylkill Navy v. Langbord, 728 A.2d 964, 968 (Pa. Super. 1999). We need not accept as true, however, “conclusions of law, unwarranted inferences from the facts, argumentative allegations or expressions of opinion.” Myers v. Ridge, 712 A.2d 791, 794 (Pa. Cmwlth. 1998). When ruling on a preliminary objection that would dismiss the action, we are mindful to sustain the objection only in the clearest of cases. Regal Industrial Corporation v. Crum and Forster, Inc., 890 A.2d 395, 398 (Pa. Super. 2005) (citation omitted). With these standards in mind, we now address Terrana’s preliminary objection to joinder plaintiffs’ complaint.

Terrana’s first objection alleges that the Certificate of Merit (“COM”) filed by joinder plaintiffs is improper since Terrana did not have an attorney client relationship with joinder plaintiffs and therefore they cannot maintain a malpractice action against him. Alternatively, Terrana claims that if a COM is filed, the joinder plaintiffs are bound by it and they are not permitted to maintain any other action against him.

A cause of action for legal malpractice contains three elements: the plaintiff’s employment of the attorney or other grounds for imposition of a duty; the attorney’s neglect to exercise ordinary skill and knowledge; and the occurrence of damage to the plaintiff proximately caused by the attorney’s misfeasance.” Epstein v. Saul Ewing LLP, 7 A.3d 303, 313 (Pa. Super. 2010). Whether a duty exists under a particular set of facts is a question of law. Campisi v. Acme Mkts., 915 A.2d 117, 119 (Pa. Super. 2006).

Kirschner v. K. & L. Gates, LLP, 46 A3d. 737, 749 (Pa. Super. 2012). Joinder plaintiffs agree that they are not pursuing a legal malpractice action against Terrana. Joinder plaintiffs argue that their complaint sounds in negligence and they filed the COM in an abundance of caution and they are not pursuing a malpractice action against Terrana. Since joinder plaintiffs agree that they are not pursuing a malpractice action, we will overrule this objection.

At oral argument, Terrana argued that once a COM was filed, the joinder plaintiffs are bound by it and are not permitted to maintain any other action against him. However, in his brief, Terrana only cites legal authority that he may not be joined since joinder plaintiffs do not have standing to assert a legal malpractice claim. Since Terrana has not provided any legal authority for this proposition, we consider this issue waived. Issues which are not developed or supported by citation to appropriate legal authority are waived. Treasure Lake Property Owner’s Association, Inc. v. Meyer, 832 A.2d 477 (Pa. Super. 2003).

Joinder plaintiffs argue that their action sounds in negligence and that they should be permitted to pursue the action against Terrana.

Negligence is proved by (1) a duty or standard of care; (2) a breach of that duty or standard; (3) proximate causation; and (4) actual damages. Carlotti v. Employees of General Electric Federal Credit Union No. 1161, 111 A.2d 564, 567 (Pa. Super. 1998). Before one can breach a duty to another; that duty must be recognized. Id. Since we must accept as true all well-pleaded, material and relevant facts, along with all reasonably deducible inferences therefrom, we will review the joinder complaint and determine whether joinder plaintiffs have pleaded a negligence claim against Terrana.

Joinder plaintiffs aver that Terrana, as title agent, failed to disclose the mortgage in favor of Wayne Bank. There is no allegation that Terrana acted as Joinder Plaintiffs’ agent at the closing. Joinder complaint (hereinafter “J.C.”), at ¶4. Joinder plaintiffs next aver that Terrana’s title search did not discover or disclose the mortgage and plaintiff proceeded to closing in reliance on the title search performed. J.C. at ¶8. Joinder plaintiffs aver that Terrana, as title agent, owed a duty of care to plaintiffs which caused plaintiff to sustain damages. J.C. at ¶ 13. The joinder complaint is not specific about what duty or standard of care was owed to them by Terrana. Finally, joinder plaintiffs claim that as a result of Terrana’s breach of duty to plaintiff, Terrana is solely liable to plaintiff.

After reviewing all of the well-pleaded material facts and the deducible inferences, we cannot say that joinder plaintiffs have pleaded a cause of action against Terrana. The facts as plead in the joinder complaint allege a duty to plaintiff, as their title agent, and not joinder claintiffs. Accordingly, we must sustain Terrana’s preliminary objections. However, where there is the potential to amend the complaint successfully, we will permit the amendment. Accordingly, we permit joinder plaintiffs to amend their joinder complaint to set forth a cognizable cause of action against Terrana.

In light of the foregoing, we enter the following order.

It is further ordered that joinder plaintiffs, Penn Commercial Real Estate, LLC, improperly named as Coldwell Banker Commercial Pennco Real Estate, Inc. and Susan Mikels shall have 20 days from notice of this order to file an amended joinder complaint.

      . The amount plaintiff seeks to recover in its amended complaint is $196,175.24.