author: McLAUGHLIN, Member,

text:
    Office of Disciplinary Counsel v. McDaniel

      Disciplinary Board Docket no. 30 D.B. 1998.
    February 22, 2005
   To the Honorable Chief Justice and Justices of the Supreme Court of Pennsylvania:

McLAUGHLIN, Member,

Pursuant to Rule 208(d)(2)(iii) of the Pennsylvania Rules of Disciplinary Enforcement, the Disciplinary Board of the Supreme Court of Pennsylvania herewith submits its findings and recommendations to your honorable court with respect to the above-captioned petition for discipline.

I. HISTORY OF PROCEEDINGS

On November 3, 2003, Office of Disciplinary Counsel filed a petition for discipline against respondent, Kirk Allen McDaniel. The petition charged respondent with violation of Pa.R.D.E. 203(b)(1) and Rule of Professional Conduct 8.4(b) based on his military conviction of false swearing, unauthorized absence and cocaine use. Respondent filed an answer to petition for discipline on December 18, 2003.

A disciplinary hearing was held on April 28, 2004, before Hearing Committee 3.07, comprised of Chair David W. Reager, Esquire, and Members Richard W. Stevenson, Esquire, and Daniel J. Distasio Jr., Esquire. Respondent appeared pro se.

Following the submission of briefs by the parties, the committee filed a report on October 6,2004, and recommended a suspension for one year and one day.

Respondent filed a brief on exceptions on October 19, 2004. Petitioner filed a brief opposing respondent’s exceptions on October 28, 2004.

This matter was adjudicated by the Disciplinary Board at the meeting of January 19, 2004.

II. FINDINGS OF FACT

The board makes the following findings of fact:

(1) Petitioner, whose principal office is located at Suite 1400,200 North Third Street, Harrisburg, Pennsylvania 17101, is invested, pursuant to Rule 207 of the Pennsylvania Rules of Disciplinary Enforcement, with the power and duty to investigate all matters involving alleged misconduct of an attorney admitted to practice law in the Commonwealth of Pennsylvania and to prosecute all disciplinary proceedings brought in accordance with the various provisions of the aforesaid rules.
(2) Respondent, Kirk Allen McDaniel, was bom in 1963 and was admitted to practice law in the Commonwealth of Pennsylvania in 1991. He resides at 879 William Boulevard, Apartment 10-F, Ridgeland, Mississippi, 39157. Fie is subject to the disciplinary jurisdiction of the Disciplinary Board of the Supreme Court.
(3) Respondent has no history of discipline.
(4) At all times relevant hereto, respondent was a captain on active duty in the United States Marine Corps, serving as a judge advocate.
(5) During September 1995, respondent was serving as senior trial counsel at the Marine Corps Air Station in Cherry Point, North Carolina.
(6) In September 1995, a non-judicial punishment proceeding before the base commanding general occurred in connection with First Lieutenant Curtis Hargrett, a friend of respondent.
(7) Despite his prosecutorial role as senior/chief trial counsel, respondent provided written advice to First Lieutenant Hargrett in connection with the proceeding.
(8) On March 22, 1996, First Lieutenant Hargrett’s case was heard by the Board of Inquiry, convened for the purpose of determining whether he should be discharged from the Marine Corps. During this proceeding, First Lieutenant Hargrett testified that he had received written advice from respondent.
(9) When called to the witness stand, respondent improperly, under oath, denied having provided such written advice. Respondent did so knowing his statement was false.
(10) In September 1996, respondent attended the Army Judge Advocate General’s School in Charlottesville, Virginia for the purpose of attending graduate school in military law.
(11) On the weekend of Friday, September 14, 1996, respondent traveled to New York City, on leave to visit family members. Respondent failed to return to Charlottesville in a timely manner. He did not return until Wednesday, September 19, 1996. The next morning, he was required to submit to urinalysis based upon his command’s policy requiring a urinalysis examination of personnel returning from an unauthorized absence.
(12) Respondent’s urine tested positive for cocaine.
(13) On April 18, 1997, respondent was charged with a violation of article 86 of the Uniform Code of Military Justice (unauthorized absence), a violation of article 112(a) of the Uniform Code of Military Justice (cocaine use), and a violation of article 134 of the Uniform Code of Military Justice (false swearing).
(14) All of the foregoing charges resulted in the commencement of a general court martial, which was conducted on various dates during August and September of 1997.
(15) During these proceedings, which concluded on September 4,1997, respondent entered a plea of guilty to the false swearing and unauthorized absence charges, but pleaded not guilty to the cocaine use charge. Subsequently, respondent was found guilty of the cocaine use charge during the course of the court martial proceeding.
(16) Respondent was sentenced to a period of 15 months confinement, forfeiture of all pay and allowances, and dismissal from military service. The confinement portion of his sentence was subsequently suspended pursuant to a pretrial agreement.
(17) Respondent was dismissed from the Marine Corps in 1997.
(18) In early 1998, respondent was the subject of an ethics investigation by the United States Marine Corps’ judge advocate’s office based on his misconduct.
(19) The investigation concluded with findings that respondent had committed multiple violations of the Rules of Professional Conduct, and as a result, respondent’s certification to perform legal functions as a military officer was revoked.
(20) By order dated March 25, 1998, the matter was referred to the Disciplinary Board pursuant to Rule 214(f)(i). ■
(21) Respondent pursued a direct appeal of his case, which was finally exhausted in the spring of 2003.
(22) Respondent has not practiced law since 1997. He is currently employed by GE Power Systems as a contracts performance manager.

III. CONCLUSIONS OF LAW

By his conduct as set forth above, respondent violated the following Rules of Professional Conduct:

(1) Respondent’s military convictions constitute an independent basis for discipline pursuant to Pa.R.D.E. 203(b)(1).
(2) R.P.C. 8.4(b) — It is professional misconduct for a lawyer to commit a criminal act that reflects adversely on the lawyer’s honesty, trustworthiness or fitness as a lawyer in other respects.

IV. DISCUSSION

This matter is before the board on a petition for discipline charging respondent with ethical misconduct arising from his military convictions of unauthorized absence, false swearing and cocaine use. These convictions constitute serious crimes as defined by Pa.R.D.E. 214(i), in that the penalty provisions under the Uniform Code of Military Justice provide for imprisonment for more than one year.

The record demonstrates that while serving as a senior trial counsel for the Marine Corps, and while engaged in a prosecutorial role, respondent wrote a letter on behalf of a junior officer in connection with that officer’s non-judicial punishment proceeding. Subsequently, in a different proceeding, respondent denied under oath that he had provided such written advice.

The record further demonstrates that respondent traveled to New York City on leave and failed to return to his base on time. He was subjected to a urinalysis pursuant to military policy and tested positive for cocaine.

Accordingly, the issue before the board is the appropriate level of discipline. The board considers respondent’s misconduct to be serious, especially as he lied under oath during a military proceeding, at a time when he was a trial counsel for the government. Respondent’s actions raise concerns as to his fitness to practice law. The board is persuaded that a suspension of one year and one day is warranted.

V. RECOMMENDATION

The Disciplinary Board of the Supreme Court of Pennsylvania unanimously recommends that the respondent, Kirk Allen McDaniel, be suspended from the practice of law for a period of one year and one day.

It is further recommended that the expenses incurred in the investigation and prosecution of this matter are to be paid by the respondent.

ORDER

And now, May 11, 2005, upon consideration of the report and recommendations of the Disciplinary Board dated February 22, 2005, it is hereby ordered that Kirk Allen McDaniel be and he is suspended from the bar of this Commonwealth for a period of one year and one day, and he shall comply with all the provisions of Rule 217, Pa.R.D.E.

It is further ordered that respondent shall pay costs to the Disciplinary Board pursuant to Rule 208(g), Pa.R.D.E.


source: Caselaw Access Project

author: BERNSTEIN, J,

license: Public Domain

text:
    Wichterman v. Sunset Memorial Park Company

      C.P. of Philadelphia County,
    March Term 2004,
    no. 5296.

      Steven G. Wigrizer, for plaintiff.

      Steven G Leventhal, for defendant.
    September 1, 2005
   BERNSTEIN, J,

Presently before this court is plaintiff’s motion for class certification arising from plaintiff’s purchase of a crypt space, for his wife, in defendant’s mausoleum. Plaintiff alleges a breach of contract arising from defendant’s alleged failure to begin building the mausoleum in the time promised as well as defendant’s failure to design the mausoleum as contracted.

FINDINGS OF FACT

(1) Plaintiff has defined the proposed class as “All individuals who entered into an agreement with defendant to purchase one or more crypts in defendant’s ‘Chapel of Memories’ Mausoleum between November 1997 and September 2003.”

(2) The Chapel of Memories is a mausoleum located on the premises of Sunset Memorial Park.

(3) Defendant decided to expand the Chapel of Memories.

(4) In order to finance the expansion of the Chapel of Memories defendant began selling crypt space in the unbuilt addition.

(5) On November 19, 1998, named plaintiff, Mr. Wichterman, entered into a form contract agreement with defendant to purchase a family room consisting of 10 crypts inside the Chapel of Memories Mausoleum for $120,095.

(6) Before signing the agreement, Mr. Wichterman was shown an artist’s rendition and schematic diagram of what the Chapel of Memories addition was to look like and the location of the purchased crypts.

(7) Due to lackluster sales of crypt space in the new addition, defendant decided to significantly alter its design.

(8) As of the class certification hearing on July 26, 2005, seven years after the contract was entered into, construction of the addition had just begun.

(9) There are 136 members in the class, each of whom signed a contract to purchase one or more crypts in the Chapel of Memories addition.

(10) All 136 class members signed the same form contract as Mr. Wichterman.

(11) All 136 class members were shown the same artist’s rendition of the Chapel of Memories addition as Mr. Wichterman.

(12) Each contract contained a room number and a crypt position based on the above mentioned artist’s rendition and schematic diagram.

DISCUSSION

The sole issue before this court is whether the prerequisites for certification as stated in Pa.R.C.P. 1702 are satisfied. The purpose behind a class action lawsuit is “to provide a means by which the claims of many individuals could be resolved at one time, thereby eliminating the possibility of repetitious litigation and providing small claimants with a method to seek compensation for claims that would otherwise be too small to litigate.” DiLucido v. Terminix International Inc., 450 Pa. Super. 393,397,676 A.2d 1237,1239 (1996). For a suit to proceed as a class action, Rule 1702 of the Pennsylvania Rules of Civil Procedure requires that five criteria be met:

“(1) the class is so numerous that joinder of all members is impracticable;
“(2) there are questions of law or fact common to the class;
“(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class;
“(4) the representative parties will fairly and adequately assert and protect the interests of the class under the criteria set forth in Rule 1709; and
“(5) a class action provides a fair and efficient method for adjudication of the controversy under the criteria set forth in Rule 1708.”

Rule 1708 of the Pennsylvania Rules of Civil Procedure requires:

“In determining whether a class action is a fair and efficient method of adjudicating the controversy, the court shall consider among other matters the criteria set forth [below]
“(a) Where monetary recovery alone is sought, the court shall consider
“(1) whether common questions of law or fact predominate over any question affecting only individual members;
“(2) the size of the class and the difficulties likely to be encountered in the management of the action as a class action;
“(3) whether the prosecution of separate actions by or against individual members of the class would create a risk of
“(i) inconsistent or varying adjudications with respect to individual members of the class which would confront the party opposing the class with incompatible standards of conduct;
“(ii) adjudications with respect to individual members of the class which would as a practical matter be dis-positive of the interests of other members not parties to the adjudications or substantially impair or impede their ability to protect their interests;
“(4) the extent and nature of any litigation already commenced by or against members of the class involving any of the same issues;
“(5) whether the particular forum is appropriate for the litigation of the claims of the entire class;
“(6) whether in view of the complexities of the issues or the expenses of litigation, the separate claims of individual class members are insufficient in amount to support separate actions;
“(7) whether it is likely that the amount which may be recovered by individual class members will be so small in relation to the expense and effort of administering the action as not to justify a class action.”

The burden of showing each of the elements in Rule 1702 is initially on the moving party. This burden “is not heavy and is thus consistent with the policy that ‘decisions in favor of maintaining a class action should be liberally made.’ ” Cambanis v. Nationwide Insurance Co., 348 Pa. Super. 41, 45, 501 A.2d 635, 637 (1985). The moving party need only present evidence sufficient to make out a prima facie case “from which the court can conclude that the five class certification requirements are met.” Debbs v. Chrysler Corp., 810 A.2d 137, 153-54 (Pa. Super. 2002) (quoting Janicik v. Prudential Insurance Co. of America, 305 Pa. Super. 120, 130, 451 A.2d 451, 455 (1982)).

In other contexts, the prima facie burden has been construed to mean “some evidence,” “a colorable claim,” “substantial evidence,” or evidence that creates a rebut table presumption that requires the opponent to rebut demonstrated elements. In the criminal law context, “the prima facie standard requires evidence of the existence of each and every element____” Commonwealth v. Martin, 727 A.2d 1136, 1142 (Pa. Super. 1999), appeal denied, 560 Pa. 722,745 A.2d 1220 (1999). However, “the weight and credibility of the evidence are not factors at this stage____” Commonwealth v. Marti, 779 A.2d 1177, 1180 (Pa. Super. 2001).

In the family law context, “the term ‘prima facie right to custody’ means only that the party has a colorable claim to custody of the child.” McDonel v. Sohn, 762 A.2d 1101, 1107 (Pa. Super. 2000). Similarly, in the context of employment law, the Commonwealth Court has opined that a prima facie case can be established by “substantial evidence” requiring the opposing party to affirmatively rebut that evidence. See e.g., Williamsburg Community School District v. Commonwealth, Pennsylvania Human Relations Commission, 99 Pa. Commw. 206, 512 A.2d 1339 (1986).

Courts have consistently interpreted the phrase “substantial evidence” to mean “more than a mere scintilla,” but evidence “which a reasonable mind might accept as adequate to support a conclusion.” SSEN Inc. v. Borough Council of Eddystone, 810 A.2d 200, 207 (Pa. Commw. 2002). In Grakelow v. Nash, 98 Pa. Super. 316 (1929), a tax case, the Superior Court said: “To ordain that a certain act or acts shall be prima facie evidence of a fact means merely that from proof of the act or acts, a rebuttable inference or presumption of the fact shall be made; it attributes a specified value to certain evidence but does not make it conclusive proof of the fact in question.” (citation omitted)

Class certification is a mixed question of fact and law. Debbs v. Chrysler Corp., 810 A.2d at 154 (Pa. Super. 2002). The court must consider all the relevant testimony, depositions and other evidence pursuant to Rule 1707(c). In determining whether the prerequisites of Rule 1702 have been met, the court is only to decide who shall be the parties to the action and nothing more. The merits of the action and the plaintiffs’ right to recover are excluded from consideration. 1977 Explanatory comment to Pa.R.C.P. 1707. Where evidence conflicts, doubt should be resolved in favor of class certification. In making a certification decision, “courts in class certification proceedings regularly and properly employ reasonable inferences, presumptions, and judicial notice.” Janicik, 305 Pa. Super, at 128, 451 A.2d at 455. Accordingly, this court must refrain from ruling on plaintiff’s ultimate right to achieve any recovery, the credibility of the witnesses and the substantive merits of defenses raised.

“The burden of proof to establish the five prerequisites to class certification lies with the class proponent; however, since the hearing on class certification is akin to a preliminary hearing, it is not a heavy burden.” Professional Flooring Co. v. Bushar Corp., 61 D.&C.4th 147, 153 (Montg. Cty. 2003), citing Debbs, 810 A.2d at 153; Janicik, 305 Pa. Super, at 130, 451 A.2d at 455. See also, Baldassari v. Suburban Cable TV Co., 808 A.2d 184, 189 (Pa. Super. 2002); Cambanis v. Nationwide Insurance Co., 348 Pa. Super. 41, 501 A.2d 635 (1985). The prima facie burden of proof standard at the class certification stage is met by a qualitative “substantial evidence” test.

Our Superior Court has instructed that it is a strong and oft-repeated policy of this Commonwealth that decisions applying the rules for class certification should be made liberally and in favor of maintaining a class action. Weismerby Weismer v. Beech-Nut Nutrition Corp., 419 Pa. Super. 403, 410, 615 A.2d 428, 431 (1992). See also, Janicik, 305 Pa. Super, at 128, 451 A.2d at 454-55, citing and quoting Esplín v. Hirschi, 402 F.2d 94, 101 (10th Cir. 1968) (“in a doubtful case... any error should be committed in favor of allowing the class action”).

Likewise, the Commonwealth Court has held that “in doubtful cases, any error should be committed in favor of allowing class certification.” Foust v. SEPTA, 756 A.2d 112, 118 (Pa. Commw. 2000). This philosophy is further supported by the consideration that “[t)he court may alter, modify, or revoke the certification if later developments in the litigation reveal that some prerequisite to certification is not satisfied.” Janicik, 305 Pa. Super, at 129, 451 A.2d at 455.

Within this context, the court will examine the requisite factors for class certification.

I. Numerosity

To be eligible for certification, appellant must demonstrate that the class is “so numerous that joinder of all members is impracticable.” Pa.R.C.P. 1702(1). A class is sufficiently numerous when “the number of potential individual plaintiffs would pose a grave imposition on the resources of the court and an unnecessary drain on the energies and resources of the litigants should such potential plaintiffs sue individually.” Temple University v. Pennsylvania Department of Public Welfare, 30 Pa. Commw. 595, 603, 374 A.2d 991, 996 (1977) (123 members sufficient); ABC Sewer Cleaning Co. v. Bell of Pa., 293 Pa. Super. 219, 438 A.2d 616 (1981) (250 members sufficient); Ablin Inc. v. Bell Telephone Co. of Pa., 291 Pa. Super. 40, 435 A.2d 208 (1981) (204 plaintiffs sufficiently numerous). Appellant need not plead or prove the actual number of class members, so long as he is able to “define the class with some precision” and provide “sufficient indicia [to the court] that more members exist than it would be practicable to join.” Janicik, 305 Pa. Super, at 132, 451 A.2d at 456.

136 individuals have purchased one or more crypt spaces in defendant’s Chapel of Memories addition. Joining 136 individual plaintiffs or having 136 separate trials over the same contract would be impracticable. Therefore, plaintiffs have satisfied the numerosity requirement for class certification of the proposed class.

II. Commonality

The second prerequisite for class certification is that “there are questions of law or fact common to the class.” Pa.R.C.P. 1702(2). Common questions exist “if the class members’ legal grievances arise out of the ‘same practice or course of conduct’ on the part of the class opponent.” Janicik, 305 Pa. Super, at 133, 451 A.2d at 457. Thus, it is necessary to establish that “the facts surrounding each plaintiff’s claim must be substantially the same so that proof as to one claimant would be proof as to all.” Weismer, 419 Pa. Super, at 409, 615 A.2d at 431. However, where the challenged conduct affects the potential class members in divergent ways, commonality may not exist. Janicik, supra at 133 n.5, 451 A.2d at 457 n.5.

“While the existence of individual questions is not necessarily fatal, it is essential that there be a predominance of common issues shared by all class members which can be justly resolved in a single proceeding.” D’Amelio v. Blue Cross of Lehigh Valley, 347 Pa. Super. 441, 452, 500 A.2d 1137, 1142 (1985). In examining the commonality of the class’ claims, a court should focus on the cause of injury and not the amount of alleged damages. “Once a common source of liability has been clearly identified, varying amounts of damages among the plaintiffs will not preclude class certification.” See Weismer, 419 Pa. Super, at 409, 615 A.2d at 431. Where there exists intervening and possibly superseding causes of damage however, liability cannot be determined on a class-wide basis. Cook v. Highland Water and Sewer Authority, 108 Pa. Commw. 222, 231, 530 A.2d 499, 504 (1987).

Common questions of law and fact predominate. This case involves a breach of contract claim. There are 136 class members who signed the same form contract when they purchased crypt space in the Chapel of Memories addition. All 136 individuals were shown the same artist’s rendition and floor plan of the proposed addition. Plaintiff is claiming, by dramatically changing the design such that the designated crypt space contained in the contract has become meaningless, that defendant breached this contract. The defendant’s conduct that plaintiff alleges constitutes a breach is the altering of the building’s design and delaying the beginning of construction of the building years after promised. It is hard to imagine a case more suited to meet the commonality requirement than a breach of contract claim where every class member has signed the same contract and claim the same actions as breach.

Accordingly, plaintiff has sustained his burden of demonstrating that common issues of fact and law exist to satisfy the requirement of commonality.

III. Typicality

The third step in the certification test requires the plaintiff to show that the class action parties’ claims and defenses are typical of the entire class. The purpose behind this requirement is to determine whether the class representatives’ overall position on the common issues is sufficiently aligned with that of the absent class members, to ensure that pursuit of their interests will advance those of the proposed class members. DiLucido, 450 Pa. Super. at 404, 676 A.2d at 1242.

Like commonality, typicality has been demonstrated. The named plaintiff, Wichterman, entered into a contract to purchase crypt space in the Chapel of Memories addition. He, along with the other 135 other class members, signed a form contract which they believe has been breached when defendant altered the plans for the addition and began building years after initially promised. Mr. Wichterman’s claims are typical of the class as certified.

IV. Adequacy of Representation

For the class to be certified, this court must also conclude that the plaintiffs “will fairly and adequately assert and protect the interests of the class.” Pa.R.C.P. 1702(4). In determining whether the representative parties will fairly and adequately represent the interests of the class, the court shall consider the following:

“(1) whether the attorney for the representative parties will adequately represent the interests of the class,
“(2) whether the representative parties have a conflict of interest in the maintenance of the class action, and
“(3) whether the representative parties have or can acquire adequate financial resources to assure that the interests of the class will not be harmed.” Pa.R.C.P. 1709.
“[U]ntil the contrary is demonstrated, courts will assume that members of the bar are skilled in their profession.” Janicik, 305 Pa. Super, at 136, 451 A.2d at 458. Here, defendants do not challenge plaintiff’s counsels’ skill and therefore, the court presumes that counsel is skilled in their profession. Defendants do not challenge plaintiff’s counsels’ skill, and the court knows that counsel is skilled in their profession.

V. Fair and Efficient Method of Adjudication

The final criteria under Pa.R.C.P. 1702 is a determination of whether a class action provides a fair and efficient method for adjudication of the controversy under the criteria set forth in Rule 1708.

1. Predominance of Common Questions of Law and Fact

The most important requirement in determining whether a class should be certified under 1702(a)(5) and 1708(a)(1) is whether common questions of law and fact predominate over any question affecting only individual members. In addition to the existence of common questions of law and fact, plaintiffs must also establish that the common issues predominate. The analysis of predominance under Rule 1708(a)(1) is closely related to that of commonality under Rule 1702(2). Janick, 305 Pa. Super, at 141, 451 A.2d at 461.

The court adopts and incorporates its analysis of commonality and concludes that the requirement of predominance as it pertains to the classes certified is satisfied.

2. The Existence of Serious Management Difficulties

Under Pa.R.C.P. 1708(2), a court must also consider the size of the class and the difficulties likely to be encountered in the management of the action as a class action. While a court must consider the potential difficulties in managing the class action, any such difficulties generally are not accorded much weight. Problems of administration alone ordinarily should not justify the denial of an otherwise appropriate class action for to do so would contradict the policies underlying this device. Yaffe v. Powers, 454 F.2d 1362 (1st Cir. 1972). Rather, the court should rely on the ingenuity and aid of counsel and upon its plenary authority to control the action to solve whatever management problems the litigation may bring. Id. (citing Buchanan v. Brentwood Federal Savings & Loan Assoc., 457 Pa. 135, 320 A.2d 117 (1974)).

Class action procedure is appropriate for these claims. Whatever management problems remain, this court will rely upon the ingenuity and aid of counsel and upon the court’s plenary authority to control the action. Janicik, 305 Pa. Super, at 142, 451 A.2d at 462.

3. Potential for Inconsistent Adjudications

Pennsylvania Rule 1708(a)(3) also requires a court to evaluate whether the prosecution of separate actions by or against individual members of the class would create a risk of inconsistent or varying adjudications with respect to individual members of the class. In considering the separate effect of actions, the precedential effect of a decision is to be considered as well as the parties’ circumstances and respective ability to pursue separate actions. Janicik, 305 Pa. Super, at 143, 415 A.2d at 462.

These claims are appropriate for a class trial. Because all the claims arise from the same conduct, the alleged breach of a form contract, there is the possibility of inconsistent adjudications if tried separately. This case belongs as a class action to alleviate the potential for inconsistent adjudications.

4. Extent and Nature of any Pre-existing Litigation and the Appropriateness of this Forum

Under Pa.R.C.P. 1708(a)(4), (a)(5), and (a)(6), a court should consider the extent and nature of any litigation already commenced by or against members of the class involving any of the same issues, the appropriateness of the chosen forum and whether the amounts recoverable justify a class action. The court has been advised of no prior litigation pending on this issue. This court finds that this forum is appropriate to litigate the claim.

Rule 1708 also requires the court to consider the amount of damages sought by the individual plaintiffs in determining the fairness and efficiency of a class action. Thus, a court must analyze whether in view of the complexities of the issues or the expenses of litigation the separate claims of individual class members are insufficient in amount to support separate amounts. Pa.R.C.P. 1708(a)(6). Alternatively, the rules require that the court analyze whether it is likely that the amounts which may be recovered by individual class members will be so small in relation to the expense and effort of administering the action as not to justify a class action. Pa.R.C.P. 1708(a)(7). This criteria is rarely used to disqualify an otherwise valid class action claim. See Kelly v. County of Allegheny, 519 Pa. 213, 215-16, 546 A.2d 608, 609 (1988) (Trial court erred in refusing to certify a class on the grounds that the class members’ average claim was too small in comparison to the expenses incurred.). However, in Klusman v. Bucks County Court of Common Pleas, 128 Pa. Commw. 616, 631, 564 A.2d 526, 534 (1989), the court said: “Where the issue of damages does not lend itself to a mechanical calculation, but requires separate mini-trials of a large number of individual claims, courts have found that the staggering problem of logistics make the damage aspect of the case predominate and renders the class unmanageable as a class action. State of Alabama v. Blue Bird Body Co. Inc., 573 F.2d 309 (5th Cir. 1978).”

Each potential claimant has a claim in excess of $5,000. This court is not concerned that any class member recovery would be too small to justify a class action.

Accordingly, having weighed the Rule 1708 requirements, this court finds that a class action is a fair and efficient method for adjudicating plaintiffs’ claims.

For the above stated reasons plaintiff’s motion for class certification is granted.

ORDER

And now, September 1, 2005, upon consideration of plaintiff’s motion for class certification, all responses in opposition, the respective memoranda, all matters of record, and in accordance with the contemporaneous memorandum opinion, it hereby is ordered and decreed as follows: plaintiff’s motion for class certification is granted. A class is certified as: “All individuals who entered into an agreement with defendants to purchase one or more crypts in defendant’s ‘Chapel of Memories’ Mausoleum between November 1997 and September 2003.”

Discovery for trial shall commence upon receipt of this order.


author: COLVILLE, J,

text:
    Cook v. Allegheny Housing Rehabilitation Corporation

      C.P. of Allegheny County,
    no. GD 03-023803.

      James J. Gillespie Jr., for plaintiff Currington.

      Richards. Matesic, for plaintiff Mize.

      Samuel S. Floro, for plaintiff Clark.

      David J. Watson, for plaintiffs Cynthia and Davon Jones.

      Theodore E. Breault, for plaintiffs Cook, Walker, Creighton, Marceáis Jones, Morris and Faucette.

      Elizabeth E. Deemer, for defendant Trafford Corp.

      Michael F. Nerone, Krista Kochosky Orashan and Francis C. Rapp Jr., for plaintiffs Allegheny Flousing Rehabilitation Co. and III Rivers Manor Associates.

      Krista Kochosky Orasha and John T. Pion, for defendant Alletheny Housing Rehabilitation Corp.

      C. Leon Sherman, for defendant Equitable Resources.
    September 23, 2005
   COLVILLE, J,

SECOND AMENDED OPINION

The relevant factual history of this case may be briefly stated as follows. On January 17, 2003, an explosion occurred at an apartment building in Pittsburgh, Pennsylvania. The explosion was allegedly caused by a natural gas leak from a section of pipes and/or valves owned, controlled and maintained by the defendant, Equitable Gas Company. It is the belief and assertion of the plaintiffs that a cracked valve on one of Equitable’s underground distribution pipes permitted gas to leak from the service pipe and migrate outside the designed distribution system, and ultimately under the plaintiffs’ apartment building. Specifically, the plaintiffs do not assert or advance any theory which would support a finding that the natural gas that caused the explosion was delivered to the plaintiffs’ premises through the plaintiffs’ gas meter, or through any portion of Equitable’s gas distribution system specifically dedicated to the plaintiffs’ premises.

This court entertained oral argument on preliminary objections filed on behalf of defendant, Equitable Resources Inc., demurring to Counts 3, 4, 7 and 8 of the plaintiffs’ amended complaint. These counts assert causes of action against Equitable sounding in breach of warranty and strict liability. Following argument, this court issued an August 16, 2005 order of court and opinion. (An amended opinion was filed on August 23, 2005.) Following reargument, conducted on September 19, 2005, this second amended opinion and an order of court incorporating the language required by 42 Pa.C.S. §702(b) was filed September 23, 2005.

The arguments presented on behalf of Equitable may ultimately be reduced to the assertion that 402A liability, and breach of warranty liability, may not be imposed upon Equitable because its delivery of natural gas constitutes only a “service” and not the “sale” of a product until, or unless, the natural gas travels through the meter of its customer, at which time the gas becomes the subject of a “sale” and therefore a “product” for purposes of 402A strict liability and breach of warranty law. In support of this assertion, counsel for Equitable references Schriner v. Pennsylvania Power & Light Company, 348 Pa. Super. 177, 501 A.2d 1128 (1985).

In Schriner, the plaintiffs sued an electric company (a Pennsylvania public utility), asserting that stray electricity emanating from the electric company’s power lines caused infectious diseases in the defendant’s dairy cattle that, in turn, resulted in the premature death of the cattle. The Schriner court initially noted that “[t]he appellate courts of this Commonwealth have not, however, directly addressed the possible application of strict liability, under the Restatement (Second) of Torts, to a supplier of electricity.” 348 Pa. Super, at 184,501 A.2d at 1131. The Schriner court goes on to review section 402A of the Restatement (Second) of Torts and purports to distill that section into five “constituent elements... (1) a product; (2) a sale of that product; (3) a user or consumer; (4) a defective condition, unreasonably dangerous; and (5) causation — that the product caused physical harm to the ultimate user or consumer, or to his property.” Schriner, 348 Pa. Super, at 185, 501 A.2d at 1132. The court then noted that (in 1985) the question of whether electricity is a product for purposes of section 402A liability was an issue of first impression within the Commonwealth. After reviewing decisions of numerous jurisdictions, the Schriner court held that: “electricity can be a ‘product,’ within the meaning of section 402A.” Schriner, 348 Pa. Super, at 187, 501 A. 2d at 1133.

The Schriner court then addresses the question of whether, under the facts in Schriner, a “sale” of the electricity occurred sufficient to satisfy section 402A. In this regard, the Schriner court curiously states:

“The sale of a product is fundamental to any strict liability claim. . . . With a product such as electricity, a literal ‘sale’ of the product may not be required; however, courts willing to call electricity a product have been consistent in holding that the electricity must have been placed into the stream of commerce before section 402A strict liability can attach....
“Entry of electricity into the stream of commerce has been deemed to occur, generally, when the electricity leaves the transmission lines and passes through the customer’s meter.” 348 Pa. Super, at 187-88, 501 A.2d at 1133. (citations omitted) (emphasis in original)

In support of this last proposition the Schriner court cited to Pierce v. Pacific Gas & Electric Company, 166 Cal. App. 3d 68, 212 Cal. Rptr. 283 (1985), where the California Court of Appeals stated:

“We emphasize that our holding is limited to cases where the electricity is actually in the ‘stream of commerce, ’ and expected to be at marketable voltage. In most cases this will mean the electricity must be delivered to the customer’s premises, to the point where it is metered, although the many variations in electrical systems prevent our drawing a ‘bright line’ at a particular point.” Pierce, 166 Cal. App. 3d at 84, 212 Cal. Rptr. at 292. (footnote omitted) (emphasis added)

Further supporting its reasoning that electricity enters the “stream of commerce” when it passes through the customer’s meter, the Schriner court quoted Aversa v. Public Service Electric and Gas Company, 186 N J. Super. 130, 451 A.2d 976 (1982), where that court stated:

“Where, however, the electricity is no longer in transmission in the public right of way, but has been introduced into the stream of commerce by a sale thereof or otherwise, the liability of the electric company is no longer dependent upon a showing of negligence but may be based upon a product liability cause of action unrelated to fault.” Aversa, 186 N.J. Super, at 135, 451 A.2d at 979. (emphasis in original) (citations omitted)

In this manner, the Schriner court arrives at its holding that:

“If electricity ‘in a defective condition, unreasonably dangerous’ passes through the meter of a user or consumer and into the stream of commerce, causing physical harm to the ultimate user or consumer, or to his property, the doctrine of strict liability in tort may be applied against the public utility which ‘engaged in the business of selling such a product,’ which product ‘[was] expected to and [did] reach the user or consumer without substantial change in the condition in which it was sold.’ ” Restatement (Second) of Torts §402A(1).

Contrary to its holding, the language of Schriner itself (and the case law cited by Schriner), allows for the possibility that a “sale” of the product may not always be required in order to impose 402A liability to electricity.

“With a product such as electricity, a literal ‘sale ’ of the product may not be required;...” Schriner, 348 Pa. Super, at 187, 501 A.2d at 1133. (emphasis added)
“We emphasize that our holding is limited to cases where the electricity is actually in the ‘stream of commerce,’ and expected to be at marketable voltage. In most cases this will mean the electricity must be delivered to the customer’s premises, to the point where it is metered, although the many variations in electrical systems prevent our drawing a ‘bright line’ at a particular point.” Pierce, 166 Cal. App. 3d at 84, 212 Cal. Rptr. at 292. (footnote omitted) (boldface added) (emphasis in original)
“Where, however, the electricity is no longer in transmission in the public right of way, but has been introduced into the stream of commerce by a sale thereof or otherwise, the liability of the electric company is no longer dependent upon a showing of negligence but may be based upon a product liability cause of action unrelated to fault.” Aversa, 186 N.J. Super, at 135, 451 A.2d at 979. (emphasis in original) (citations omitted) (boldface added)

Surprisingly, the Schriner court does not address the Pennsylvania case law established by, and following, the Pennsylvania Supreme Court decision in Francioni v. Gibsonia Truck Corp., 472 Pa. 362,372 A.2d 736 (1977), where the court specifically held that a “sale” was not required to impose 402A liability. While the Francioni court dealt with neither electricity nor natural gas, it did address the question of whether a “sale” of a product was required to impose strict liability upon a supplier of a product. In this regard, the Francioni court began by noting Pennsylvania’s recognition of strict liability recover in Webb v. Zern, 422 Pa. 424, 220 A.2d 853 (1966), where the court adopted 402A of the Restatement (Second) of Torts as the law of Pennsylvania. The Francioni court went on to state:

“On its face section 402A applies to sellers of defective products, and because the Restatement provides for distinct negligence liability rules for lessors of chattels it is arguable that section 402A is only applicable to sellers. On this basis, in Speyer Inc. v. Humble ... the district court interpreting Pennsylvania law refused to extend strict liability to the lessor of an allegedly defective fuel pump. We cannot agree with the logic of Speyer. It too easily disregards the policy basis for strict liability which supports application of the rule to any supplier of a product who, because he is in the business of supplying products, assumes a special responsibility toward the consuming public.” Francioni, 472 Pa. at 365-66, 372 A.2d at 738. (footnotes omitted) (citations omitted) (emphasis in original)

The Francioni court went on to state:

“By the adoption of section 402A, that [special] responsibility was placed on those who, through manufacturing and distribution, intend that products ‘reach the market.’ Bialek v. Pittsburgh Brewing Co., 430 Pa. 176, 187 n.2,242 A.2d 231, 236 n.2 (1968); Restatement (Second) of Torts §402A, Comments c and f. While section 402A speaks only in terms of ‘sellers’, the foregoing policy statement and accompanying citations demonstrate the propriety of extending its application to anyone ‘who enters into, the business of supplying human beings with products which may endanger the safety of their persons and property,.. .’Restatement (Second) of Torts §402A, comment f. What is crucial to the rule of strict liability is not the means of marketing but rather the fact of marketing, whether by sale, lease or bailment, for use and consumption by the public____Where the fundamental principles are applicable, the imposition of artificial distinctions will only frustrate the intended purpose.” Francioni, 472 Pa. at 367, 372 A.2d at 738-39. (citations omitted)

Francioni concludes its analysis on this issue by citing to the decisions of numerous jurisdictions holding that a lessor of a product may be found strictly liable without a “sale” of the product, stating:

“All [of these jurisdictions] have premised their holdings on these pertinent factors: (1) In some instances the lessor, like the seller, may be the only member of the marketing chain available to the injured plaintiff for redress; (2) As in the case of the seller, imposition of strict liability upon the lessor serves as an incentive to safety; (3) The lessor will be in a better position than the consumer to prevent the circulation of defective products; and (4) The lessor can distribute the cost of compensating for injuries resulting from defects by charging for it in his business, i.e., by adjustment of the rental terms. We find the reasoning of these opinions to be highly persuasive and hold that all suppliers of products engaged in the business of supplying products for use or consumption by the public are subject to strict liability for injuries caused by ‘a defective condition unreasonably dangerous to the user or consumer or his property. ’ ” Francioni, 472 Pa. at 368-69, 372 A.2d at 739.

The Francioni test has been recognized and applied in subsequent Supreme Court decisions. See Nath v. National Equipment Leasing Corp., 497 Pa. 126, 439 A.2d 633 (1981); Musser v. Vilsmeier Auction Co. Inc., 522 Pa. 367, 562 A.2d 279 (1989); Cafazzo v. Central Medical Health Services Inc., 542 Pa. 526, 668 A.2d 521 (1995).

In Kalumetal Inc. v. Hitachi Magnetics Corporation, 21 F. Supp.2d 510 (W.D. Pa. 1998), the United States District Court for the Western District of Pennsylvania predicted that under Pennsylvania law, where an injury occurred as a result of a defect in a piece of machinery subject to a bailment agreement between the defendant/ bailor and the possessor/bailee of the equipment, the “special responsibility” to the consuming public that is the predicate for section 402A liability under the Francioni test is established. Invited to adopt a narrow interpretation of what constitutes “on the market” for the purposes of section 402A, the district court declined to do so, stating:

“We believe that it is immaterial that the [allegedly defective] swarf was merely given to Kalumetal for processing. We find that in providing Kalumetal with the swarf, Hitachi placed the product in the stream of commerce for the purposes of section 402A. The use made by the swarf by plaintiffs’ employees is at least arguably a public use — the ‘consuming public’ to which Hitachi marketed the swarf. A contrary ruling would set a precedent which subverts the public policy underlining the section.” Kalumetal, 21 F. Supp.2d at 515-16.

This court recognizes that while it is evident that no “sale” of the allegedly defective product occurred in either Francioni or Kalumetal, it is true that in both cases a “delivery” of the allegedly defective product, in fact, occurred. This court recognizes that neither Francioni nor any other Pennsylvania appellate court decision applying Francioni directly addresses the question of whether 402A strict liability may be imposed upon a supplier of a product whose “sale” or “delivery” is never technically consummated. In both Francioni and Kalumetal, the defective product was delivered as intended by the supplier. While this difference between the instant matter and the facts of Francioni and Kalumetal exists, this court is unable to conclude that the difference is a material difference. In this court’s judgment, the question is not whether there was either a “sale” or a “delivery” of the product; but rather whether the product was placed into the “stream of commerce.”

Returning to the language of Francioni: “By the adoption of section 402A, that [special] responsibility was placed on those who, through manufacturing and distribution, intend that products ‘reach the market.’ ” Francioni, 472 Pa. at 367, 372 A.2d at 738. There can be little debate that Equitable, through manufacturing and distribution, intended that its natural gas product “reach the market.” Indeed, the natural gas which is alleged to have escaped from Equitable’s service line was literally within the pipeline, and inexorably and irretrievably on its way to Equitable’s customer. It simply cannot be plausibly argued that the natural gas was not intended to “reach the market,” or otherwise not in the “stream of commerce.”

Because this court’s determination, in the paragraph above appears, on its face, to be at odds with the decision in Schriner, a closer review and analysis of the Schriner decision is warranted. The authorities relied upon by the Schriner court strongly suggest that Schriner’s determination that “stray voltage” is not a product placed into the “stream of commerce” may be based upon the peculiar nature of “stray electricity” which is not similarly at issue with the natural gas in the instant case. Schriner stated:

“We emphasize that our holding is limited to cases where the electricity is actually in the ‘stream of commerce,’ and expected to be at marketable voltage.” Schriner, 348 Pa. Super, at 188, 501 A.2d at 1133, quoting Pierce, (emphasis added)

In the instant matter, the alleged defect asserted to exist in Equitable’s gas product was that the gas was inadequately odorized. Adequate odorization is required so that the gas may be detected if a leak occurs. In this regard, the alleged defect, inadequate odorization, was a condition of the product that allegedly existed in the product whether it reached the consumer through the customer’s meter or by way of a leak in the distribution system before the customer’s meter.

The natural gas that escaped from Equitable’s pipelines is materially different from the electricity that escaped from the power company’s electrical lines in Schriner. The court’s holding in Schriner was, in material part, based upon the fact that the “stray electricity” released from the power lines was, by veiy function of its inadvertent release from the power lines, not at a marketable voltage. Although not explicitly stated, the Schriner decision appears, to this court, to have been predicated upon the fact that the alleged “defect” in the electricity existed, not as a function of an inherent “defect” in the tangible product itself, but, rather, as a function of the electric company’s failure to distribute it at a marketable voltage (i.e., in a controlled fashion through the service box of the customer).

In the instant matter, the alleged defect is inherently within the tangible product itself — it is inadequately odorized — whether discharged before or after the customer’s meter. Significantly, the gas in this case reaches the consumer (albeit by an irregular, and unintended, route, but) in substantially the same condition as it would have reached the consumer if delivered through the customer’s meter.

More importantly, when applying the Francioni four-prong analysis to Equitable and its natural gas in this case, this court finds that the test is met. Application of the first three elements clearly support a finding that Equitable is a supplier for purposes of 402A liability. Initially more problematic to this court was the question of whether the fourth prong of the Francioni test is satisfied. That prong requires consideration of whether the supplier can distribute the cost of compensating for injuries resulting from defects by charging for it in his business. This court questions whether Equitable, as a public utility company that does not maintain complete control over determining costs of its product, can be said to be adequately able to distribute the costs of compensating for injuries resulting from defects by charging for it in its business. Interestingly, the Schriner decision placates this court’s concerns to some degree. Schriner states:

“The inquiry regarding public policy is for the court ... and the factors relevant to the inquiry support the application of strict liability to a utility company supplying electricity as a product. . . . But see Comment, Torts of Electric Utilities: Can Strict Liability Be Plugged In?, 11 Loyola L.A.L.Rev. 775 (1978).” Schriner, 348 Pa. Super, at 189-90, 501 A.2d at 1134. (citations omitted)

Relying upon the above cited language, this court concludes that the Schriner court considered the question of whether it was appropriate to impose 402A strict liability upon a public utility company and resolved that question in the affirmative.

At argument on Equitable’s motion for reconsideration and within Equitable’s brief in support of motion for reconsideration, counsel for Equitable clarified Equitable’s position that while a “sale” is not required, a “commercial transfer” event is required for 402A liability to attach. In support of this proposition Equitable cites to several cases: Stecyk v. Bell Helicopter Textron Inc., 1996 WL 153555 (E.D. Pa. 1996); Woods v. Luertzing Corp., 167 N.J. Super. 156, 400 A.2d 562 (App. Div. 1979); Ettinger v. Triangle-Pacific Corp., 799 A.2d 95 (Pa. Super. 2002); and Armstrong Rubber Co. v. Urquidez, 570 S.W.2d 374 (Tex. 1978). Each of these cases may be fairly distinguished from the instant matter.

Stecyk involved claims arising from the crash of an experimental aircraft. The aircraft involved was not yet fully developed for use by the consuming public. The Stecyk court held:

“I conclude that strict liability does not apply to experimental, developing products still in the process of being tested.” Stecyk, 1996 WL 153555, p. 7.

The gas involved in the instant matter was in no manner “experimental.” It was fully developed, and, in all material respects, it was in precisely the same condition as it would have been if it had reached the consumer through the customer’s meter.

Similarly, Woods, a 1979 New Jersey Superior Court decision, involved an accident that occurred while operating a “Glass Cantainer” machine prototype that was still under development. The Woods court stated:

“The only ‘Glass Cantainer’ in existence is that involved in this case. Hoping that the softer glass used in plaintiff’s [shop] would solve the problems with the machine, defendant contracted with plaintiff to aid in the further development of the machine....
“From the deposition excerpts filed, it is clear that plaintiff knew that the machine was still being developed.” Woods, 400 A.2d at 564.
“Plaintiff, here, was not the target of a sales effort but was expressly hired to aid in the development of the machine. This fact raises policy considerations countervailing those that seemingly support strict or warranty liability in this case....
“A further reason for not imposing liability for breach of the implied warranty of fitness for a particular purpose under [New Jersey’s state warranty law] is that, in this case and in all cases where goods are supplied to an individual or corporation for the purpose of discovering the capabilities and shortcomings of the thing being supplied, that is the essence of the transaction. The supplier does not know enough about his product to market it; hence he engages someone to help him find out, paying that person for his services and facilities. Plaintiff’s purpose here was to earn the money promised for aiding in the development of defendant’s product; he clearly had no purpose of his own for the use ofthe ‘Glass Cantainer’ independent of defendant’s testing purpose....
“[T]he postulate of strict liability cannot apply to this case in which plaintiff was not the buyer, lessor, or ultimate user as recipient from buyer or lessor, but was specifically hired to test the product supplied, which product had never been sold or leased.” Woods, 400 A.2d at 566-61.

Ettinger involved a claim arising from an injury suffered by an electrician at a furniture manufacturing plant. The electrician was running electrical conduit along the outside of, and to the motors of, a large oven. In point of fact, the oven was a two-story enclosed oven system with a conveyor system designed to dry large wood cabinetry after it had been coated with finish. Importantly, the oven was still being assembled by the defendant at the time of the electrician’s injury. In the instant matter, there is no similar “unassembled” product involved. The gas at issue in this case was a product in its final form.

In Armstrong, a 1978 Texas court decision, plaintiff alleged that a defect caused a tire blowout resulting in the accident injuring the plaintiff. The allegedly defective tire, a so-called “non-interest spare” blew out at a testing facility during the testing and development of another undeveloped tire on the same vehicle. The allegedly defective “non-interest spare” tire “was manufactured and provided for use only as a non-interest spare on [the testing facility’s test] trucks.” Armstrong, 570 S.W.2d at 375. As such, the product in Armstrong was never manufactured for purposes of reaching the consuming public. The same cannot be said of the gas in this case. The gas in this case was clearly manufactured for use by the consuming public.

This court is satisfied that, even to the extent the authorities cited by Equitable may be controlling or persuasive authorities as to the issues before this court, the authorities cited do not support the assertion by Equitable that some specific “commercial transfer” event (that did not occur in this case) must occur before Equitable’s gas may be deemed to have been placed into the stream of commerce.

Accordingly, having determined that Equitable placed its gas “into the stream of commerce,” having found that the four prongs of the Francioni test have been established, and having found no authority to support the proposition that a “sale,” “delivery” or other specific “commercial transfer” event must be consummated before 402A liability may be imposed upon a supplier, this court concludes that Equitable was a supplier of a product (natural gas) which has been adequately alleged to have been in a defective condition unreasonably dangerous (by virtue of its inadequate odorization), which product was expected to and did reach the user or consumer (albeit by an irregular and unintended route) without substantial change in the condition in which it was supplied by Equitable.

For the above reasons, the preliminary objection of the Equitable defendants to the plaintiffs’ 402A claims are overruled. As indicated in this court’s order of this date, this court’s determination involves a controlling question of law as to which there is substantial ground for difference of opinion, and an immediate appeal from this court’s order may materially advance the ultimate termination of the matter.

The preliminary objections of the Equitable defendants to the plaintiffs’ warranty claims are overruled. See Gardiner v. Philadelphia Gas Works, 413 Pa. 415, 197 A.2d 612 (1964).

ORDER

And now, September 23, 2005, following argument on Equitable’s motion for reconsideration, and for the reasons set forth in this court’s second amended opinion of this date, the preliminary objection of the Equitable defendants to the plaintiffs’ 402A claims are overruled. This court’s determination involves a controlling question of law as to which there is substantial ground for difference of opinion and an immediate appeal from this court’s order may materially advance the ultimate termination of the matter. 42 Pa.C.S. 702(b).

The preliminary objections of the Equitable defendants to the plaintiffs’ warranty claims are overruled. See Gardiner v. Philadelphia Gas Works, 413 Pa. 415, 197 A.2d 612 (1964).

      . At argument on Equitable’s motion for reconsideration and within Equitable’s brief in support of motion for reconsideration, counsel for Equitable clarified Equitable’s position that while a “sale” is not required, a “commercial transfer” event is required. In support of this proposition Equitable cites to several cases: Stecyk v. Bell Helicopter Textron Inc., 1996 WL 153555 (E.D. Pa. 1996); Woods v. Luertzing Corp., 161 N.J. Super. 156, 400 A.2d 562 (App. Div. 1979); Ettinger v. Triangle-Pacific Corp., 799 A.2d 95 (Pa. Super. 2002); and Armstrong Rubber Co. v. Urquidez, 570 S.W.2d374 (Tex. 1978). Each of these cases may be fairly distinguished from the instant matter. See discussion infra.

      . It is recognized that in each case, Nath involving a financier of machinery, Musser involving an auctioneer of fann machinery, and Cafazzo involving a physician implanting a mandibular prosthesis, the defendant was deemed to not be a seller/supplier for purposes of 402A liability.

      . A “swarf’ is a mixture of fine metallic grindings and grinding fluid.

      . Equitable properly advised this court at argument on Equitable’s motion for reconsideration that, technically, there exists no evidence of record that the gas could not be retrieved by simply reversing the pressure in the pipeline. While the possibility of Equitable’s ability to retrieve the gas is accepted as true, this, at best, remote possibility does not materially affect this court’s analysis on the question of whether the gas had been placed into the stream of commerce when Equitable placed it into its distribution system.

      . Equitable’s brief in support of motion for reconsideration bolsters the significance of the Woods decision by noting that both Stecyk (U.S. Dist. Ct., E.D. Pa. 1996) and Ettinger (Pa. Super. 2002), supra, rely upon the reasoning of Woods. This court notes that Stecyk and Ettinger’s reliance upon Woods is limited to the proposition that 402A liability could not be imposed where the allegedly defective product was “still being developed” or the injury occurred “during experiments involving [a]... machine still in development....” 799 A.2d at 103.


author: O’BRIEN, J.,

text:
    Merchants and Business Men’s Mutual Insurance Company v. Juvenile Rehabilitation Services Inc.

      C.P. of Monroe County,
    no. 460 Civil 2004.

      Michael P McKenna, for plaintiff.

      C. Daniel Higgins Jr. and Michael J. Foley, for defendant CJ.C. a minor, S.S.

      Michael H. Roth, for defendant, M.L., a minor.

      William F. Anzalone, for defendant M.S., a minor, J.W., a minor.

      Leo V. DeVito Jr., for defendant Juvenile Rehabilitation Services.

      James J. Wilson, for defendant Wordsworth.
    August 25, 2005
   O’BRIEN, J.,

From November of 1999 through August of 2000, defendant Juvenile Rehabilitanon Services Inc. (JRS) placed minors M.S., J. W., M.L. and C. J.C. in short-term foster care with Kevin James Simon, a transvestite, who is currently incarcerated at SCI Graterford, Graterford, Pennsylvania, after pleading guilty to involuntary deviate sexual intercourse, aggravated indecent assault, indecent assault, endangering the welfare of children and corruption of minors, stemming from his interactions with the aforementioned minors. At the time of the minors’ placement with Simon, Merchants and Business Men’s Mutual Insurance Company was the commercial liability carrier for JRS at policy number **********-jjL. In February 2002, M.S., J.W., M.L. and C J.C. and their parents/natural guardians initiated lawsuits for personal injuries suffered by filing separate complaints through separate counsel in this court (docket numbers 658 CV 2002, 659 CV 2002,7280 CV 2002 and 7651 CV 2002 respectivly). On January 20, 2004, Merchants initiated the present declaratory judgment action seeking a judicial determination that it need not defend or indemnify JRS regarding the personal injury claims brought by the minors. On June 7, 2005, Merchants filed a motion for summary judgment arguing that Simon’s sexual assault of the minors was an intentional act, thereby excusing Merchants’ duty to defendant JRS. Following the submission of briefs and oral argument on August 1,2005, plaintiff’s motion for summary judgment is now before the court for disposition.

Pennsylvania Rule of Civil Procedure 1035.2 provides that a motion for summary judgment may be granted if:

“After the relevant pleadings are closed, but within such time as not to unreasonably delay trial; any party may move for summary judgment in whole or in part as a matter of law
“(1) whenever there is no genuine issue of material fact as to a necessary element of the cause of action or defense which could be established by additional discovery or expert report, or
“(2) if, after the completion of discovery relevant to the motion, including the production of expert reports, an adverse party who will bear the burden of proof at trial has failed to produce evidence of facts essential to the cause of action or defense which in a jury trial would require the issues to be submitted to a jury.”

Summary judgment is a means to eliminate the waste of time and resources of litigants and the courts in cases where a trial would be a useless formality. Liles v. Balmer, 389 Pa. Super. 451, 567 A.2d 691 (1989). In a summary judgment proceeding, the court need not determine the facts essential to the case, but only determine if a material issue of fact exists. Summary judgment is only properly granted in cases where the right to judgment is clear and free from doubt, with any existing doubts viewed in light most favorable to the non-moving party. Marks v. Tasman, 527 Pa. 132, 589 A.2d 205 (1991); J.H. ex rel. Hoffman v. Pellak, 764 A.2d 64 (Pa. Super. 2000). In order to determine whether a case is free from doubt, the court may consider pleadings, depositions, answers to interrogatories, admissions and supporting affidavits. Pa.R.C.P. 1035.1. Non-moving parties may not rest upon mere allegations or denials of pleadings. Rather, the non-moving party must set forth specific facts demonstrating that there are genuine issues for trial. Failure to allege such specific facts will result in a summary judgment, if appropriate, against the non-moving party. Pa.R.C.P. 1035.3; Washington Federal Savings and Loan Association v. Stein, 357 Pa. Super. 286, 515 A.2d 980 (1986); Overly v. Kass, 382 Pa. Super. 108, 554 A.2d 970 (1989).

The standards to be applied in reviewing coverage questions arising under insurance contracts are well settled. “The proper focus regarding issues of coverage under insurance contracts is the reasonable expectation of the insured.... In determining the reasonable expectations of the insured, courts must examine the totality of the insurance transaction involved.” Hertz Corpora tion v. Smith, 441 Pa. Super. 575, 578, 657 A.2d 1316, 1317 (1995). (citations omitted) See also, Britamco Underwriters Inc. v. Weiner, 431 Pa. Super. 276, 636 A.2d 649 (1994), alloc, denied, 540 Pa. 575, 655 A.2d 508 (1994); Dibble v. Security of America Life Insurance Co., 404 Pa. Super. 205, 590 A.2d 352 (1991). While a determination as to the reasonable expectations of the insured must be based upon the totality of the insurance transaction involved, an insured may not complain that his or her reasonable expectations were frustrated by policy limitations which are clear and unambiguous. Bateman v. Motorists Mutual Insurance Co., 527 Pa. 241, 590 A.2d 281 (1991); St. Paul Mercury Insurance Co. v. Corbett, 428 Pa. Super. 54, 630 A.2d 28 (1993). However, where a provision of an insurance policy is ambiguous, the provision is to be construed in favor of the insured and against the insurer. Britamco Underwriters Inc. v. Weiner, supra; Bateman v. Motorists Mutual Insurance Co., supra. Additionally, Pennsylvania law requires an insurer act with the utmost good faith towards its insured, and it should accord the interest of its insured the same faithful consideration it gives its own interest. Williams v. Hartford Insurance Company, 83 F. Supp.2d 567 (E.D. Pa. 2000).

Plaintiff argues that coverage under the policy is triggered by claims of “bodily injury” caused by an “occurrence.” Plaintiff alleges that, since the Monroe County pleadings allege neither an “occurrence” nor “bodily injury” as defined in the policies, Merchants need not provide coverage to JRS. Additionally, plaintiff alleges that no punitive damages may be recovered, as punitive damages are barred by both policy language and public policy.

The Commercial General Liability (CGL) policy issued by Merchants to IRS provides in part as follows:

“Section I — Coverages
“Coverage A. Bodily Injury And Property Damage Liability
“(1) Insuring agreement.
“(a) We will pay those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies. We will have the right and duty to defend the insured against any ‘suit’ seeking those damages. However, we will have no duty to defend the insured against any ‘suit’ seeking damages for ‘bodily injury’ or ‘property damage’ to which this insurance does not apply....
“(b) This insurance only applies to ‘bodily injury’... if:
“(1) The ‘bodily injury’ or ‘property damage’ is caused by an ‘occurrence’ that takes place in the ‘coverage territory’; and;
“(2) The ‘bodily injury’. . . occurs during the policy period....
“Section V — Definitions
“(3) ‘Bodily injury’ means bodily injury, sickness or disease sustained by a person, including death, resulting from any of these at any time.
“(12) ‘Occurrence’ means an accident, including continuous or repeated exposure to substantially the same general harmful conditions.”

Initially, the issue of punitive damages has been resolved by agreement of counsel. The policy states that “it is agreed that this policy does not apply to punitive or exemplary damages, fines or penalties.” Both at oral argument and in defendants’ briefs, defendants admit that the punitive damages exclusion contained in the policy is sufficient to eliminate coverage for any punitive damages. Pacific Indemnity v. Linn, 766 F. 2d 754 (3d Cir. 1985) (in construing insurance policy, under Pennsylvania law, if the words of the policy are clear and unambiguous, the court must give the words their plain and ordinary meaning).

Plaintiff next contends that the Monroe County pleadings do not allege an “occurrence.” The insurance policy defines “occurrence” as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” Plaintiff avers that, under Pennsylvania law, sexual molestation is an intentional act, not an accidental act, thus, not an “occurrence” under the policy.

First, we acknowledge that Pennsylvania follows the inferred intent rule when dealing with liability cases concerning the sexual molestation of children by an insured. Wiley v. State Farm Fire, and Casualty Co., 995 F.2d 457 (3d Cir. 1993) (Harm to children in sexual molestation cases is inherent in the very act of sexual assault committed on a child, regardless of the motivation for or nature of such assault... the resulting injuries are, as a matter of law, intentional...); Erie Insurance Exchange v. Claypoole, 449 Pa. Super. 142, 673 A.2d 348 (1996); Aetna Casualty and Surety Company v. Roe, 437 Pa. Super. 414, 650 A.2d 94 (1994). The inferred intent rule is not applicable in the case at bar, however, because the complaints are not alleging negligence on the part of Simon, but rather on the part of JRS. Thus, the “occurrence” in this case was not the intentional conduct of Simon, but the accidental, negligent conduct of JRS’s placement of the children with Simon. The complaints allege, inter alia, that JRS failed to do a thorough background check on Simon, failed to investigate Simon’s claims to be a female, failed to perform a physical examination of Simon and failed to monitor the children’s placement with Simon. All of these negligent omissions by JRS combine to form an “occurrence” under the terms of the insurance policy.

Additionally, the proper focus regarding issues of coverage under insurance contracts is the reasonable expectation of the insured viewed in light of the totality of the insurance transaction. Hertz Corporation v. Smith, supra. Clearly, it is not a stretch to presume that JRS expected to be covered by its insurance policy for the negligent placement of children with an unfit foster parent. Moreover, JRS’s expectation of coverage for this type of situation is more than reasonable because, if not for protection from improper placement of children, what would JRS seek insurance coverage for?

In support of its position that there was no “occurrence” as defined by the policy, Merchants heavily relies upon Gene’s Restaurant Inc. v. Nationwide Insurance Co., 519 Pa. 306, 548 A.2d 246 (1988) and two Superior Court cases, Erie Insurance Exchange v. Claypoole, supra and Aetna Casualty and Surety Company v. Roe, supra. Although all of these cases dealt with intentional torts which did not trigger coverage under the policy, the facts in the case at bar are readily distinguishable from the cases plaintiff relies on.

In Gene’s Restaurant, supra, Gene’s Restaurant was sued for failing to prevent an attack when one of its bar patrons was physically assaulted by another customer. The Supreme Court of Pennsylvania held that, because the complaint averred a “willful and malicious assault,” which was not an accident but rather an intentional tort, it was not covered by the policy. In Erie v. Claypoole, supra, the Superior Court held that a bus driver’s automobile liability insurance did not have to defend or indemnify the bus driver in a suit arising out of his sexual molestation of minor bus passengers. Aetna v. Roe, supra, also involved the sexual molestation of minors. In that case, the Superior Court held that a homeowner’s insurance policy provided no coverage for allegations of sexual, physical and mental abuse of children by its insureds.

The two cases involving sexual assault are easily distinguishable from the case at bar in that both Erie v. Claypoole and Aetna v. Roe involved the intentional acts of the insured.

Conversely, in the case at bar, it is not the intentional actions of Simon that are at issue, but rather the negligence of JRS in placing the children with Simon and in failing to adequately perform its duty of ensuring the welfare and safety of the children. Additionally, JRS is different than the restaurant in Gene’s Restaurant because JRS actually placed the children in the care of Simon after approving him as a foster parent. The restaurant played no part in selecting who entered their bar the night of the assault. Additionally, unlike the complaints now before the court, the complaint in Gene’s Restaurant did not allege any negligence, but rather only alleged willful and malicious assault.

Finally, plaintiff contends that, even if the allegations in the Monroe County complaints give rise to an “occurrence,” the insurance policy also requires “bodily injury” in order to trigger coverage. According to the plaintiff, the minors neither pled nor suffered “bodily injury” as defined in the insurance policy. Plaintiff argues that emotional and mental distress are not physical, bodily injuries. Needleman v. Liberty Mutual Fire Insurance Co., 352 Pa. Super. 288, 507 A.2d 1233 (1986); Terrafranca v. Virgin Atlantic, 151 F.3d 108 (3d Cir. 1998) (alleging mere physical manifestation of mental or emotional harm will not rise to the level of bodily injury).

However, a careful review of the pleadings disclose the following factual allegations:

“(10) That during the minor plaintiff’s stay with his foster parents, Kevin James Simon, also known as Anna Hart, and James Hart, his/her alleged husband, he was continually subjected to oral sex, anal sex and pornographic movies which displayed explicit sexual scenes causing the said minor plaintiff to be permanently, physically and emotionally scarred....
“(14) That as a further result of the aforesaid injuries, the minor plaintiff, [M.S.] was rendered sick, sore and disabled and sustained severe physical and mental pain, suffering great discomfort and disability associated with the aforesaid injuries, all of which have disabled him and have required medical care and treatment and the plaintiff is informed, believes, and therefore avers that his injuries, suffering, pain, discomfort, and inconvenience, and disabilities are of a continuing and permanent nature.” (Merchants’ MSJ exhibit B; M.S. complaint, Tirio, i4.)
“(10) That during the minor plaintiff’s stay with his foster parents, Kevin James Simon, also known as Anna Hart, and James Hart, his/her alleged husband, he was continually subjected to oral sex, anal sex and pornographic movies which displayed explicit sexual scenes causing the said minor plaintiff to be permanently, physically and emotionally scarred....
“(14) That as a further result of the aforesaid injuries, the minor plaintiff J. W. was rendered sick, sore and disabled, and sustained severe physical and mental pain, suffering great discomfort and disability associated with the aforesaid injuries, all of which have disabled him and have required medical care and treatment, and the plaintiff is informed, believes, and therefore avers that his injuries, suffering, pain, discomfort, and inconvenience, and disabilities are of a continuing and permanent nature.” (Merchants’ MSJ exhibit C; J.W., complaint, ¶¶10, 14.)
“(11) Following the initial placement of plaintiff C.J.C. into the residence of defendant Simon, defendant Simon continuously abused, raped, molested and otherwise sexually assaulted plaintiff C.J.C....
“(17) Plaintiff C.J.C. has been and will in the future be physically, mentally and emotionally damaged, directly and proximately caused by the conduct of defendant JRS in that the physical, sexual and mental abuse of C.J.C. during the period of his foster placement with defendant Simon has caused, presently causes and in the future will cause minor plaintiff C.J.C. to suffer extreme emotional distress, anxiety, depression and numerous other physical and mental ailments.” (Merchants’ MSJ exhibit D; J.W. complaint, ¶¶11, 17.)
“As a direct and proximate result of the aforementioned negligence of the defendant JRS which resulted in the sexual abuse, molestation and exploitation of minor plaintiff M.L., the minor plaintiff M.L. has suffered and will continue to suffer profound physical, psychological and emotional injuries.” (Merchants’ MSJ exhibit E; M.L. complaint, ¶20.)

The above paragraphs illustrate that this is not an instance where the sole injuries alleged are psychological and/or emotional in nature. On the contrary, rape and physical assault are violent acts resulting in what is often severe physical bodily injury. In fact, even the plaintiff describes the minor defendant’s complaints as containing broad, “sweeping injury allegations.” (Merchants’ MSJ brief, 11.) Reading the allegations in the complaints in the light most favorable to the non-moving party, as is required by law, it is clear that physical bodily injuiy was sufficiently pled by the minor defendants in this case.

In view of the foregoing analysis, plaintiff’s motion for summary judgment as to coverage for punitive damages will be granted. However, the claims for compensatory damages resulting from the alleged negligence of JRS are covered by the Merchants commercial liability insurance policy. As such, plaintiff’s motion for summary judgment regarding coverage for compensatory damages will be denied.

ORDER

And now, August 25, 2005, it is ordered as follows:

(1) The motion of plaintiff, Merchants and Business Men’s Mutual Insurance Company, for summary judgment with respect to coverage provided to Juvenile Rehabilitation Services Inc. for punitive damages is granted.
(2) In all other respects, the motion of plaintiff, Merchants and Business Men’s Mutual Insurance Company, for summary judgment is denied.


author: MOSCHETTA, J,

text:
    Glover v. Deem

      C.P. of Washington County,
    no. 2003-2683.

      Jeffery Olup, for plaintiff.

      William Johnson, for defendant.
    August 23, 2005
   MOSCHETTA, J,

FINDINGS OF FACT

After a non-jury trial in the above captioned matter, the court makes the following findings of fact:

(1) Plaintiffs, John D. Glover and Linda A. Glover, are adult individuals and husband and wife, residing át 2168 E. National Pike, Scenery Hill, PA 15360.
(2) Defendants, Thomas R. Deem and Laurie A. Deem, are adult individuals and husband and wife, currently residing at 355 Amos, Scenery Hill, PA 15360.
(3) On or about September 7, 2001, the parties entered into a written agreement of sale dated August 26, 2001 for the purchase and sale of the real estate and premises located at 2168 E. National Pike, Scenery Hill, PA 15360, whereby the Glovers agreed to.purchase, and the Deems agreed to sell, the subject premises for $95,000.
(4) Prior to executing the agreement, the Deems executed a seller disclosure statement dated August 4,2001.
(5) The Glovers believed that the information provided in the narrative was contained in the disclosure, furnished by the Deems to their realtor for review and consideration by prospective purchasers, including the Glovers.
(6) Pursuant to the disclosure, the Deems affirmatively represented:
(a) the property was serviced by an individual on-lot system;
(b) a newer leach bed was apparently installed in 1993;
(d) the Deems answered “no” to the question, “Are you aware of any leaks, backups or other problems relating to any of the plumbing, water and sewage-related items?”
(7) The Deems did not experience any septic system problems while residing at 2168 E. National Pike.
(8) The Deems affirmatively represented that, “The septic leach field had also been recently improved.” Also, in the disclosure statement, in response to the question, “[w]hen was the septic system, holding tank or cesspool last serviced?” the Deems answered, “October 2000, new leach bed.”
(9) The Deems installed a new leach field at 2168 E. National Pike in 1993, however, they did so without securing the requisite Department of Environmental Protection permits.
(10) The agreement contains no specific reference to an on-site sewage disposal system; it merely references an “individual on-lot sewage disposal inspection contingency.”
(11) Notwithstanding the lack of specific reference in the agreement, the Deems represented to the Glovers that an adequate on-lot system and a new leach bed serviced the property.
(12) The Glovers promptly pursued a septic dye test on September 7, 2001, the results of which ostensibly concluded that the septic system was working properly on that date and at that time, under apparently warm and dry conditions. However, the report went on to note:
“Since any historic information of the septic system was not available, I must assume that the system was functioning properly on the day of the inspection . . . This test is a check of the septic system to see if there is a dye breakout on the day of the test only. It is assumed by Essential Home Inspections, and also the person performing the septic test, that the property has a proper septic tank and leach field. Essential Home Inspections and the person performing the septic test cannot be held responsible for septic systems that drain into hidden areas or underground and could not have been seen during the septic test.”
(13) The Glovers moved into the house at 2168 E. National Pike on October 19, 2001.
(14) The septic system worked properly between October 19, 2001 and mid-2002.
(15) Subsequently, in June 2002, it suffered complete drain field failure.
(16) After the septic system failed, the septic tanks required weekly pumpings which were performed between June 18,2002 and November 5, 2002 at a cost of $90 per pumping.
(17) These pumpings remained necessary until a large permanent holding tank was installed on the property.
(18) The tanks were pumped 21 times for a total cost of $1,890.
(19) The Glovers installed a new 3,900 gallon septic tank system in November of 2002 at a cost of $7,895.
(20) The new 3,900 gallon tank installed needs to be pumped approximately once a month at a cost of $280 per pumping.
(21) As of July 2005, the total cost of pumping the holding tank has been $8,880.
(22) The Glovers will be required to pump the holding tank on a monthly basis until the township has a public sewage system in place.

CONCLUSIONS OF LAW

(1) Both parties filed “findings of fact and conclusions of law briefs” with the court prior to trial. In their briefs, the parties contemplate the admissibility of parol evidence to show the purchaser plaintiffs’ justifiable reliance on the defendant sellers’ representations regarding the septic system at 2168 E. National Pike.

(2) The admissibility of the parol evidence is at issue in this case because the signed agreement contained integration and release provisions stating that the written agreement comprised the entire agreement between the parties, and that there were no other terms or conditions, oral or otherwise, pertaining to the sale of the property.

(3) The purpose of the parol evidence rule is to preserve the integrity of written agreements by prohibiting the contracting parties from altering the import of their contract through the use of contemporaneous or prior oral declarations. LeDonne v. Kessler, 256 Pa. Super. 280, 286, 389 A.2d 1123, 1126 (1978).

(4) The Real Estate Seller Disclosure Law, enacted December 20,2000, involves residential real estate transactions. 68 Pa.C.S. §7302.

(5) The Disclosure Law applies to this case, which involves the sale of a residential home.

(6) The Disclosure Law states that any seller who negligently violates or fails to perform his or her duties under the law “shall be liable to the buyer as a result of a violation of this chapter.” 68Pa.C.S. §7311.

(7) Prior to the enactment of the Disclosure Law, a line of cases following LeDonne permitted the admission of parol evidence, such as, oral representations, into evidence to support claims of fraudulent or negligent misrepresentation in real estate transactions. See 1726 Cherry Street Partnership v. Bell Atlantic Properties Inc., 439 Pa. Super. 141,653 A.2d 663 (1995); Myers v. McHenry, 398 Pa. Super. 100, 580 A.2d 860 (1990); Mancini v. Morrow, 312 Pa. Super. 192, 458 A.2d 580 (1983).

(8) The Disclosure Law, however, does not completely eclipse the LeDonne line of cases. The final sentence of section 7311 states that “this subsection shall not be construed to restrict or expand the authority of a court to impose punitive damages or apply other remedies applicable under any other provision of law.”

(9) Under the LeDonne line of cases, whether or not a court based its decision to admit or reject oral evidence of misrepresentation in real estate transactions involved balancing the extent of a party’s knowledge of the objectionable condition, derived from a reasonable inspection, against the coverage of the contract’s integration clause to determine whether a party could justifiably rely on the oral representations without insisting on further contractual protections. Blumenstock v. Gibson, 811 A. 2d 1029, 1036 (Pa. Super. 2002), citing LeDonne v. Kessler, 256 Pa. 280, 389 A.2d 1123.

(10) In a recent Allegheny County Court of Common Pleas decision, Vaughn v. Drab, AR04-2321 (Allegheny Cty. 2005), the Honorable R. Stanton Wettick discussed the Disclosure Law and its applicability to residential real estate transactions.

(11) In Vaughn, Judge Wettick explained that the Disclosure Law was enacted to provide broader relief to residential homebuyers, beyond the protections offered by LeDonne.

(12) The Disclosure Law expanded a seller’s obligations and a buyer’s remedies in three ways: (1) by requiring disclosure of specified information and allowing a buyer to pursue a claim without convincing a court that the seller’s silence is a fraudulent misrepresentation, (2) by allowing a buyer to recover damages caused by misstatements or omissions on the property disclosure statement that may be known to the seller and (3) by allowing the buyer to recover damages when he proves by a preponderance of the evidence that the seller, when completing the disclosure statement, knew or had reason to know that a statement made was false or misleading. Vaughn, AR04-2321, page 5.

(13) Judge Wettick also remarked that when the Disclosure Law was enacted, members of the legislature had reason to know that residential home sales are almost always governed by standard agreements that include integration clauses.

(14) Because members of the legislature are familiar with the standard sales agreements used in residential home sales, Judge Wettick stated that the Disclosure Law should be construed to incorporate any representations made in the disclosure agreement into the sales agreement. Vaughn, AR04-2321, page 6.

(15) Both LeDonne and Blumenstock contain language indicating that release clauses should be treated similarly to integration clauses. In Blumenstock, the court states that a release clause will not automatically defeat a misrepresentation claim that could be recognized under the balancing test. Blumenstock, 811 A.2d at 1036.

(16) If the integration and release language standard to real estate contracts released sellers from liability, a release from liability would occur in virtually every real estate dispute and would render the Disclosure Law meaningless. Vaughn, AR04-2321, page 7.

(17) In the present case, the buyers read through the sellers’ disclosure statement which clearly stated that a newer leach bed was installed on the property in 1993. In fact, the disclosure statement asked, “[w]hen was the septic system, holding tank or cesspool last serviced?” and the Deems answered, “October 2000, new leach bed.”

(18) The buyers had this bed tested and no immediate problem was apparent.

(19) The buyers relied on the disclosure statement and oral representations of the sellers in purchasing the home.

(20) Evidence of oral representations regarding the septic system at 2168 E. National Pike are admissible to determine whether any fraudulent or negligent misrepresentations were made by the sellers in this real estate transaction.

(21) Prior to reaching a decision in this case, the court examined each of the counts against the defendants.

(22) The first count, fraudulent misrepresentation, requires that the plaintiff demonstrate by clear and convincing evidence the following: (1) that there was a representation, (2) the representation was material to the transaction at hand, (3) the representation was made falsely, with knowledge of its falsity or with recklessness as to whether it is true or false, (4) the representation was made with the intent of misleading another into relying on it, (5) there was justifiable reliance on the misrepresentation, and (6) the resulting injury was proximately caused by the reliance. Bortz v. Noon, 556 Pa. 489, 500, 729 A.2d 555, 561 (1999).

(23) A material misrepresentation is a misrepresentation of such character that, if the statement had not been made, the transaction would not have been consummated. Skurnowicz v. Lucci, 798 A.2d 788, 793 (Pa. Super. 2002).

(24) The statement made by the Deems regarding the septic system was a material misrepresentation.

(25) The statement was made with recklessness as to whether or not the statement was true.

(26) However, the court finds that the Deems did not make the statements regarding the septic system with the intent of misleading the Glovers.

(27) For the foregoing reasons, the court finds in favor of the defendants with respect to Count I.

(28) The second count of the Glover’s complaint is under the Unfair Trade Practices and Consumer Protection Law (UTPCPL). 73 P.S. 201 et seq.

(29) Any individual purchasing goods, including real estate, may bring a private action to recover damages caused by another’s “act or practice declared unlawful” by the UTPCPL. 73 P.S. 201-9.2.

(30) In order to prove the catchall provision of the UTPCPL, the plaintiffs must prove all the elements of common-law fraud. Skurnowicz, 798 A.2d at 794.

(31) The court finds that the Glovers were unable to prove all the elements of fraudulent representation. Therefore, the court finds no violation of the UTPCPL.

(32) For the foregoing reasons, the court finds in favor of the defendants with respect to Count II.

(33) The third count alleged negligent misrepresentation. Negligent misrepresentation requires proof of: (1) a misrepresentation of material fact; (2) the misrepresentation must be made under circumstances in which misrepresenter ought to have known its falsity; (3) the misrepresentation must be made with intent to induce another to act on it; and (4) the misrepresentation must result in injury to party acting in justifiable reliance on the misrepresentation, Restatement (Second) of Torts §552, as adopted by the Pennsylvania Supreme Court in Bortz, 556 Pa. at 500, 729 A.2d at 561.

(34) The Deems knew or should have known of the material latent defects with the septic system at 2168 E. National Pike.

(35) The Deems knew or should have known that the written and oral representations they made concerning the condition of the septic system and the salability of 2168 E. National Pike were false and/or misleading.

(36) The Deems negligently misled the Glovers by failing to reveal to the Glovers that there were, or may have been, material latent defects in the septic system at 2168 E. National Pike.

(37) The Deems were negligent in failing to inform the Glovers that the installation/improvement of the leach bed at 2168 E. National Pike was performed without a permit.

(38) The Deems knew or should have known that the Glovers would rely upon the Deems’ representations, with regard to their decision to purchase the subject premises at 2168 E. National Pike.

(39) The Deems were under a duty to the Glovers to disclose the existence of the material defects at 2168 E. National Pike.

(40) The Deems negligently failed to disclose to the Glovers the existence of those material defects.

(41) The Deems breached their duty to the Glovers through their failure to disclose the existence of the material defects at 2168 E. National Pike.

(42) As a direct and proximate result of the Deems’ breach of their duty of care owed to the Glovers, the Glovers have been and will be forced to make repairs to 2168 E. National Pike.

(43) For the foregoing reasons, the court finds in favor of the plaintiffs with respect to Count III.

VERDICT

And now, August 23, 2005, on Count I, fraudulent misrepresentation, the court enters a verdict for the defendants, Thomas and Laurie Deem and against the plaintiffs, John and Linda Glover. On Count II, violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law, the court enters a verdict for the defendants, Thomas and Laurie Deem and against the plaintiffs, John and Linda Glover. On Count III, negligent misrepresentation, the court finds for the plaintiffs, John and Linda Glover and against the defendants, Thomas and Laurie Deem, in the amount of $18,585.