author: REIBMAN, J.,

text:
    Stellar v. Saucon Mutual Ins. Co.

      C.P. of Lehigh County,
    No. 2011-C-4714.

      James T. Huber, for plaintiff.

      Michael P Shay, for defendant.
    March 28, 2012
   REIBMAN, J.,

The present dispute arises out of the cancellation of an insurance policy issued by defendant Saucon Mutual Insurance Co. Plaintiff has filed a four-count complaint seeking recovery under theories of fraud, breach of contract, and the Unfair Trade Practices and Consumer Practices Law (UTPCPL). Defendant has filed preliminary objections demurring to the claims for punitive damages and attorney’s fees. Additionally, defendant seeks to strike allegations of emotional distress appearing in the complaint. For the reasons that follow, the objections will be sustained in part and denied in part.

Background

As alleged in the complaint, defendant originally sold to defendant Anthony Stellar and his now late wife, Deborah Stellar, and issued in their names a “perpetual” property insurance policy, covering a dwelling house, outbuildings and the lot on which the improvements are located. Being “perpetual” policies, the premium was covered by a large initial payment, with no additional annual premiums due. The policy also carried with it the added benefit of a return of the initial principal payment upon termination of the policy.

As part of an estate plan, the subject realty was transferred to Mrs. Stellar, who, in turn, conveyed the property to a revocable trust bearing her name. Defendant took the position that such a change in ownership warranted cancellation of the policy. Plaintiff, however, hired counsel and challenged that action before the insurance commission, whereupon he obtained a favorable ruling directing reinstatement of the policy. Thereafter, defendant attempted to charge an additional premium. This prompted another administrative challenge, at the end of which plaintiff was again vindicated and the increase in premium disallowed.

Plaintiff has now filed an action in common pleas, alleging breach of contract, common-law fraud, and violations of the UTPCPL, 23 P.S. § 201-1 et seq. He also alleges in the complaint that he suffered severe emotional distress as a result of the cancellation ofthe policies, coming as it did only days after the death of his wife. Plaintiff seeks compensatory damages equivalent to $6,304.61 as costs incurred in obtaining replacement insurance policies he was forced to purchase. Plaintiff also seeks to recover as damages attorney’s fees in excess of $18,000 incurred in the administrative actions before the insurance commission. Lastly, plaintiff seeks punitive and treble damages under the UTPCPL as well as punitive damages for common-law fraud, contending that defendant “acted intentionally in order to advance its own business interests despite the policy provisions [that permitted assignment to the revocable trust].” (See Compl ¶ 44.)

Defendant preliminarily objects to the complaint. It demurs to the claims of punitive damages under both the claims of fraud and the UTPCPL, maintaining that the facts alleged fail to state a claim for punitive damages under the fraud count and that such damages cannot be awarded under the UTPCPL as a matter of law. Additionally, it moves to strike the allegation of emotional distress, arguing that only pecuniary damages equivalent to “actual loss” may be recovered on the allegations set forth in the complaint.

Legal Standard

Preliminary objections in the nature of a demurrer will be sustained “only if, assuming the averments of the complaint to be true, the plaintiff has failed to assert a legally cognizable cause of action.” Kramer v. Dunn, 749 A.2d 984, 990 (Pa. Super. 2000) (internal quotation marks omitted). Moreover, “[a]demurrer should not be sustained if there is any doubt as to whether the complaint adequately states a claim for relief under any theory.” Sevin v. Kelshaw, 611 A.2d. 1232, 1235 (Pa. Super. 1992). Finally, in lieu of simply sustaining or overruling a preliminary objection, the court retains discretion to permit or require an amended pleading. Motheral v. Burkhart, 583 A.2d 1180, 1183 n.1 (Pa. Super. 1990), superseded on other grounds by Pa.R.A.P. 341.

Attorney’s Fees

As noted, defendant objects to plaintiff’s claims for recovery of attorney’s fees incurred in the proceedings before the insurance commission. It argues there is no recognized exception to the so-called “American Rule” that would allow recovery of attorney’s fees in the present circumstances. In response, plaintiff contends those fees, incurred in its previous proceedings through which the subject insurance policy was reinstated, are recoverable as “damages” in this subsequent action.

Plaintiff misapprehends the rule emanating from the cases in which attorney’s fees have been awarded as an element of damages. In the cases in which attorney’s fees in predecessor actions have been recognized as recoverable damages, the underlying contractual right involved a right to representation. Hence, where a defendant failed to discharge that obligation consisting of a contractual duty to defend, the courts understandably have held that in order to make plaintiff whole, the defendant must pay the fair amount of the attorney’s fees plaintiff incurred in a previous proceeding. See Mosaica Academy Charter School v. Com. Dept. of Educ., 572 Pa. 191, 209, 813 A.2d 813, 824 (Pa. 2002). Simply put, the right to an attorney was a benefit flowing from the underlying contract that the defendant was obligated to provide. Id. And in keeping with that logic, it has also been held that where a plaintiff is forced to file a subsequent declaratory judgment action to vindicate the underlying right to counsel, justice demands that an award of attorney’s fees in the subsequent action is necessary, as supplemental relief under the authority of the declaratory judgments act, 42 Pa. C.S. § 7538, so as not to render Pyrrhic the underlying victory in securing the contractual right to counsel. See id. at 824; Kelmo Enterprises Inc. v. Commercial Union Insurance Company, 426 A.2d 680 (Pa. Super. 1981). Federal case law cited by plaintiff similarly bases the right to recover attorney’s fees in a prior proceeding as an element of damage where there occurred a breach of an underlying duty to provide representation in a previous matter. See, e.g., Bygott v. Leaseway Transp. Corp.,637 F.Supp. 1433, 1440 (E.D. Pa. 1986) (union failed to provide representation in grievance proceeding in violation of rights of member).

Here, however, plaintiff does not allege defendant breached any duty to defend him in a previous matter or that defendant was contractually obligated to provide representation in the proceedings before the insurance commission. Instead, he seeks recovery of fees he incurred as a result of his retaining legal counsel to pursue other contractual rights against defendant in a prior proceeding. No exception to the so-called “American Rule,” under which each party pays his own legal fees, see Bygott, supra, 637 F.Supp. at 1439, has been recognized in such circumstances. The general assembly, of course, remains free to abrogate the rule and award counsel fees to prevailing parties in matters before the insurance commission, but the court cannot judicially create such aright. Accordingly, the demurrer to plaintiff’s claims for attorney’s fees incurred in the previous administrative disputes between the parties will be sustained and the alleged damages based on counsel fees in previous proceedings shall be stricken.

Punitive Damages

Defendant demurs to the claim for punitive damages asserted in count II, arguing such relief is not forthcoming under the UTPCPL. Because exemplary damages are specified in the amount of treble the compensatory award, defendant’s point is well taken. The Superior Court has observed that “although the [UTPCPL] does allow the court to impose up to treble damages for actual damage sustained, it does not otherwise confer a right to punitive damages.” McCauslin v. Reliance Finance Co., 751 A.2d 683, 685 (Pa. Super. 2000); see also Samuel-Bassett v. KIA Motors America, Inc., 357 F.3d 392, 401-02 (3d Cir. 2004). Plaintiff’s claim for punitive damages under the UTPCPL will, therefore, be stricken.

Defendant also demurs to the claim for punitive damages set forth in count III, arguing that “fraud alone” is insufficient to warrant an award of exemplary damages and the complaint is devoid of facts demonstrating the requisite outrageous conduct to allow such a claim to move forward. Plaintiff counters that it has pled that the conduct of defendant in acting its own economic self-interest was “willful, reckless, and outrageous” and, thus, it would be appropriate for a finder of fact to consider the issue.

The guiding principle, repeatedly articulated by the appellate courts, is that in order for punitive damages to attach to an action in fraud, there must be more than the commission of fraud itself. See, e.g., Smith v. Renaut, 564 A.2d 188, 193 (Pa. Super. 1989) (citing cases). As the Superior Court has instructed, “If the rule were otherwise, punitive damages could be awarded in all fraud cases. This is not the law. The rule, rather, is that for punitive damages to be awarded there must be acts of malice, vindictiveness, and a wholly wanton disregard of the rights of others.” Id. at 193. On another occasion, the Superior Court reiterated that an award of exemplary damages requires a showing of “’malice, vindictiveness and wanton disregard’ to encompass that kind of conduct that is wholly reckless of another’s rights. Fraud, alone, is not sufficient to satisfy the rule.” Golumb v. Korus, 396 A.2d 430, 432 (Pa. Super. 1978) (quoting People’s National Bank v. Kern, 44 A.331 (Pa. 1899)); cf. Lesoon v. Metropolitan Life Ins. Co., 898 A.2d 620 (Pa. Super. 2006) (finding jury question on punitive damages arising from fraud claim premised on forgery of payment authorization by insurer’s agent).

It will be acknowledged, however, that the Superior Court has also observed that it would be “difficult to picture a fact pattern which would support a finding of intentional fraud without providing proof of “outrageous conduct” to support an award of punitive damages.” Delahanty v. First Pennsylvania Bank, N.A., 464 A.2d 1243, 1263 (Pa. Super. 1983). But thereafter, in Rizzo v. Michener, 584 A.2d 973, 979 (Pa. Super. 1990), the Superior Court identified such an example in a case concerning misrepresentation of the extent of termite damage, holding the deceit in that case insufficient as matter of law to warrant the imposition of punitive damages. And, perhaps more noteworthy, in Pittsburgh Live Inc. v. Servov, 615 A.2d 438, 442 (Pa. Super. 1992), the court reversed an award for punitive damages where the finder of fact had determined the defendant fraudulently induced an assignment of realty by altering a document after the fact. There, the Superior Court held that such evidence failed to constitute “malice, vindictiveness and a wholly wanton disregard of the rights of others” over and above the fraud requisite for an award of compensatory damages. Id.

In this matter, plaintiff contends in the complaint that defendant acted in its own economic interest in refusing to honor its contractual obligations “because it found the...policies were not profitable” and cites the conclusory allegation therein that defendant’s actions were “willful, reckless, and outrageous.” However, there are no factual allegations in the complaint from which it may be inferred that defendant possessed the scienter demanded under the standard set forth by the commonwealth’s appellate courts. Surely, if the fact of “fraud alone,” which demands a showing of intentional deception, has been deemed not enough, then conduct which is tantamount to a simple, albeit intentional, breach of contract will not suffice to warrant punitive damages absent some further tortious element of evil motive in the form of malice, vindictiveness or wanton disregard of plaintiff’s rights. Cf. Daniel Adams Associates, Inc. v. Rimbach Pub. Inc., 429 A.2d 726 (Pa. Super. 1981) (punitive damages not recoverable for breach of contract, irrespective of intentionality).

Although plaintiff points to Lesoon, supra, as authority in support of its claim for punitive damages in this matter, that case, as noted above, involved forgery by the insurer in the perpetration of a fraudulent transaction. Plaintiff here has not pled facts rising, or descending, to that level of egregiousness. Accordingly, the demurrer to the claim for punitive damages on the claim of common-law fraud thus appears to be on sound footing. However, in view of the stringent standard applicable to preliminary objections in the nature of a demurrer, plaintiff shall be afforded the opportunity to file an amended complaint to set forth further facts, if any he has, in support of the claim that defendant acted in a willful, reckless and outrageous fashion.

Emotional Distress Damages Recoverable in Claim of Fraud

Finally, in perhaps the most intriguing issue raised by the pleadings, defendant also objects to an averment in the complaint which appears to assert that plaintiff “suffered severe emotional distress due to the cancellation of the policies days after his wife’s death.” Defendant moves to strike the allegation, arguing that damages for mental suffering are not available under a cause of action based on fraud. Plaintiff responds that defendant has failed to cite a case that unequivocally precludes recovery of emotional distress in a claim sounding in fraud.

In Pennsylvania, there appears to be a lone appellate case touching upon this issue. In Schuster v. Clark, 50 Pa. Super. 459 (1912), the defendant real-estate agent had been found liable for deception in the course of procuring a buyer for plaintiff’s property. Ibid. In the context of addressing the propriety of an award of punitive damages in that instance, the court held that mental suffering could properly be taken into account in evaluating the vexation defendant’s conduct caused to plaintiff. Ibid. Accordingly, on the authority of that decision, it would appear that at least where punitive damages are recoverable, the finder of fact may consider the annoyance to, and grief of, the plaintiff in fashioning an appropriate punitive remedy. Because, in this matter, plaintiff has been afforded leave to amend his complaint in support of punitive damages, it would be premature at this juncture to strike the allegations regarding emotional distress. On that basis, therefore, defendant’s preliminary objection must fail and the averment in respect to emotional distress will not be stricken as impertinent.

That result, however, leaves unanswered the question of whether and, if so, under what circumstances damages for emotional distress may be recovered as compensatory damages in the event of fraud. And because the issue is likely to be soon revisited in this case, it is appropriate to address the circumstances in which emotional distress damages may be recovered under a claim of fraud.

No appellate decision in Pennsylvania has directly confronted the issue and the courts of Pennsylvania’s sister states remain divided on the question of the viability of emotional distress claims of damages as a consequence of fraud. See Steven J. Gaynor, Annotation, Fraud Actions: Right to Recover for Mental or Emotional Distress, 11 A.L.R.5th 88 (1993); Andrew L. Merit, Damages for Emotional Distress in Fraud Litigation: Dignitary Torts in a Commercial Society, 42 Vand. L.Rev. 1 (1989). Many jurisdictions have chosen to deny recovery on the theory that where fraud is alleged, “the interest ordinarily protected in such cases is purely an economic interest and does not include interests in personality.” Dobbs, Law of Remedies (2d Edition) § 9.2 (4) at 698. And, the argument runs, because fraud involves an economic as opposed to a dignitary tort, emotional injuries, which do not constitute pecuniary damages, are not recoverable. See ibid.

For example, in denying recovery for mental suffering stemming from fraud, the Supreme Court of Iowa explained as follows:

One of the keys to an award of damages for fraudulent misrepresentation is that the party committing the fraud could have contemplated the claimed damage as a consequence of the fraud at the time the misrepresentation was made. Damages for mental distress are not ordinarily contemplated in a business transaction; thus, few courts have recognized their availability as an element of fraud damages. See Walsh v. Ingersoll-Rand Co., 656 F.2d 367, 370-71 (8th Cir. 1981); Moore v. Slonim, 426 F.Supp. 524, 527 (D.Conn.). aff'd, 562 F.2d 38 (2d Cir. 1977) (“It is black letter law that damages for mental distress are not ordinarily available in a cause of action for a business fraud.”); Ellis v. Crockett, 51 Hawaii 45, 52, 451 P.2d 814, 820 (1969) (emotional distress damages recoverable only if amounting to separate intentional tort); Harsche v. Czyz, 157 Neb. 699, 710, 61 N.W.2d 265, 272 (1953) (prejudicial error to instruct jury on emotional distress in fraud case, even though damages for emotional distress recoverable for breach of promise of marriage). But see McNeill v. Allen, 35 Colo.App. 317, 325, 534 P.2d 813, 819 (1975). We adhere to the view announced by Professor Dobbs,
deceit is an economic, not a dignitary tort, and resembles, in the interests it seeks to protect, a contract claim more than a tort claim. For this reason, though strong men may cry at the loss of money, separate recovery for mental anguish is usually denied in deceit cases.

Dobbs [Law of Remedies (First Edition)] § 9.2, at 602.

Cornell v. Wunschel, 408 N.W.2d 369 (Iowa 1987). Likewise, the Supreme Court of Maine has rejected emotional distress as a basis for damages in fraud claims: “We therefore conclude that pecuniary loss is an essential element of a fraud action and that damages for emotional or mental pain and suffering are not recoverable. We see no reason to depart from the well-established view that fraud actions are essentially economic in nature and serve to protect economic interests. See generally D. Dobbs, Handbook on the Law of Remedies § 9.1 at 591-592 (1973).” Jourdain v. Dineen, 527 A.2d 1304 (Me. 1987).

This logic is sound as far as it goes. However, inherent in these cases is the assumption that in essentially economic transactions, emotions and mental well being are not normally contemplated. That merely begs the question of the proper result when mental suffering is indeed foreseeable based on either the nature of the parties’ relationship or the subject matter of their encounters. Alert to that nuance, other common law courts have opted not to foreclose recovery of damages for mental suffering resulting from acts of intentional deception. See, e.g., Kilduff v. Adams, Inc., 593 A.2d 478 (Conn. 1991) (emotional distress damages recoverable where defendant should have realized conduct involved unreasonable risk of emotional distress resulting in illness or bodily harm); Umphrey v. Sprinkel, 682 P.2d 1247 (Idaho 1983) (damage for mental suffering recoverable where, inter alia, bodily harm occurs and defendant had reason to know conduct would cause mental suffering for reasons other than mere pecuniary loss).

Pennsylvania courts do not appear to have ever expressly confronted a fraud claim in which the defendant was charged with having reason to know, either because of the subject matter of the encounter or the nature of the relationship with the plaintiff, that serious emotional injury and mental suffering would ensue as a result of deception or misleading information. Nevertheless, in Pennsylvania, fraud has traditionally been viewed as an economic tort and, as such, recoverable damages in the reported cases have been characterized as “actual pecuniary” loss demonstrated at trial. See, e.g., Delahanty v. First Pennsylvania Bank, N.A., supra, 464 A.2d at 1257 (measure of damages is “actual loss” and victim entitled to “all pecuniary losses” which result from reliance on false representations (citing Neuman v. Corn Exchange Nat. Bank & Trust Co., 356 Pa. 442, 451, 51 A.2d 759, 764 (Pa. 1947))). However, in assessing the availability of emotional distress damages in the context of economic claims premised on breach of contract, Pennsylvania courts have adverted to the restatement (first) of contracts § 341, which provides that

“[i]n actions for breach of contract, damages will not be given as compensation for mental suffering, except where the breach was wanton or reckless and caused bodily harm and where it was the wanton or reckless breach of a contract to render a performance of such a character that the defendant had reason to know when the contract was made that the breach would cause mental suffering for reasons other than mere pecuniary loss.”

See Rodgers v. Nationwide Mutual Ins. Co., 496 A.2d 811, 814-15 (Pa. Super. 1985) (quoting restatement (first) contracts § 341); see also Fennell v. Nationwide Mut. Fire Ins. Co., 603 A.2d 1064, 1068 (Pa. Super. 1992).

Thus, even when viewing a transaction purely from the economic realm of private-ordering based on the law governing causes sounding in assumpsit, the restatement of contracts instructs that emotional damages are recoverable in those, albeit unusual, instances in which emotional distress or mental suffering was a particularly likely consequence of a breach of one’s contractual obligations and that breach resulted in physical harm. Simply invoking the “economic” nature of the tort of fraud should not, therefore, categorically preclude recovery for emotional distress or mental suffering.

This view jibes with the treatment of misrepresentation in the relevant provisions of the restatement (second) of torts, which provides illustrations that militate against a blanket rejection of emotional distress claims whenever fraud is at issue. For instance, where the misrepresentation itself results in physical harm, such as deceit in representation of the fitness of a firearm that subsequently explodes and injures the plaintiff, recovery for all resulting injuries is appropriate. See restatement (second) torts § 557A; see also restatement (second) torts § 310 (where misrepresentation results in physical harm, damages recoverable in tort). In such circumstances, the natural and proximate harm readily could include mental suffering accompanying the physical injuries and it could not be seriously maintained the mere fact that the cause of action sounded in deceit would bar recovery. Cf. Murphy v. Penn Fruit Co., 418 A.2d 480, 485 (Pa. Super. 1985) (noting in negligence cases mental suffering accompanying even minor physical injury compensable); also see Armstrong v. Paoli Memorial Hosp., 633 A.2d 605, 609 (Pa. Super. 1993) (in negligence action emotional distress damages recoverable when accompanied by physical symptoms). These examples, in concert with the relevant sections of the restatement of contracts cited above by the Superior Court, do, however, caution that recovery is appropriately limited to the particular subset of cases in which the circumstances of the parties’ relationship or encounter rendered it foreseeable that such damages would follow as an anticipated consequence of a material misrepresentation and that a physical manifestation of the emotional distress resulted from the tortious conduct. See Rodgers, supra; accord Umphrey v. Sprinkel, supra, 682 P.2d at 1259. Although the precise circumstances in which such damages would be recoverable are more properly addressed on a case-by-case basis, it should certainly follow that when a defendant had reason to know of a particular mental or emotional fragility on the part of a plaintiff and preyed on that vulnerability through deceptive means, the law will not hesitate to compensate the victim for the damages occasioned. However, the mere loss of money, without more, will not suffice to allow recovery of emotional distress when fraud is alleged. Accord, Dobbs, supra, Law of Remedies at 698.

Recognizing the right to recover emotional distress damages in fraud cases analogous to the same small subset of actions recognized under the restatement of contracts § 341, cited in Rodgers, supra, also avoids the anomalous situation that otherwise might result from the gist-of-the-action doctrine. Although it has not been raised in this matter, under that principle, a cause of action which stems from the parties’ economically-based contractual arrangement will not be allowed to proceed in tort under a fraud theory. See, e.g., Hart v. Arnold, 884 A.2d 316, 339-40 (Pa. Super. 2005). And yet, if emotional-distress damages were recoverable under contract and not under fraud, the policy underpinnings of the gist-of-the-action doctrine would be subverted inasmuch as the scope of recovery would be more expansive under a cause of action sounding in assumpsit, which is ostensibly rooted in the more constrained realm of “mutual consensus,” than would be available under the law of tort, which is presumably informed by “larger social policies.” See id. In view of such a contradiction, it cannot be seriously maintained that the “economic” nature of the tort of fraud necessitates that recovery be constrained to pecuniary damages under circumstances when the law of assumpsit, if it were to apply, would sanction recovery ofnon-economic damages. Instead, the more coherent approach is to recognize that in the rare situation in which circumstances rendered it foreseeable that a material misrepresentation would occasion emotional distress for reasons beyond simply the loss of money, a fraudulent tortfeasor will remain answerable for all of the damages proximately caused by his conduct, including mental suffering that manifests itself in physical symptoms.

Turning backto the complaint filed in this matter, plaintiff has alleged no facts indicating that mental suffering or emotional distress was foreseeable in these circumstances or that such a result was, or reasonably should have been, within the contemplation or knowledge of defendant as a likely outcome. Nor has plaintiff pled that his emotional distress manifested itself in any physical symptoms. Accordingly, if plaintiff is in possession of unpled facts satisfying these standards, they must be presented in an amended complaint. Otherwise, the averment respecting alleged emotional distress incurred by plaintiff will not warrant recovery on the facts pled and, absent an amended pleading stating a claim for punitive damages, it will be stricken as impertinent pursuant to Pa.R.C.P. 1028 (a) (2).

Conclusion

For the foregoing reasons, plaintiff’s claims for attorney’s fees incurred in prior proceedings shall be stricken. The demurrer to punitive damages under the UTPCPL is sustained. Plaintiff shall further be required to file an amended complaint setting forth with sufficient specificity the basis for his claim of punitive damages for fraud, else that claim shall also be stricken. Finally, plaintiff shall be afforded an opportunity to re-plead the facts in support of his averment respecting emotional distress. Absent facts indicating that the defendant knew or should have known that emotional distress was a particularly likely result of a material misrepresentation, the averment regarding such mental suffering will be stricken as impertinent to the claim for compensatory damages.

ORDER

And now, this day of March, 2012, upon consideration of defendant’s preliminary objections, filed on February 8.2012, and plaintiff’s response thereto, filed on February 23.2012, and for the reasons set forth in the accompanying opinion, and consistent with said opinion, said objections are sustained in part and denied in part.

      . Curiously, there is no paragraph 46 appearing in the original version of the complaint filed of record in this matter; instead, only a fragment thereof appears between paragraphs 45 and 47. The quoted language is, therefore, taken from defendant’s brief. Rather than dismiss the objection on this basis as moot, the merits of the preliminary objection will be addressed so as to avoid repetition of the arguments upon the filing of an amended complaint.

      . In MacGregor v. Mediq Inc., 576 A.2d 1123, 1127 (Pa. Super. 1990), the Superior Court reinstated a cause of action where the plaintiff had sought both punitive and emotional distress damages in a single count jointly alleging negligence and fraud. In allowing the claims to move forward through an amended pleading, the court noted that “ [t]hese types of damage, of course, are recoverable under these two theories of liability.” Ibid. However, the court discussed and cited authorities dealing solely with punitive damages and did not further address the contours of recovery of emotional distress under either negligence or fraud, or both, in the absence of punitive damages so as to distinguish the case from Schuster, supra. See ibid.


source: Caselaw Access Project

author: FRIEDMAN, J.,

license: Public Domain

text:
    Huntington National Bank v. Dinkins
    C.R of Allegheny County,
    No. GD 11-10318.

      James F. Grenen for plaintiff

      Andrew J. Leger Jr. for defendent

    June 1, 2012
   FRIEDMAN, J.,

The defendants in two related but unconsolidated captioned actions have each filed petitions to strike or open confessed judgments entered against each of them based on separate guaranties each gave to plaintiff’s predecessor, Sky Bank, in connection with a loan made by Sky Bank to TFT Funding, LLC (“TFT”). The case involving Darnell Dinkins is filed at GD 11-10318; the case involving Robert L. Thornton is filed at GD 11-10311. Identical memoranda and orders are filed for each defendant.

A rule was issued on July 6, 2011 and, in accordance with local rules and custom, answers were filed, depositions were taken and an argument date was later scheduled for December 14,2011. After argument we took the case under advisement. After considering the evidence contained in the depositions and documents, we conclude that the defendants’ petitions must be denied.

The purpose of the original loan and the one of February 2008 was to enable TFT to lend money to their “customer base” to provide

...the necessary bridge financing for the acquisition and renovation of single family and 1-4 unit residential investment properties for [TFT’s] residential investor base. TFT [would] lend money to the individual investors for the purchase of properties in $30M to $50M range, and then allow for approximately $10M to $20M in renovations. At that point, the individual investor [was expected to] seek permanent financing (sometimes through Huntington Bank) based on competitive pricing, or sell the property.

See the “Transaction Overview” in dxhibit 7 to the Lennon deposition, which is a copy of one of the bank’s internal underwriting documents regarding the note now at issue, dated February 7, 2008.

The guaranties given to Sky Bank by Mr. Thornton and Mr. Dinkins are dated April 5, 2006. The guaranties are identical and say that they will apply not only to the Sky Bank loan represented by “the promissory note dated 10-6-05,” but also to “all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for the promissory note or agreement.” The note at issue, February 7,2008, states that it is in “renewal and replacement” of a note dated October 6, 2005, which is the Sky Bank note.

The sole legal question is whether a “renewal and replacement” is the same as a “renewal and substitution.” The guaranties at issue specify that they will apply to “renewals and substitutions.” The use of “replacement” rather than “substitution” as part of the characterization of the later note does not create an ambiguity. The words have an identical meaning. According to Merriam Webster’s Collegiate Dictionary, 10th Ed., 1994, “replace” means “to take the place of esp. as a substitute or successor;” “replacement” means “one that replaces another esp. in a job or function.” “Substitute” is defined as “to take the place of: Replace.” “Substitution” means “one that is substituted for another.” No other definitions have been suggested or discovered.

Although confession clauses are not favored under Pennsylvania law, even in the commercial context, they are enforceable in the appropriate circumstances. Mr. Dinkins and Mr. Thornton may have relied on statements made by Mr. Lennon which led them to believe that there was no need for them to sign new guaranties because the new note would pay off the note they had guaranteed. However, there is no evidence that the earlier note had been paid off or that the guarantees were released. More importantly here, the unambiguous language of the pertinent documents makes it clear that the note at issue was a “renewal and substitution” of the earlier note which they had already guaranteed. Therefore, the parol evidence rule bars the use of any statement by Mr. Lennon. There is no basis in either of these two cases for striking or opening the judgments. The Petitions must be denied. See order filed herewith.

ORDER OF COURT

And now, to-wit, June 1,2012, the defendant’s petition to strike or open confessed judgments is hereby denied for the reasons set forth in the attached memorandum in support of order.

      . Erroneously titled petitions to open default judgments.

      . Based on hindsight, this probably involved loans by TFT to people who wanted to buy inexpensive real estate with the thought of either “flipping” the property or keeping it and renting it out.


author: NEALON, J.,

text:
    Eastern Roofing Systems, Inc. v. Cestone

      C.P. of Lackawanna County,
    No. 08 CV 8764.

      John L. Siejk and Paul G. Batyko, for plaintiff.

      James M. Tressler, for defendants.

      April 13, 2012
   NEALON, J.,

A roofing contractor has filed two lawsuits against a local businessman, his residential construction firm and an industrial building construction company, and asserts contract, quasi-contract, statutory and tort claims against them for unpaid invoices relating to work it performed on eight construction projects. Defendants have filed preliminary objections demurring to the contractor’s claims for promissory estoppel, fraud, and negligent misrepresentation in both cases, as well as the individual businessman’s personal liability in the second suit involving the commercial construction company.

The contractor has alleged a valid claim for promissory estoppel as an alternative form of relief to its breach of contract claim. Since the contractor’s fraud claim in the first action is based upon the defendants’ contractual obligation to pay for roofing services, it is barred by the gist of the action doctrine. However, the roofing contractor’s fraud in the inducement claims in the second suit are not dependent upon any contractual duties, and as such, are not precluded by the gist of the action doctrine. The fraudulent inducement claims involve extra-contractual promises that the defendants allegedly had no intention of keeping when they made them, such that they may be actionable as fraud. Additionally, since the defendants were not engaged in the business or profession of providing information for pecuniary gain, and the contractor seeks economic damages only, the contractor has not stated a cause of action under section 552 of the restatement (second) of torts and its negligent misrepresentation claims are barred by the economic loss doctrine. Last, the defendant businessman who served as an officer of the commercial construction company may be individually liable for damages under the participation theory based upon the allegations that he personally participated in the tortious and wrongful conduct in question.

I. FACTUAL BACKGROUND

Plaintiff Eastern Roofing Systems, Inc., for itself and as successor to John Basalyga d/b/a Eastern Contracting Company (“Eastern Roofing”), has instituted two civil actions against defendant Michael G. Cestone (“Cestone”) and two businesses which he allegedly owns or operates. In the first suit docketed to No. 08 CV 8764 (Lacka, Co.), Eastern Roofing seeks to recover compensatory damages from Cestone and defendant Cestone Custom Homes (“Custom Homes”) for unpaid invoices totaling $11,090.00 for roofing and related services that Eastern Roofing provided in connection with the Sanctuary Townhomes project in Mountaintop, Luzerne County, Eastern Roofing has also sued Cestone and defendant S. G. Mastriani Construction Management, Inc. (“Mastriani Construction”) in No. 08 CV 8765(Lacka. Co.) and claims damages for unpaid invoices of $ 102,251.70 for roofing services performed on the Mauch Chunk Train Station project in Jim Thorpe, the Dunmore Civic Center project, the Polk Elementary School project in Wilkes Barre, the Wilkes-Barre Housing Authority project, the Mill Street Housing Development project in Wilkes-Barre, the Sleep Inn pool project in Dunmore, and the 405 Vemard Road project in Lackawanna County. In both cases, Eastern Roofing has advanced eight causes of action for breach of contract, violation of the Contractor and Subcontractor Payment Act, unjust enrichment, quantum meruit, account stated, promissory estoppel, fraudulent misrepresentation/inducement, and negligent misrepresentation.

In the Custom Homes litigation, Eastern Roofing avers that it entered into a written subcontract agreement with Custom Homes in November 2006 and later provided three invoices dated August 30,2007, September 15,2007 and October 29, 2008 upon completing the subcontracted work. (Docket Entry No. 4, ¶¶6-7 in No. 08 CV 8764). Based upon Custom Homes’ failure to pay those invoices totaling $11,090.00, Eastern Roofing has asserted a breach of contract claim against Cestone and Custom Homes. {Id., ¶¶14-20). Due to Eastern Roofing’s reported status as a “subcontractor” and Custom Homes’ position as a “contractor” under section 2 of the contractor and Subcontractor Payment Act (CSPA), 73 P.S. §502, Eastern Roofing demands compensatory damages, 12% annual interest, and reasonable counsel fees pursuant to sections 504, 507 and 512 of the CSPA, 73 P.S. §§504, 507 and 512. (Id., ¶¶22-28). Eastern Roofing alternatively seeks to recover in quasi-contract and advances claims for unjust enrichment and quantum meruit. (Id., ¶¶30-33, 35-37).

In addition to asserting a cause of action for account stated in the Custom Homes action, (Id., ¶¶39-42), Eastern Roofing has set forth claims for promissory estoppel, fraud and negligent misrepresentation which are the subject of the defendants’ preliminary objections. In its promissory estoppel count, Eastern Roofing contends that “[i]n reasonable and justifiable reliance on defendant’s repeated promises of payment in full, [Eastern Roofing] performed work for the defendant” which it “would not have performed... if not for defendant’s promises and representations to pay the full balance due and owing to [Eastern Roofing].” (Id., ¶¶54,56). Eastern Roofing’s fraudulent misrepresentation claim in the Custom Homes suit is predicated upon Cestone’s “numerous intentional and false” promises “to pay [Eastern Roofing] for the work it performed relative to the project.” (Id., ¶¶61). Eastern Roofing’s cause of action for negligent misrepresentation is premised upon Cestone’s “numerous negligent misrepresentations of material facts” comprised of “promising to pay [Eastern Roofing] for the work it performed relative to the project.” (Id., ¶68).

In the Mastriani Construction matter, Eastern Roofing alleges that it entered into a written contract with Mastriani Construction in May 2004 to perform work on the Mauch Chunk Train Station in Jim Thorpe. (Docket Entry No. 4, ¶¶8-10 in No. 08 CV 8765). In December 2004 and January 2005, Mastriani Construction approved change orders for Eastern Roofing to complete additional work that was not contained in the original contract. (Id., ¶11). Eastern Roofing contends that “near the completion of [its] work relative to the Mauch Chunk project, John Basalyga, Principal of [Eastern Roofing], spoke to Cestone via telephone and requested payment” of the sums due and owing at that point. (Id., ¶14). Eastern Roofing asserts that “[i]n a scheme of fraud and artifice and with the intention of inducing [Eastern Roofing] to perform other and additional work for [Cestone and Mastriani Construction], Cestone represented and promised [Eastern Roofing] that it would be paid for the work it performed..., and Cestone represented that he was on the board of directors of a local bank and that he would make it worth [Eastern Roofing’s] while if it waited on payment relative to the aforementioned change orders.” {Id., ¶15). “Specifically, Cestone represented and promised that he would provide [Eastern Roofing] with additional work and ensured [Eastern Roofing] that it would receive favorable financing, if ever needed, from the local bank relative to which Cestone represented [that] he served as a member of the board of directors.” (Id., ¶16).

Eastern Roofing submits that “[b]ased on the representations and promises of Cestone,” it “agreed to delay its demand for payment of the sum of $17,811.00” owed on the Mauch Chunk project and further agreed to perform $12,630.70 worth of additional work on the Dunmore Civic Center project, as per six written change orders approved by Mastriani Construction between December 2005 and August 2006. (Id., ¶¶18,21-23). Eastern Roofing also claims it is owed $9,500.00 under the subcontract agreement signed by the parties on May 13, 2005 in conjunction with the Polk Elementary School project, as well as $3,080.00 for extra work performed on that project pursuant to approved change orders dated January 18, 2006. (Id., ¶¶24-29). Eastern Roofing further maintains that it is owed $33,200.00 on the Wilkes Barre Housing Authority project, $17,340.00 on the Mill Street Housing Development project, $5,890.00 on the Sleep Inn pool project, and $2,800.00 on the 405 Vemard Road project in accordance with the parties’ subcontract agreements and approved change orders in 2006 and 2008. (Id., ¶¶30-50).

On December 24, 2008, Eastern Roofing commenced the Custom Homes and Mastriani Construction litigation by the filing of writs of summons. (Docket Entry Nos. 1 in Nos. 08 CV 8764 and 08 CV 8765). The writs were reissued on February 3, 2009 and served upon Cestone, Custom Homes and Mastriani Construction on Februaiy 18, 2009. (Id, Nos. 2-3). Eastern Roofing did not file its complaints in the Custom Homes and Mastriani Construction cases until August 17, 2011. (Id., Nos. 4). Eastern Roofing alleges in the Mastriani Construction complaint that it forwarded a statement to Mastriani Construction on January 28, 2009 demanding payment of its outstanding invoices for work performed on the Mauch Chunk Train Station, Dunmore Civic Center, Polk Elementary School, Mill Street Housing Development, Sleep Inn pool and 405 Vemard road projects, but that those invoices remain unpaid. (Docket Entry No. 4 in No. 08 CV 8765, ¶¶12-13, 22-23, 28-29, 40-41, 45-46, 49-50).

In the Mastriani Construction action, Eastern Roofing avers that Cestone is an officer and shareholder of Mastriani Construction and “personally and individually participated in the tortious and unlawful conduct described” in the Mastriani Construction lawsuit. (Id, ¶¶5, 52). As in the Custom Homes case, Eastern Roofing has alleged causes of action against Cestone and Mastriani Construction for breach of contract, violation of the CSPA, unjust enrichment, quantum meruit, account stated and promissory estoppel. (Id., ¶¶52-60,62-70,72-76,78-81, 83-87, 99-105). Unlike the Custom Homes litigation, the fraud and negligent misrepresentation claims against Cestone and Mastriani Construction are based upon the representations and promises allegedly made by Cestone during his telephone conversation with Eastern Roofing’s principal, John Basalyga, in late 2004. (Id., ¶¶14-17, 107-112, 114-119).

Cestone and Custom Homes have filed preliminary objections in the nature of a demurrer to Eastern Roofing’s claims for promissory estoppel, fraud and negligent misrepresentation. Cestone and Custom Homes submit that the promissory estoppel claim (Count VII) is “legally insufficient” in that Eastern Roofing has failed “to allege the essential element of damages accruing from reliance on a promise.” (Docket Entry No. 8, ¶7 in No. 08 CV 8764). Cestone and Custom Homes demur to Eastern Roofing’s fraud claim (count VIII) based upon the gist of the action doctrine and the common law precept that the “[m]ere breach of a promise to do something in the future is not actionable in fraud.” {Id., ¶¶8-9,14,16). Cestone and Custom Homes also seek to dismiss Eastern Roofing’s negligent misrepresentation claim (count IX) pursuant to the economic loss doctrine. {Id., ¶¶17-20).

Cestone has filed preliminary objections in the Mastriani Construction action, demurring to his individual liability for breach of contract, violations of the CSPA, unjust enrichment, quantum meruit, account stated and promissory estoppel in counts I to V and VII of the complaint. (Docket Entry No. 8, ¶¶2-27 in No. 08 CV 8765). Cestone and Mastriani Construction both demur to Eastern Roofing’s fraud and negligent misrepresentation claims (counts VIII, IX) on the same grounds raised in the Custom Homes suit, i.e., the gist of the action doctrine, non-liability for the mere breach of a promise to do something in the future, and the economic loss doctrine. {Id., ¶¶28-40). Consolidated oral argument on both sets of preliminary objections was conducted on February 2, 2012, at the conclusion of which the defense demurrers were submitted for a decision.

II. DISCUSSION

(A) STANDARD OF REVIEW

Preliminary objections in the nature of a demurrer test the legal sufficiency of the complaint. Richmond v. McHale, 35 A.3d 779, 783 (Pa. Super. 2012). The question presented by a demurrer “is whether, on the facts averred, the law says with certainty that no recovery is possible.” Betts Industries, Inc. v. Heelan, 33 A.3d 1262, 1265 (Pa. Super. 2011). Preliminary objections seeking the dismissal of a claim may be sustained only in cases that are clear and free from doubt. In re Estate of Sauers, 32 A.3d 1241, 1247-48 (2011). To be clear and free from doubt that dismissal is appropriate, it must appear with certainty that the law would not permit recovery based upon the facts averred. Unglo v. Zubik, 29 A.3d 810, 813 (Pa. Super. 2011). If any doubt exists as to whether a demurrer should be sustained, it should be resolved in favor of overruling the preliminary objections. Soto v. Nabisco, Inc., 32 A.3d 787, 790 (Pa. Super. 2011).

(B) PROMISSORY ESTOPPEL CLAIM IN CUSTOM: HOMES SUIT

Cestone and Custom Homes first seek to dismiss Eastern Roofing’s promissory estoppel claim on the ground that “[tjhere exist no allegations in the Complaint that [Eastern Roofing] suffered any damages as a result of relying on the promise...forming as the basis of its promissory estoppel claim.” (Docket Entry No. 11, p. 3 in No. 08 CV 8764). Cestone and Custom Homes argue that “[t]o raise that theory [Eastern Roofing] must plead some new damage - separate and apart from the underlying breach of contract damages - accruing from defendant’s inability to make good on its post-breach promise to pay [Eastern Roofing].” (Id., at p. 4). Eastern Roofing counters that it “properly and sufficiently states a claim for promissoiy estoppel” and that the defense “request for a dismissal of [Eastern Roofing’s] promissory estoppel claim at the pleading stage is simply premature.” (Id., No. 12 at p. 4).

To maintain an action for promissory estoppel, the plaintiff must show that: (1) the promissor made a promise that [s]he should have reasonably expected to induce action or forbearance on the part of the promissee; (2) the promissee actually took action or refrained from taking action in reliance on the promise; and (3) injustice can be avoided only be enforcing the promise. Crouse v. Cyclops Industries, 560 Pa. 394, 403, 745 A.2d 606, 610 (2000); Guerra v. Redevelopment Authority of City of Philadelphia, 27 A.3d 1283, 1292 (Pa. Super. 2011). “In effect, the detrimental reliance of the promissee creates the consideration necessary for the formation of a contract, the breach of which is actionable.” Matarazzo v. Millers Mutual Group, Inc., 927 A.2d 689, 692 (Pa. Cmwlth. 2007). Promissory estoppel “is invoked in order to avoid injustice” and “permits an equitable remedy to a contract dispute” by making “otherwise unenforceable agreements binding.” Pratter v. Penn Treaty American Corp., 11 A.3d 550, 556 (Pa. Cmwlth. 2010) (quoting Crouse, supra). It is proper for a plaintiff to plead promissory estoppel as an alternative cause of action to a breach of contract claim. See, JK Roller Architects, LLC v. Tower Investments, Inc., 2003 WL 1848101, at * 1 n. 1 (Phila. Co. 2003) (“Unjust enrichment and promissory estoppel are proper alternative causes of action to a breach of contract claim.”); Booth v. Southern Fulton School District, 43 D. & C. 4th 21, 32 (Fulton Co. 1998) (“Because these plaintiffs are seeking to recover on the theories of breach of contract and promissory estoppel, they should be required to plead each alternative cause of action in a separate count.”).

Eastern Roofing avers in the complaint that Cestone and Custom Homes repeatedly promised to pay it for its roofing services, that Eastern Roofing performed work on the Sanctuary Townhomes project in reasonable and justifiable reliance on those promises, and that it has suffered damages of $ 11,090.00 “ [a] s a direct and proximate result of the defendant’s failure to pay the outstanding balance due and owing” to Eastern Roofing. (Docket Entry No. 4, ¶¶53-59 in No. 08 CV 8764). If proven at trial, those factual allegations will establish the elements of a promissory estoppel claim. Thus, Eastern Roofing has adequately pled a cause of action for promissory estoppel as an alternate theory of liability to its breach of contract claim.

Cestone and Custom Homes have not cited any authority for their proposition that Eastern Roofing must allege distinct damage “separate and apart from the underlying breach of contract damages” in order to state a claim for promissory estoppel. It is axiomatic that consideration is an essential component of an enforceable contract, Pennsy Supply. Inc. v. American Ash Recycling Corp. of Pennsylvania, 895 A.2d 595, 600 (Pa. Super. 2006), app. denied, 589 Pa. 722, 907 A.2d 1103 (2006), and “that promissory estoppel is used to enforce a promise not otherwise supported by consideration.” Id., at 604. As with a contract claim, the damages recoverable in an action for promissory estoppel are designed to put the promisee in the same position that [s]he would have enjoyed if the promise had been performed by the promisor. See, Travers v. Cameron County School District, 117 Pa. Cmwlth. 606, 614 n. 5, 544 A.2d 547, 551 n. 5 (1988) (quoting Restatement (Second) of Contracts §90, which has been adopted as the law in Pennsylvania, see, Lobolito, Inc. v. North Pocono School District, 562 Pa. 380, 389 n. 9, 755 A.2d 1287, 1292 n. 9 (2000), and stating that “[a] promise binding under [section 90] is a contract, and full-scale enforcement by normal remedies is often appropriate,” but “damages should not put the promisee in a better position than performance of the promise would have put him.”). It is, therefore, not necessary for Eastern Roofing to plead damages separate from its breach of contract losses in order to state an alternate claim for promissory estoppel. Since Eastern Roofing has averred a cognizable promissory estoppel claim, Cestone and Custom Homes have not established that the law states with certainty that no recovery is possible on the facts alleged.

(C) GIST OF THE ACTION DOCTRINE

Cestone, Custom Homes and Mastriani Construction seek to dismiss Eastern Roofing’s claims for fraudulent misrepresentation in both lawsuits. To state a claim for common law fraud, the plaintiff must allege: (1) a representation; (2) material to the transaction at issue; (3) made falsely, with either knowledge or reckless disregard of its falsity; (4) with the intent to mislead another person or induce justifiable reliance; and (5) some injury caused by the reliance. Bennett v. A. T. Masterpiece Homes at Broadsprings, LLC, 2012 WL 698132, at * 5 n. 5 (Pa. Super. 2012). The intent to defraud may be established by circumstantial evidence, that is, by inferences that reasonably may be drawn from the facts and circumstances. Integrated Behavioral Health Services v. Department of Public Welfare, 871 A.2d 296, 300 (Pa. Cmwlth. 2005); Brown v. Jones, 2012 WL 756607, at * 4 (Lacka. Co. 2012).

In the Custom Homes action, Eastern Roofing’s fraud claim is based upon the serial promises allegedly made by Cestone and Custom Homes to pay Eastern Roofing for the work it performed on the Sanctuary Townhomes project. (Docket Entry No. 4, ¶¶61-66 in No. 08 CV 8764). The obligation to pay Eastern Roofing for the services it provided on that project arose from the Sanctuary Townhomes subcontract agreement which is attached to the complaint. (Id., ¶6, exhibit A). In contrast, Eastern Roofing’s fraudulent inducement claim in the Mastriani Construction suit stems from the telephone conversation that Cestone allegedly had with John Basalyga in late 2004 during which he promised Eastern Roofing that it would receive additional work and obtain favorable financing from the local bank on which he served as a director if it waited to receive payment due on the change orders for the various construction projects. (Docket Entry No. 4, ¶¶14-17 in No. 08 CV 8765).

Cestone, Custom Homes and Mastriani Construction first contend that Eastern Roofing’s fraud claims in both lawsuits are barred by the gist of the action doctrine. (Docket Entry No. 11, pp. 5-6 in No. 08 CV 8764; Docket Entry No. 11, p. 7 in No. 08 CV 8765). In the Custom Homes action, Eastern Roofing responds that the demurrer to its fraud claim “is simply premature” since “it is too early in the proceedings to classify the gist of [Eastern Roofing’s] suit.” (Docket Entry No. 12, p. 7 in No. 08 CV 8764). Eastern Roofing maintains in the Mastriani Construction matter that its fraudulent inducement claim is not dependent upon the various subcontract agreements and, to the contrary, is predicated upon the Cestone-Basalyga telephone conversation and Eastern Roofing’s subsequent agreement “to complete other and additional work for the defendants relative to the Dunmore Civic Center, the Polk Elementary School, the Wilkes Barre Townhouses, Mill Street, Sleep Inn, and Vernard Road projects.” (Docket Entry No. 12, pp. 8-9 in No. 08 CV 8765).

“Under Pennsylvania law, a cause of action framed as a tort but reliant upon contractual obligations will be analyzed to determine whether the cause of action properly lies in tort or contract.” Autochoice Unlimited, Inc. v. Avangard Auto Finance, Inc., 9 A.3d 1207, 1212 (Pa. Super. 2010). The gist of the action “doctrine ‘maintains the conceptual distinction between breach of contract claims and tort claims,’ and precludes plaintiffs from recasting ordinary breach of contract claims as tort claims.” McShea v. City of Philadelphia, 606 Pa. 88, 96, 995 A.2d 334, 339 (2010) (quoting eToll, Inc. v. Elias/Savion Advertising. Inc., 811 A.2d 10, 14 (Pa. Super. 2002)). Under this approach, “[t]ort actions lie for breaches of duties imposed by law as a matter of social policy, while contract actions lie only for breaches of duties imposed by mutual consensus agreements between particular individuals.” Mirizio v. Joseph, 4 A.3d 1073, 1079 (Pa. Super. 2010) (quoting eToll, supra), app. denied, 14 A.3d 829 (Pa. 2010). The gist of the action doctrine operates to bar tort claims (1) arising solely from the contractual relationship between the parties, (2) when the alleged duties breached were grounded in the contract itself, (3) where any liability stems from the contract, and (4) when the tort claim essentially duplicates the breach of contract claim or where the success of the tort claim is dependent on the success of the breach of contract claim. Strausser, 944 A.2d at 767; Reardon v. Allegheny College, 926 A.2d 477, 486 (Pa. Super. 2007), app. denied, 596 Pa. 755, 947 A.2d 738 (2008).

Claims of fraud in the performance of a contract are clearly barred under the gist of the action doctrine. Autochoice Unlimited, Inc. v. Avengard Auto Finance, Inc., 9 A.3d 1207, 1212 (Pa. Super. 2010) (quoting Hart v. Arnold, 884 A.2d 316, 340 (Pa. Super. 2005), app. denied, 587 Pa. 695, 897 A.2d 458 (2006)); Sparrow v. PACE/CM, Inc., 2011 WL 1131487, at * 10 (Lacka. Co. 2011). However, a tort claim asserting fraudulent inducement to enter into an agreement is not precluded by the gist of the action doctrine since fraudulent inducement allegations do not relate to the defendant’s failure to perform obligations under the parties’ contract. Mirizio, 4 A.3d at 1085-86; Healey v. Wells Fargo, N.A., 2012 WL 994564, at * 18 (Lacka. Co. 2012); Busy Bee, Inc. v. Wachovia Bank, N.A., 2006 WL 723487, at *20 (Lacka. Co.2006), aff’d, 932 A.2d 248 (Pa. Super. 2007), app. denied, 598 Pa. 778, 959 A.2d 318 (2008). But see, Vives v. Rodriguez, 2012 WL 298760 at * 11 (E.D. Pa. 2012) (“We ultimately side with the authority from our circuit, and predict that the Pennsylvania Supreme Court would find fraudulent inducement claims predicated upon misrepresentations as to a party’s intent to perform under a contract to be barred by the gist of the action doctrine.”).

Eastern Roofing’s fraud claim in the Custom Homes suit is based entirely upon the contractual obligation of Cestone and Custom Homes to pay Eastern Roofing for its work on the Sanctuary Townhomes project pursuant to their subcontract agreement. As such, those fraud claims are clearly foreclosed by the gist of the action doctrine in that they involve the alleged fraudulent performance of contract-based duties. However, the genesis of Eastern Roofing’s fraudulent inducement claim in the Mastriani Construction action is the Cestone-Basalyga telephone conversation in late 2004, not the seven subcontract agreements for the projects at issue in that case. Cestone purportedly induced Eastern Roofing to enter into the Dunmore Civic Center, Polk Elementary School, Wilkes Barre Housing Authority, Mill Street Housing Development, Sleep Inn and Vemard Road subcontracts by falsely representing that Mastriani Construction would pay the overdue Mauch Chunk Train Station invoices and procure favorable financing for Eastern Roofing from Cestone’s local bank. Since the proffered liability for such fraudulent inducement does not stem from those contracts and the success of Eastern Roofing’s fraudulent inducement claim is not dependent upon the outcome of its breach of contract claims, Eastern Roofing’s cause of action for fraudulent inducement in the Mastriani Construction litigation is not barred by the gist of the action doctrine. Consequently, the demurrer to count VIII of the complaint in the Custom Homes case will be sustained, but the demurrer to the fraudulent inducement claim in the Mastriani Construction action will be overruled.

(D) LEGAL SUFFICIENCY OF FRAUD CLAIM IN MASTRIANI CONSTR UCTION SUIT

Cestone and Mastriani Construction alternatively demur to Eastern Roofing’s fraud in the inducement claim on the ground that Eastern Roofing “merely alleges the breach of an alleged promise to make a future payment.” (Docket Entry No. 11, p. 7 in No. 08 CV 8764). Arguing that the breach of a promise to do something in the future is not actionable as fraud, they assert that Eastern Roofing’s fraud “claim is legally insufficient and should be dismissed.” (Id.). Eastern Roofing replies that an intention to take future action which does not actually comport with the declarant’s true state of mind can constitute a misrepresentation of an existing fact. (Id., No. 12, p. 8) (quoting Phoenix Technologies, Inc. v. TRW. Inc., 834 F.Supp. 148, 152 (E.D. Pa. 1993)).

It is true that the mere breach of a promise to do something in the future, without more, is not fraud. eToll, Inc. v. Elias/Savion Advertising, Inc., 811 A.2d 10, 16-17 n. 6 (Pa. Super. 2002); Busy Bee, Inc., supra at * 24. However, “a promise which the promissor had no intention of keeping at the time [s]he made it may be actionable as fraud.” Martrano v. Quizno’s Franchise Co., LLC, 2009 WL 1704469, at * 8 n. 26 (W.D. Pa. 2009); Precision Printing Co., Inc. v. Unisource Worldwide, Inc., 993 F.Supp. 338, 356 (W.D. Pa. 1998); Fox’s Food, Inc. v. K-Mart Corp., 870 F.Supp. 599, 609 (M.D. Pa. 1994); DTK Ventures, LP v. Russo, 2006 WL 2988463, at * 7 (Lacka. Co. 2006). “Statements of intention,...which do not, when made, represent one’s true state of mind are misrepresentations known to be such and are fraudulent.” College Watercolor Group. Inc. v. William H. Newbauer, Inc., 468 Pa. 103, 115, 360 A.2d 200, 206 (1976); DTK Ventures, supra; Busy Bee. Inc., supra.

Eastern Roofing asserts that Cestone, acting individually and on behalf of Mastriani Construction, represented that they would pay Eastern Roofing’s invoices, provide Eastern Roofing with additional work and secure favorable financing for it via a local bank if it deferred the payment of its outstanding bills. (Id, No. 4, ¶¶ 14-17). Eastern Roofing avers that Cestone and Mastriani Construction knew that those representations were false when they were made with the clear intent of misleading Eastern Roofing and inducing it to act in reliance upon those misrepresentations. (Id., ¶¶109-111). Therefore, affording Eastern Roofing the benefit of all inferences which may be reasonably deduced from those averments, see, Landay v. Rite Aid, 2012 WL 982790, at * 1 (Pa. Super. 2012) (when considering preliminary objections, all material facts set forth in the complaint are admitted as true, as well as all inferences reasonably deducible therefrom), it has alleged that Cestone and Mastriani Construction made certain promises which they had no intention of keeping at the time that they were made. Since those statements of intention arguably did not reflect their true state of mind, Cestone and Mastriani Construction may be liable for fraud. Hence, their demurrer to Eastern Roofing’s fraudulent inducement claim will be overruled.

(E) ECONOMIC LOSS DOCTRINE

Cestone, Custom Homes and Mastriani Construction next seek to dismiss Eastern Roofing’s negligent misrepresentation claims in both lawsuits. Negligent misrepresentation requires proof of: (1) a misrepresentation of a material fact; (2) made under circumstances in which the misrepresenter ought to have known its falsity; (3) with an intent to induce another to act on it; and (4) which results in injury to a party acting in justifiable reliance on the misrepresentation. Bortz v. Noone, 556 Pa. 489, 500, 729 A.2d 555, 561 (1999); Smalanskas v. Indian Harbor Insurance Company, 2008 WL 3889290, at * 7 (Lacka. Co. 2008), aff’d, 970 A.2d 490 (Pa. Super. 2009). The primary difference between fraudulent misrepresentation and negligent misrepresentation is the state of mind of the person making the representation. Busy Bee, Inc. v. Corestates Bank, 61 D. & C. 4th 496, 521-522 (Lacka. Co. 2004). With a negligent misrepresentation claim, the speaker need not know that the spoken words are untrue, but must have failed to make a reasonable investigation of the truthfulness of the representation. Bortz, 556 Pa. at 501, 729 A.2d at 561; Com. v. TAP Pharmaceutical Products, Inc., 36 A.3d 1197, 1276 (Pa. Cmwlth.2011).

Cestone, Custom Homes and Mastriani Construction contend that Eastern Roofing’s “negligent misrepresentation claims against defendants allege exclusively economic losses and seek exclusively economic damages.” (Docket Entry No. 11, p. 11 in No. 08 CV 8764; Docket Entry No. 11, p. 8 in No. 08 CV 8765). Citing E.J. Deseta, Inc. v. Goldner/Accord Ballpark, L.P, 2006 WL 51207, *2 (Phila. Co. 2006), those defendants posit that “[t]he economic loss doctrine ‘states that no cause of action exists for negligence that results solely in economic damages.’” (Id). Eastern roofing argues that “section 552 of the restatement (second) of torts...allows [negligent misrepresentation] claims to evade dismissal even if they assert purely economic losses.” (Docket entry No. 12, pp. 7-8 in No. 08 CV 8764; Docket entry No. 12, p. 10 in No. 08 CV 8765). Eastern roofing submits that “at this stage of the proceedings...it is too premature to determine whether section 552 of the restatement (second) of torts is applicable.” (Docket entry No. 12, p. 9 in No. 08 CV 8764; Docket entry No. 12, p. 11 in No. 08 CV 8765).

Although the economic loss doctrine traces its roots to the United States Supreme Court decision in Robins Dry Dock and Repair Company v. Flint. 275 U.S. 303, 309 (1927), its first reported reference in Pennsylvania precedent is found in Aikens v. Baltimore & Ohio Railroad Company, 348 Pa. Super. 17, 501 A.2d 277 (1985). In Aikens, employees of aplant that was damaged by a train derailment brought a negligence action against the railroad company for lost wages they suffered after production at the plant was curtailed due to the derailment. Noting that the employees did not suffer personal injury or property damage from the derailment, the Superior Court upheld the dismissal of the employees’ suit and found that “negligent harm to economic advantage alone is too remote for recovery under a negligence theory.” Id., at 21, 501 A.2d at 279.

Some courts later extended the breadth of the economic loss doctrine to preclude recovery for negligent misrepresentation in construction litigation. In Palco Linings, Inc. v. Pavex, Inc., 755 F.Supp. 1269 (M.D. Pa. 1990), the federal district court held that a subcontractor could not sue an architect and engineer for negligent misrepresentation after the subcontractor incurred additional costs as a result of delays allegedly attributable to their faulty design. Finding such claims barred by the economic loss doctrine, the Palco Linings court reasoned that under the restatement (second) of Torts §552, tort liability for economic loss caused by negligent misrepresentation is limited to those defendants who are in the business of selling information upon which customers rely and take conditional action, such as attorneys, abstractors of title, surveyors, inspectors of goods, operators of ticket services, and banks dealing with nondepositor’s checks. Id., at 1274.

In David Pflumm Paving & Excavating, Inc. v. Foundation Services Company, 816 A.2d 1164 (Pa. Super. 2003), an excavation subcontractor on a township’s library construction project filed a negligent misrepresentation claim against architectural and engineering companies that performed subsurface testing for the township to assist it in the design of its library. The excavation subcontractor alleged that it encountered large quantities of rock and incurred substantial expense after it relied upon the companies’ subsurface testing report which negligently represented that rock would not be encountered during excavation. Relying upon Linde Enterprises. Inc. v. Westmoreland Engineering Company. Inc., 412 Pa. Super. 67, 602 A.2d 897 (1991), app. denied, 533 Pa. 601, 617 A.2d 1275 (1992), the Superior Court stated that “[ajlthough negligence actions pursuant to section 552 may lie where there is loss that is not solely economic,...as this court...indicated in Linde, the economic loss doctrine precludes recovery in negligence actions for injuries which are solely economic.” David Pflumm Paving & Excavating, Inc., 816 A.2d at 1170. As a result, the Superior Court affirmed the dismissal of the subcontractor’s negligent misrepresentation claims. Id., at 1171 (“Because, as explained above, Pflumm’s claims for negligent misrepresentation are solely economic, they are precluded by the economic loss doctrine.”).

The Supreme Court of Pennsylvania later considered whether a contractor could maintain a negligent misrepresentation claim against an architect under section 552 of the Restatement. In Bilt-Rite Contractors. Inc. v. The Architectural Studio, 581 Pa. 454, 866 A.2d 270 (2005), the contractor alleged that the architect’s plans and specifications, upon which the contractor relied in submitting the winning bid, contained negligent misrepresentations which caused the contractor to suffer economic loss in connection with a school construction project. The Supreme Court interpreted section 552 as applying “only to those businesses which provide services and/or information that they know will be relied upon by third parties in their business endeavors, and it includes a foreseeability requirement, thereby reasonably restricting the class of potential plaintiffs.” Id., at 479, 866 A.2d at 286. In declining to follow Palco Linings, supra, and Linde Enterprises, supra, the Bilt-Rite court stated that “we hereby adopt section 552 as the law in Pennsylvania in cases where information is negligently supplied by one in the business of supplying information, such as an architect or design professional, and where it is foreseeable that the information will be used and relied upon by third persons, even if the third parties have no direct contractual relationship with the supplier of information.” Id., at 482, 866 A.2d at 287. See also, TAP Pharmaceutical, 36 A.3d at 1277.

The Supreme Court subsequently concluded that liability for negligent misrepresentation under section 552 is confined to those individuals or entities engaged in the business of supplying information for pecuniary gain. In Excavation Technologies, Inc. v. Columbia Gas Company of Pennsylvania, 604 Pa. 50, 985 A.2d 840 (2009), acontractor that sustained economic loss as a result of a utility’s failure to properly mark the location of underground gas lines sued the utility for negligent misrepresentation after the contractor struck certain gas lines and suffered economic losses due to construction delays. The trial court sustained the utility’s demurrer and the Superior Court affirmed, reasoning that a utility is not “akin to the architect in Bilt-Rite who was a professional information provider” and that “[t]he relationship between utilities and contractors bears no resemblance to the relationships discussed in Bilt-Rite.” Excavation Technologies, Inc. v. Columbia Gas Company of Pennsylvania, 936 A.2d 111, 116 (Pa. Super. 2007) (en banc). The Supreme Court agreed and held that “[b]ecause the [utility] is not in the business of providing information for pecuniary gain, section 552(1) and (2) do not apply here.” Excavation Technologies. Inc., 604 Pa. at 56, 985 A.2d at 843.

Other courts have similarly restricted the scope of viable claims under section 552 which are not barred by the economic loss doctrine. See, Integrity Carpet Cleaning, Inc., v. Bullen Companies, 2011 WL 31397, at * 4 (E.D. Pa. 2011) (“The Pennsylvania Supreme Court expressly limited its holding in Built-Rite to apply to design professionals, and did not include generic manufacturers, even those involved in sophisticated work.”); Federal Home Loan Bank of Pittsburgh v. J.P Morgan Securities LLC, 19 D. & C. 5th 32, 46 (Alleg. Co. 2010) (“The Supreme Court made clear in its rationale that application of section 552 liability for economic loss was limited to design professionals, such as architects, because they have a contractual relationship with some party to the construction project, typically the owner, from which a duty flows to foreseeable third parties to that contract.”). In the cases sub judice, Eastern Roofing does not allege that Cestone, Custom Homes or Mastriani Construction acted as professional information providers or otherwise supplied plans or specifications which contained negligent misrepresentations that caused Eastern Roofing to suffer pecuniary harm. Rather, Eastern Roofing’s negligent misrepresentation claims merely reference Cestone’s promises “to pay [Eastern Roofing] for the work it performed” on the construction projects. (Docket entry No. 4, ¶68 in No. 08 CV 8764; Docket Entry No. 4, ¶114 in No. 08 CV 8765). The contractual relationship between a contractor and a subcontractor is not comparable to the relationships analyzed m Bilt-Rite, absent some suggestion that the contractor negligently provided professional design information upon which the subcontractor relied in performing its work.

Eastern Roofing has not alleged any facts which theoretically could state a cognizable claim under section 552 as interpreted by Bilt-Rite and its progeny. It does not allege any personal injury or property damage and instead claims purely economic loss. Eastern Roofing contends that its “negligent misrepresentation claim should be allowed to proceed to discovery, and if after reasonable discovery it appears that section 552 is inapplicable, defendants will have an opportunity to contest [Eastern Roofing’s] negligent misrepresentation claim via summary judgment.” (Docket Entry No. 12, p. 9 in No. 08 CV 8764; Docket Entry No. 12, p. 11 in No. 08 CV 8765). However, without any averments in the complaint which conceivably infer a valid claim under section 552, Eastern Roofing cannot withstand the defense demurrers based upon the economic loss doctrine. Accordingly, the preliminary objections of Cestone, Custom Homes and Mastriani Construction to Eastern Roofing’s negligent misrepresentation claims set forth in counts IX of the complaints in the Custom Homes and Mastriani Construction actions will be sustained.

(F) CESTONE’S INDIVIDUAL LIABILITY

Cestone seeks to dismiss all claims filed against him in the Mastriani Construction case and argues that he cannot be individually liable since he did not sign any of the subcontract agreements, nor did he personally benefit from the wrongful conduct alleged in the complaint. (Docket Entry No. 11, pp.4-6 in No. 08 CV 87665). Eastern Roofing maintains that Cestone may be personally accountable for damages based upon the “participation theory” of liability. (Id, No. 12, pp.4-6).

Although an officer or agent of a corporation who takes no part in the commission of a tort committed by the corporation is not individually liable to third parties for such a tort, Nordi v. Keystone Health Plan West. Inc., 989 A.2d 376, 384 (Pa. Super. 2010), such an officer or agent may be held liable in tort under the “participation theory.” Roethlein v. Portnoff Law Associates, Ltd., 25 A.3d 1274, 1280 (Pa. Cmwlth. 2011). Under that theory, the court imposes liability on the participating individual as an actor, not as an owner or officer. Wicks v. Milzoco Builders, Inc., 503 Pa. 614, 621, 470 A.2d 86, 90 (1983); Nordi, supra. To impose liability under the participation theory, the plaintiff must establish that the individual officer or agent engaged in misfeasance rather than mere nonfeasance. Roethlein, supra; Com. ex rel. Corbett v. Snyder, 977 A.2d 28, 46 (Pa. Cmwlth. 2009), app. denied, 606 Pa. 700, 999 A.2d 1247 (2010). Misfeasance involves the improper performance of an act whereas nonfeasance refers to the simple failure to act. Shay v. Flight C Helicopter Services, Inc., 822 A.2d 1, 17 (Pa. Super. 2003). Liability may exist under the participation theory even though the agent or officer derived no personal benefit and the corporation alone was enriched by the tortious act. Shonberger v. Oswell, 365 Pa. Super. 481, 485, 530 A.2d 112, 114 (1987); Sanzone v. Phoenix Technologies, Inc., 1990 WL 50732, at * 13 (E.D. Pa. 1990).

Eastern Roofing has specifically averred that Cestone “personally and individually participated in the tortious and unlawful conduct” alleged in the complaint filed in the Mastriani Construction lawsuit. (Docket Entry No. 4, ¶¶5, 52 in No. 08 CV 8765). Indeed, Cestone was the sole tortfeasor during the Cestone-Basalyga telephone conversation involving the fraudulent misrepresentations claimed by Eastern Roofing. The conduct in which Cestone allegedly participated involved misfeasance rather than nonfeasance and exposes Cestone to potential liability under the participation theory. See, Wicks, supra; Roethlein, supra. The fact that Cestone purportedly did not benefit personally from the alleged misconduct is of no consequence. Shonbemer, supra. Accordingly, Cestone’s demurrer to the individual claims asserted against him will be overruled. An appropriate order follows.

ORDER

And now, April 13, 2012, upon consideration of the preliminary objections in the nature of a demurrer filed by defendants Michael C. Cestone, Individually and t/d/b/a Cestone Custom Homes in No. 08 CV 8764 (Lacka. Co.), the preliminary objections in the nature of a demurrer filed by defendants Michael G. Cestone and S. G. Mastriani Construction Management, Inc. in No. 08 CV 8765 (Lacka. Co.), the memoranda of law submitted by the parties and the oral argument of counsel, and based upon the reasoning set forth in the foregoing memorandum, it is hereby ordered and decreed that:

1. Defendants ’ preliminary obj ections in the nature of a demurrer are sustained in part and overruled in part;

2. The preliminary objections to the plaintiff’s promissory estoppel claim (count VII) in No. 08 CV 8764 are overruled;

3. The preliminary objections to the plaintiff’s fraudulent misrepresentation claim (count VIII) in No. 08 CV 8764 are sustained based upon the gist of the action doctrine, and count VIII of the complaint in No. 08 CV 8764 is dismissed;

4. The preliminary objections to the plaintiff’s negligent misrepresentation claims (counts IX) in No. 08 CV 8764 and No. 08 CV 8765 are sustained pursuant to the economic loss doctrine, and counts IX of the complaints filed in No. 08 CV 8764 and No. 08 CV 8765 are dismissed;

5. The preliminary objections to the plaintiff’s fraudulent inducement claim (count VIII) in No. 08 CV 8765 are overruled;

6. The preliminary objections of defendant Michael G. Cestone to his personal liability for breach of contract (count I), violation of the Contractor and Subcontractor Payment Act (count II), unjust enrichment (count III), quantum meruit (count IV), account stated (count V) and promissory estoppel (count VII) in No. 08 CV 8765 are overruled based upon the participation theory;

7. With the concurrence of the plaintiff, the defendants’ preliminary objections to the plaintiff’s claims for violations of the Unfair Trade Practices and Consumer Protection Law (counts VI) in No. 08 CV 8764 and No. 08 CV 8765 are sustained, and count VI of the complaints filed in No. 08 CV 8764 and No. 08 CV 8765 are dismissed; and

8. Within the next twenty (20) days, the defendants shall file responsive pleadings to the complaints in No. 08 CV 8764 and No. 08 CV 8765

      . In count VI of the complaints filed in both actions, Eastern Roofing also set forth claims for violations of the Unfair Trade Practices and Consumer Protection Law, 73 P.S. §201-1 et seq., but has agreed to voluntarily withdraw those claims.

      . In contrast to the Superior Court’s four-part analysis, the Commonwealth Court employs a “misfeasance/nonfeasance” test in determining whether an action sounds in contract or in tort under the gist of the action doctrine. Under the Commonwealth Court’s approach, if there is a “misfeasance” or an improper performance of a contractual obligation, the defendant breaches a duty imposed by law as a matter of social policy and the gist of the action sounds in tort. Conversely, if there is a nonfeasance or mere failure to perform, the wrong attributed to the defendant is solely a breach of the defendant’s duty to perform under the contract, in which instance the gist of the plaintiff’s action sounds solely in contract. Pratter v. Penn Treaty American Corp., 11 A.3d 550, 559 n. 9 (Pa. Cmwlth. 2010) (quoting Yocca v. Pittsburgh Steelers Sports, Inc., 806 A.2d 936, 944 (Pa. Cmwlth. 2002), rev’d on other grounds, 578 Pa. 479, 854 A.2d 425 (2004)).


author: MAZERMOSS, /.,

text:
    Stier v. Bensalem Racing Assoc., Inc.

      J. Davy Yockey, for plaintiff.

      Andrew J. Kramer, for defendant.

      March 29, 2012
   MAZERMOSS, /.,

The instant issue is whether we correctly determined venue was improper in Philadelphia County by sustaining defendants’ preliminary obj ections. For the reasons below, we correctly ordered the case transferred to Bucks County with costs to plaintiff.

FACTS AND PROCEDURAL HISTORY

Plaintiffs Regina and Richard Stier (“plaintiffs”) filed a complaint on November 8, 2011 against defendants Greenwood Gaming & Entertainment Inc., Greenwood Racing, Inc., Robert Green, William Hogwood, Parx Casino Design, Inc. and Greenwood Gaming Services Co., and Keystone Turf Club, Inc. (“Keystone”), and Bensalem Racing Association, Inc (“Bensalem Racing”), complaint, 11/08/11. All defendants are located in Bensalem, Bucks County, Pennsylvania except Bensalem Racing, located in Philadelphia. Id. ¶¶2-9. The complaint stemmed from an October 15, 2010 incident at Parx Casino where Regina Stier alleged serious injury when she tripped and fell on a drop between a sidewalk and mulch bed. See id. ¶12. The complaint alleged carelessness and negligence. See generally id. Plaintiffs averred Philadelphia venue was proper because defendants regularly conducted business here by operating multiple “Turf Clubs” and advertising. Id. ¶ 10.

Defendants filed preliminary objections on December 7, 2011. They objected, inter alia, to Philadelphia venue and requested transfer to Bucks County. Defendants’ preliminary objections 12/07/11, ¶¶ 4-11. Defendants pointed out Bensalem Parx Casino — where the alleged incident occurred — was owned and operated only by Defendant Greenwood Gaming and Entertainment (“Greenwood”). Id. ¶ 5 An attached lease exhibit (“Lease”) indicated Greenwood leased the property from co-defendants Keystone and Bensalem Racing (who collectively operate the Philadelphia Park Racetrack). Id. Ex. B, at 1. Greenwood was a separate entity from the aforementioned. Id. The Lease clearly stated Greenwood was responsible for repairs and alleged negligence. Id. at sections 6.1-6.2, 13. Since only Greenwood’s activities mattered and they did not regularly conduct business in Philadelphia, venue was improper here. Id. ¶¶ 10-11.

Plaintiffs countered Greenwood’s legal ownership assertions were contrary to the complaint, therefore creating a factual issue. Plaintiff Reply to preliminary objections, 12/23/11, ¶¶ 5-11. Moreover, the Hon. William Manfredi previously overruled venue objections in a similar matter on October 19, 2011. Id. There, the court held there was evidence defendants regularly conducted business sufficient to confer Philadelphia venue. See order, J. Manfredi, 10/19/11 n.l.

On January 25, 2012, We sustained venue objections, deferred Greenwood’s remaining ones, and transferred the matter to Bucks County, order, 01/25/12. Plaintiffs timely appealed on February 6, 2012.

DISCUSSION

We correctly found Philadelphia venue improper pursuant to Pa. R.C.P § 1006(b). A trial court is accorded “considerable discretion in determining whether or not to grant a petition for change of venue, and the standard of review is one of abuse of discretion.” Zampana-Barry v. Donahue, 921 A.2d 500, 503 (Pa. Super. 2007). If there exists any proper basis for a venue decision, it must stand. Goldman v. Fonslick, 844 A.2d 1252, 1253 (Pa. Super. 2004). In Pennsylvania, venue against a corporation is only proper in:

The county where its registered office or principal place of business is located; (2) a county where it regularly conducts business; (3) the county where the cause of action arose; (4) a county where [the relevant] transaction or occurrence took place..., or (5) a county where the property [thereof] is located provided... equitable relief is sought with respect to [same].

Pa. R.C.P. 2179(a) (2010). Here, the only real dispute is whether defendants regularly conduct business in Philadelphia.

Wimble v. Parx Casino & Greenwood Gaming & Entm’t, Inc. is directly on point and decided after Judge Manfredi’s decision. In Wimble, the Pennsylvania Superior Court affirmed our venue transfer of an October, 2010 Greenwood matter after rejecting said casino regularly conducts business in Philadelphia. Wimble v. Parx Casino & Greenwood Gaming & Entm’t, Inc., 2012 PA. Super 62, *7-8 (Pa. Super. Ct. 2012). The Wimble court noted the factual record demonstrates Bensalem Racing and Keystone are not Greenwood Gaming subsidiaries but rather “sister” corporations. Id. Wimble rejected the theory Parx’s sister corporations’ activities could be attributable to Greenwood for conferring Philadelphia venue. Id. Therefore, Wimble controls the instant matter.

The only notable difference between Wimble and the instant matter is not ultimately a dispositive one. Unlike Wimble, Philadelphia based Bensalem Racing and Keystone Turf Club are named defendants here. Nevertheless, the established record indicates they are not liable for any negligence occurring at Parx Casino.

We need not develop an additional factual record when a party’s issue is based upon a false premise and the established record alone is sufficient. Wimble, 2012 PA. Super at * 10. First, Greenwood’s attached Lease indicates it is distinct from Bensalem Racing and Keystone. Second, said lease also states Greenwood is solely liable for its alleged negligence. Since the alleged incident took place on casino grounds, for which Greenwood is solely responsible, the other defendants are not culpable. Therefore, their business activities are not relevant to determine proper venue. Hence, we properly determined venue solely on Greenwood’s activities which were insufficient to confer Philadelphia venue.

CONCLUSION

For the foregoing reasons, we properly sustained defendants ’ preliminary obj ection to venue and transferred the matter to Bucks County.