author: SHEPPARD JR., J.,

text:
    Aetna Inc. v. Lexington Insurance Company

      Ann M. Laupheimer, for plaintiff.

      Jeffrey R. Lerman, for defendants.
    October 27, 2005
   SHEPPARD JR., J.,

This opinion is submitted relative to the appeal of plaintiff, Aetna Incorporated of this court’s order of September 9, 2005, denying plaintiff’s motion to enforce settlement and granting the motion to enforce settlement of Lexington Insurance Company and National Union Fire Insurance Company of Pittsburgh, Pa., defendants.

For the reasons discussed, this court respectfully submits that its order should be affirmed.

BACKGROUND

This is an insurance coverage action relating to litigation in the United States District Court for the Southern District of Texas against an insured subsidiary of Aetna. The parties to that case, at the conclusion of the trial, settled for a payment by Aetna of $8.25 million. Aetna asserts that it expended an additional $10.2 million in attorney’s fees in the defense of that matter.

Subsequently, Aetna filed this insurance coverage action seeking reimbursement of the $8.25 million settlement and $7.2 million representing its defense costs minus a $3 million self-insured retention. Aetna, in its complaint, identified ARIC as a “captive reinsurer” through which Aetna funded a self-insured retention in the amount of $3 million per claim.

Following a two-day mediation presided over by the Honorable Abraham J. Gafni of ADR Options, a settlement agreement was reached. According to that settlement agreement, defendants were to pay plaintiff $4,455,000 in two equal payments of $2,227,500 on or before June 10, 2005 and July 11, 2005, respectively. Counsel for plaintiff informed this court by letter of May 10,2005, that “the parties have agreed to a settlement of the above-captioned matter.” Lexington’s petition to enforce settlement, exhibit. “1.” Plaintiff also sent defendants’ counsel a letter on the same date stating that: “[a]s we discussed on the telephone, our clients have agreed to a settlement of this litigation for a payment by the defendants to an entity to be designated by Aetna in the amount of $4,455,000.” Id., exhibit “2.”

After the first payment was made, an Aetna representative not involved in the ADR Options mediation informed Lexington that the settlement called not only for the payment of $4,455,000, but also a relinquishment by defendants of claims for reinsurance against an Aetna affiliate, ARIC, on a $30,000,000 “at risk” policy. (This relinquishment amounts to approximately $1.2 million.) As a result, defendants expressed surprise and disagreement and did not pay the requisite second installment, instead placing the $2,227,500 in escrow.

Both parties then filed petitions to enforce the settlement.

Defendants’ petition to enforce settlement requested that this court enter an order: (1) enforcing a settlement which calls for defendants to pay plaintiff $4,455,000 in full consideration of the release of its claims in this litigation; (2) determining that the settlement did not provide for the release of ARIC’s obligations to defendants in its capacity as reinsurer on the $30 million “at risk” policy; (3) providing that defendants pay Aetna the unpaid installment of $2,227,500 plus interest accrued on that amount; and (4) awarding legal fees and costs as sanctions for Aetna’s alleged “vexatious” conduct in this matter.

Plaintiff’s petition to enforce the settlement asked this court to enter an order compelling defendants to pay the second installment of $2,227,500 plus interest at the rate of 6.25 percent and $2,260 in attorney’s fees. In addition, plaintiff took the position that defendants were attempting to ignore the provision of the settlement agreement which, according to plaintiff, calls for the release of ARIC’s obligations in its capacity as reinsurer on the $30 million “at risk” policy.

The court granted defendants’ petition to enforce settlement, in part, and denied plaintiff’s petition to enforce settlement.

The plaintiff has now appealed.

DISCUSSION

I. The Release at Issue Must Be Strictly Construed in Light of the Circumstances at the Time of Its Execution and Implicates Only Those Claims Within the Contemplation of the Parties

“The courts of Pennsylvania have traditionally determined the effect of a release using the ordinary meaning of its language and interpreted the release as covering only such matters as can fairly be said to have been within the contemplation of the parties when the release was given.” Vaughn v. Didizian, 436 Pa. Super. 436, 439, 648 A.2d 38, 40 (1994). (citations and quotation marks omitted) (emphasis added) Moreover, “releases are strictly construed so as not to bar the enforcement of a claim which had not accrued at the date of the execution of the release.” Id., citing Restifo v. McDonald, 426 Pa. 5, 230 A.2d 199 (1967). Claims that have not accrued will not have been within the contemplation of the parties. The basic reasoning behind the rule is “that it would be unfair for a release to bar claims that could not possibly have been contemplated or foreseen by the parties.” Transportation Insurance Co. v. Spring-Del Associates, 159 F. Supp. 2d 836, 841 (E.D. Pa. 2001), citing Restifo, 230 A.2d at 210.

The provision of the settlement agreement at issue provides:

“Lexington and National Union ... , do hereby release and forever discharge Aetna and its predecessors ... from and against any and all claims, demands, debts, liabilities . . . and causes of action whatsoever (including any purported claims for reinsurance or additional premium or payment of any type from the Aetna releasors, including ARIC)....” Settlement agreement, ¶3.

The settlement agreement does not specify whether ARIC is released in its capacity as a “captive reinsurer” of Aetna’s self-insured $3 million per claim retention, or in its capacity as reinsurer on the $30 million “at risk” policy. However, plaintiff asserts that there is no ambiguity with regard to ARIC. Aetna Inc.’s response to Lexington’s petition to enforce settlement, ¶14. Plaintiff argues that the characterization of ARIC as the “captive reinsurer” in its own complaint is irrelevant. Id. This court disagrees.

In Vaughn, the Pennsylvania Superior Court was critical of the lower court’s decision which failed to consider what matters were within the parties’ contemplation when reviewing the language of the release. The court stated:

“In construing [a] general release, a court cannot merely read the instrument. Instead, it is crucial that a court interpret a release so as to discharge only those rights intended to be relinquished. The intent of the parties must be sought from a reading of the entire instrument, as well as from the surrounding conditions and circumstances.” Vaughn, 436 Pa. Super, at 439, 648 A.2d at 40. (emphasis added)

The manner with which plaintiff identified ARIC in its own complaint — as the “captive reinsurer” through which Aetna funded the self-insured retention amount of $3 million per claim — sheds light on the intent of the parties. This is particularly true when considered in the context of Judge Gafni’s starting point of damage amounts as set out in the settlement agreement. The settlement agreement provides in part:

“Whereas, Aetna’s damages in the litigation were later alleged to total approximately $15.45 million, which amount represents approximately $10.2 million in attorneys’ fees and other costs that Aetna incurred in litigating the Adminstaff action, plus Aetna’s $8.25 [million] settlement payment to Adminstaff, and less Aetna’s $3 million self-insured retention;. . . .” (emphasis added)

Furthermore, counsel for Aetna, wrote to this court on May 10, 2005, advising that the parties had settled the case. On the same date he wrote to defense counsel, “Our clients have agreed to a settlement of this litigation for a payment by the defendants to an entity designated by Aetna in the amount of $4,450,000.” Lexington’s petition to enforce settlement, exhibits “1” and “2.” Significantly, both of these letters, which presumably show Aetna’s intent with regard to settlement, are devoid of any mention of the release of ARIC in its capacity as a reinsurer on the $30 million “at risk” policy.

As to the issue whether the claim (related to ARIC in its capacity as the reinsurer on the “at risk” policy) had accrued as of the date of the execution of the release, keep in mind that at the time of the mediation neither ARIC nor any other reinsurer had an obligation in connection with settlement. Such obligation would accrue only after a settlement payment was made. The first installment of the settlement was paid to Aetna two days after the settlement agreement became effective. Therefore, a claim involving ARIC as the reinsurer on the “at risk” policy had not accrued as of the date of the execution of the settlement agreement. The case law on this issue specifically instructs that “releases are strictly construed so as not to bar the enforcement of a claim which had not accrued at the date of the execution of the release.” Vaughn, 436 Pa. Super, at 439, 648 A.2d at 40. Thus, it is submitted that it would not have been the intent of the parties to release ARIC in its capacity as the reinsurer on the “at risk” policy.

Accordingly, this court finds that the settlement agreement does not release ARIC in its capacity as the rein-surer on the “at risk” $30 million policy.

II. The Confidentiality Provision of the ADR Agreement and the Pennsylvania Statute Guaranteeing the Confidentiality of Mediation Does Not Bar This Court’s Consideration of What Was Not Discussed by the Parties During the Settlement Process

Plaintiff urges that defendants have violated the ADR Options agreement with the mediator and Aetna, specifically the following:

“The fact of this proceeding, and all disclosures made in connection therewith, as well as all negotiations and/ or results relating thereto, are confidential settlement negotiations with the meaning of all applicable rules, statutes, and regulations.” (emphasis added)

Plaintiff argues that defendants have attempted to flout the Pennsylvania statute guaranteeing the confidentiality of mediations. The pertinent Pennsylvania Statute, 42 Pa.C.S. §5949, states: “Mediation communications ... shall not be admissible as evidence in any action or proceeding including but not limited to a judicial . . . proceeding.” (emphasis added)

This court submits that the ADR proceeding cannot be ignored given that the settlement agreement that resulted is the contract at issue here. The court need not consider the communications or disclosures made during the course of the mediation process. The fact of what was not discussed, in and of itself, evidences the fact that the parties did not intend to release ARIC in its capacity as the reinsurer on the “at risk” policy. The statute and the confidentiality provision of the ADR Options agreement do not bar this court’s consideration of what facts or positions were not disclosed or negotiated.

Since Lexington’s potential claim against ARIC as the reinsurer on the $30 million “at risk” policy had not accrued during the ADR Options mediation process, Lexington’s reinsurance claim against ARIC was not then in dispute. The parties did not discuss the release of Lexington’s reinsurance claim against ARIC either before or after the settlement was achieved at the mediation. Further, as noted, the two May 10, 2005 letters (to defense counsel and this court) make no mention of a release covering ARIC in its capacity of the reinsurer on the “at risk” policy.

Finally, even if this court were to consider communications related to the mediation in order to ascertain the parties’ intent with regard to the settlement agreement, the purpose of the Pennsylvania statute would not be defeated. The court in United States Fidelity and Guaranty Company v. Bilt-Rite Contractors Inc., an Eastern District of Pennsylvania case applying Pennsylvania law, set out the purpose of the mediation privilege, thusly:

“If participants cannot rely on the confidential treatment of everything that transpires during [mediation] sessions then counsel of necessity will feel constrained to conduct themselves in a cautious, tightlipped, noncommittal manner more suitable to poker players in a high-stakes game than to adversaries attempting to arrive at a just resolution of a civil dispute. This atmosphere if allowed to exist would surely destroy the effectiveness of a program which has led to settlements ..., thereby expediting cases at a time when... judicial resources ... are sorely taxed.” 2005 U.S. Dist. Lexis 9299, *18 (E.D. Pa. 2005), citing Lake Utopia Paper Ltd. v. Connelly Containers Inc., 608 F.2d 928, 930 (2d Cir. 1979), quoted in Sheldon v. Pa. Tpk. Comm’n, 104 F. Supp.2d 511, 513 (W.D. Pa. 2000). (emphasis added)

This court submits that this reasoning makes clear that evidence related to settlement negotiations is inadmissible in connection with the prosecution and trial of the underlying claim. However, this court was not asked to decide the issues related to the underlying case. Instead, this court was charged with interpreting the settlement agreement. The court agrees with the conclusion set out in Bank of America National Trust and Savings Association v. Hotel Rittenhouse Associates, 800 F.2d 339, 345 (3d Cir. 1986), “Having undertaken to utilize the judicial process to interpret the settlement and to enforce it, the parties are no longer entitled to invoke the confidentiality ordinarily accorded settlement agreements.”

In sum, then, this court finds that the confidentiality of the mediation process, as set out in 42 Pa.C.S. §5949, was not violated by defendants or this court in reaching a decision here.

III. Plaintiff Is Not Entitled to Damages for Defendants ’Alleged Bad Faith Conduct or to Sanctions Under Pa.R.C.P. 229.1

Plaintiff contends that it is entitled to punitive damages and reimbursement of the court costs and attorneys’ fees incurred in litigating this issue. This claim is based upon 42 Pa.C.S. §8371 which provides in pertinent part:

“In an action arising under an insurance policy, if the court finds that the insurer has acted in bad faith toward the insured, the court may ...
“(2) Award punitive damages against the insurer.
“(3) Assess court costs and attorney fees against the insurer.”

Success in bringing a claim of bad faith requires the insured to present clear and convincing evidence that “the insurer did not have a reasonable basis for denying benefits under the policy and that the insurer knew of or recklessly disregarded its lack of a reasonable basis in denying the claim.” MGA Inc. Co. v. Bakos, 699 A.2d 751, 754 (Pa. Super. 1997). Though left undefined by the statute, the Pennsylvania Superior Court has recognized that “bad faith” has a particular meaning in the insurance context:

“Insurance. ‘Bad faith’ on [the] part of [an] insurer is any frivolous or unfounded refusal to pay proceeds of a policy; ... For purposes of an action against an insurer for failure to pay a claim, such conduct imports a dishonest purpose and means a breach of a known duty (i. e., good faith and fair dealing), through some motive of self-interest or ill will; mere negligence or bad judgment is not bad faith.” Id. citing Terletsky v. Prudential Property and Casualty Insurance Co., 437 Pa. Super. 108, 124-25, 649 A.2d 680, 688. (emphasis added)

Plaintiff argues that it is entitled to bad faith damages because defendants failed to comply with their obligation to make the second installment payment pursuant to the settlement agreement, “nor have defendants articulated any reason for failing to [make] the payment when due.” Aetna’s motion to enforce settlement agreement, ¶8. This argument is not persuasive. Plaintiff attached to its motion to enforce settlement correspondence dated July 7,2005 from counsel for defendants to Judge Gafni with copies to plaintiff’s counsel, stating that the relinquishment by defendants of claims for reinsurance against an Aetna affiliate on the $30 million policy was not contemplated during the mediation process and that, unless plaintiff changed their position, there would be further legal proceedings. Moreover, plaintiff’s counsel also attached to its motion to enforce settlement agreement correspondence dated July 12,2005, from defense counsel to this court, with copies sent to plaintiffs’ counsel, which advised:

“As Mr. Richter has been advised, as a result of Aetna’s repudiation of the essence of the agreement that it reached before Judge Gafni to accept $4,455,000 in full consideration of the release of its claims in this litigation, de fendants are arranging to escrow the second installment in an interest bearing account until this matter is resolved." Aetna’s motion to enforce settlement, exhibits 3, 5. (emphasis added)

This court finds that defendants had a legitimate disagreement with plaintiff’s construction of the settlement agreement. Thus, the defendants’ refusal to pay the second installment under the settlement agreement was neither frivolous nor unfounded.

The plaintiff also argues that it is entitled to damages pursuant to 42 Pa.C.S. §8371 because defendants allegedly made “libelous accusations against its insured, which allegations [were] made solely for defendants’ own business purposes.” The statement at issue is defendant’s assertion to this court that plaintiff’s contention — that the settlement agreement includes the release of obligations of ARIC in its capacity as the reinsurer on the $30 million “at risk” policy — “would be an attempt to perpetrate a fraud on this court.” Aetna’s motion to enforce settlement, exhibits “5” and “6.” Plaintiff asserts that this statement amounts to a violation of common law and statutory obligations of defendants to treat their insured (plaintiff) “in a good faith manner at all times.” The court rejects this position.

As noted, our Superior Court’s definition of “bad faith” under 42 Pa.C.S. §8371 provides: “‘Bad faith’ on [the] part of [an] insurer is any frivolous or unfounded refusal to pay proceeds of a policy; . . . .” MGA Inc. Co., 699 A.2d at 754. The statement that plaintiff asserts constitutes bad faith has nothing to do with a refusal to pay the proceeds of a policy. Instead, defendants’ assertions were simply defendants’ position with regard to plaintiff’s interpretation of the settlement agreement. Accordingly, this court finds that defendants’ statements do not fit within the definition of bad faith.

Plaintiff also complains that “Aetna’s insurers hurled invective of the most obnoxious kind against Aetna, all for defendants’ own purposes.” This “invective” includes statements such as: (1) “Aetna’s conduct in this matter is reprehensible”; (2) Aetna is trying to “make a mockery of the process of mediation”; and (3) Aetna is engaged in “deliberate and faithless overreaching.” These statements are also unrelated to defendants’ refusal to pay the second installment payment set out in the settlement agreement. Similarly, then, these statements do not constitute bad faith.

As to the imposition of sanctions under Pennsylvania Rule of Civil Procedure 229.1, a prerequisite to the imposition of sanctions for failure to deliver settlement funds is a finding that “there is no material dispute as to the terms of the settlement or release.” Pa.R.C.P. 229.1 (g). The scope of the release, specifically whether the release includes a relinquishment of defendants’ rights against ARIC in its capacity as the reinsurer on the $30 million policy, is the precise issue of this dispute.

Additionally, the sanction for failure to deliver settlement funds is the imposition of interest on the funds “running from the twenty-first day to the date of delivery of the settlement funds.” Pa.R.C.P. 229.1(g). Here, because Lexington has placed the second settlement installment into an interest bearing escrow account, the court need not consider the imposition of interest as a sanction.

In sum, then, this court denies plaintiff’s claims for sanctions and bad faith damages.

IV. Lexington’s Claim for an Award of Attorneys ’Fees Under 42 Pa.C.S. §2503 Is Denied

Lexington asserts that it is entitled to an award of attorneys’ fees under 42 Pa.C.S. §§2503(7) and (9) because plaintiff had “no reasonable basis” to argue an entitlement to an additional $1.2 million settlement benefit. This court disagrees and denies this claim.

42 Pa.C.S. §2503, titled “Right of participants to receive counsel fees,” provides in part:

“The following participants shall be entitled to a reasonable counsel fee as part of the taxable costs of the matter:...
“(7) Any participant who is awarded counsel fees as a sanction against another participant for dilatory, obdurate or vexatious conduct during the pendency of a matter. ...
“(9) Any participant who is awarded counsel fees because the conduct of another parly in commencing the matter or otherwise was arbitrary, vexatious or in bad faith.”

While this court does not agree with Aetna’s construction of the settlement agreement, this court does not find that Aetna’s belief that the settlement agreement included a release of ARIC as the reinsurer on the “at risk” policy was baseless. Despite the fact that the settlement agreement specifically named ARIC, it does not specify in which capacity ARIC was to be released. Therefore, this court finds that plaintiff’s conduct in filing its petition to enforce settlement was not “arbitrary, vexatious or in bad faith.” Likewise, this court finds that plaintiff did not participate in “dilatory, obdurate or vexatious conduct” during the pendency of this matter.

Accordingly, this court denied Lexington’s claim for attorneys’ fees under 42 Pa.C.S. §2503.

CONCLUSION

For the reasons discussed, this court respectfully submits that its order of September 9, 2005, should be affirmed.

      . This order further provided that “[t]he settlement between Aetna and Lexington does not include the release of any of Lexington’s reinsurers, including ARIC, on the $30 million Lexington insurance policy at issue” and that Lexington shall pay the second installment payment ($2,227,500 plus accrued interest) pursuant to the settlement agreement “following the passage of all applicable periods for appeal of any and all present and future orders relating to the enforcement of the settlement of this action without any appeal being taken or, in the event of an appeal, upon any and all present and future orders becoming final and conclusive upon the exhaustion of all rights to appeal.”

      . That suit, Adminstaff v. Aetna Life Insurance Co., is referred to in this opinion as the “Adminstaff litigation.”

      . Complaint, ¶13.

      . The correct amount is $4,455,000.


source: Caselaw Access Project

author: CULLEN, J.,

license: Public Domain

text:
    Travelers Indemnity Co. v. Mahiai

      Daniel M. Brown, for plaintiffs.

      Michael W. Wagman, for defendant.
    October 6, 2005
   CULLEN, J.,

Before the court for disposition is the motion for summary judgment filed by defendant, Matthew D. Weaver. For the reasons set forth herein, defendant’s motion for summary judgment will be granted in part and denied in part.

PROCEDURAL AND FACTUAL BACKGROUND

Cloister Gardens L.P. is a Pennsylvania limited partnership that owns Cloister Gardens Apartments in Ephrata, Pennsylvania.

On May 15, 1995, Cloister Gardens L.P. entered into a management agreement with RP Management Inc. for a term of five years with automatic renewals for subsequent terms of one year. The management agreement provided that RP Management Inc. would completely manage the apartments, including but not limited to the leasing, operating, and care of the apartments.

In this capacity, RP Management Inc. purchased an insurance policy for the apartments from The Travelers Indemnity Co. Pursuant to a written lease agreement with Cloister Gardens L.P., Dawn Mahiai and Matthew D. Weaver, defendant, were tenants in apartment no. 335 at the Cloister Gardens Apartments.

On June 8,2001, defendant left the apartment to go to work. While alone in the apartment, Ms. Mahiai walked onto the apartment’s exterior deck and smoked a cigarette. When she finished smoking, Ms. Mahiai discarded the cigarette into a plastic fish tank and drove to a drugstore where she shopped for 20 to 30 minutes. During this time, a fire ignited on the deck and quickly spread to the adjoining apartment.

The fire department responded and extinguished the fire. An investigation by the Pennsylvania State Police Fire Marshal determined that the fire was an accident caused by the discarding of Ms. Mahiai’s cigarette into the fish tank.

The fire caused extensive property damage that prompted RP Management Inc. to submit an insurance claim to The Travelers Indemnity Co., which paid $86,427.97 for the losses.

On February 24, 2003, The Travelers Indemnity Co., as subrogee of RP Management Inc., and RP Management Inc. commenced this action against Ms. Mahiai and defendant seeking to recover the amount paid for the fire damage. Plaintiffs argue the fire was caused by the negligence and/or carelessness of Ms. Mahiai and defendant and that these individuals breached their lease.

On October 24, 2003, defendant filed an answer and new matter, and on May 2, 2005, he filed a motion for summary judgment and partial summary judgment.

On June 3, 2005, plaintiffs filed their first memorandum, and on August 22, 2005, pursuant to this court’s order, plaintiffs filed a second supplemental memorandum.

DISCUSSION

Defendant frames his motion for summary judgment and partial summary judgment in response to the complaint and raises four issues: (1) whether defendant owed a duty to RP Management Inc. to protect the property from damage and, therefore, may be liable in negligence; (2) whether contractual privity exists between RP Management Inc. and defendant so as to permit plaintiffs to bring a breach of contract action against defendant; (3) whether the language of the indemnity “pass through” provision of the lease is so lacking in specificity as to render it unenforceable; and (4) whether an insurance company subrogee may recover an amount in excess of the subrogor’s insurable interest.

These motions for summary judgment were made pursuant to Pennsylvania Rule of Civil Procedure 1035.2 which provides: “[a]tier the pleadings are closed... 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 any 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.” Pa.R.C.P. 1035.2.

A grant of summary judgment is proper where the evidentiary record either “(1) shows the material facts are undisputed or (2) contains insufficient evidence of facts to make out a prima facie cause of action or defense and, therefore, there is no issue to be submitted to the jury.” McCarthy v. Dan Lepore & Sons Co. Inc., 724 A.2d 938, 940 (Pa. Super. 1998). Thus, “[i]f the non-moving party fails to come forward with sufficient evidence to establish or contest a material issue to the case, the moving party is entitled to judgment as a matter of law.” Id. (citing Ertel v. Patriot-News Co., 544 Pa. 93, 100-102, 674 A.2d 1038, 1042 (1996), cert. denied, 519 U.S. 1008, 117 S.Ct. 512, 136 L.Ed.2d 401 (1996)).

“A material fact is one that directly affects the outcome of the case.” Gerrow v. Shincor Silicones Inc., 756 A.2d 697, 700 (Pa. Super. 2000).

A court must view the record “in the light most favorable to the non-moving party, and all doubts as to the existence of a genuine issue of material fact must be resolved against the moving party.” Pennsylvania State University v. County of Centre, 532 Pa. 142, 145, 615 A.2d 303, 304 (1992).

The purpose of the summary judgment procedure is to “pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial.” Phaff v. Gerner, 451 Pa. 146, 151, 303 A.2d 826, 829 (1973). The court “must ignore controverted facts appearing only in the pleadings” and restrict its consideration to material “filed in support of and in opposition to the motion for summary judgment” and the “uncontroverted” allegations of the pleadings. Id. at 151, 303 A.2d at 830; Washington Federal Savings & Loan Association v. Stein, 357 Pa. Super. 286, 289, 515 A.2d 980, 981 (1986).

Once a motion for summary judgment is made and properly supported, the opposing party cannot rest on the allegations or denials in the pleadings. Rapagnani v. Judas Co., 736 A.2d 666, 668 (Pa. Super. 1999). “Rather, the adverse party must identify evidence in the record establishing the facts essential to the cause of action or defense which the motion cites as not having been produced.” Id.

1. Negligence

Because plaintiffs’ complaint, Count II, alleges that the fire was caused due to the negligence and/or carelessness of defendant, the plaintiff must establish the facts essential to a negligence cause of action.

In order to state a cause of action for negligence, the plaintiff must demonstrate the following:

“(1) a duty or obligation recognized by the law that requires an actor to conform his actions to a standard of conduct for the protection of others against unreasonable risks; (2) failure on the part of the defendant to conform to that standard of conduct, i.e., a breach of duty; (3) a reasonably close causal connection between the breach of duty and the injury sustained; and (4) actual loss or damages that result from the breach.” Gutteridge v. A.P. Green Services Inc., 804 A.2d 643, 654 (Pa. Super. 2002).
“The primary element in any negligence cause of action is that the defendant owes a duty of care to the plaintiff.” Althaus ex rel. Althaus v. Cohen, 562 Pa. 547, 552, 756 A.2d 1166, 1168 (2000). To determine whether “a duty exists in a particular case,” a court must weigh the following factors: “(1) the relationship between the parties; (2) the social utility of the actor’s conduct; (3) the nature of the risk imposed and forseeability of the harm incurred; (4) the consequences of imposing a duty upon the actor; and (5) the overall public interest in the proposed solution.” Id. at 553, 756 A.2d at 1169.

After weighing these factors, the Superior Court has articulated the general duty owed for acts committed by third parties:

“Although each person may be said to have a relationship with the world at large that creates a duty to act where his own conduct places others in peril, Anglo-American common law has for centuries accepted the fundamental premise that mere knowledge of a dangerous situation, even by one who has the ability to intervene, is not sufficient to create a duty to act.” Elbasher v. Simco Sales Service of Pennsylvania, 441 Pa. Super. 397, 400, 657 A.2d 983, 984-85 (1995). (emphasis in original)

However, an exception to this general rule exists “where a defendant stands in some special relationship with either the person whose conduct needs to be controlled or in a relationship with the intended victim of the conduct, which gives to the intended victim a right to protection.” Emerich v. Philadelphia Center for Human Development Inc., 554 Pa. 209, 216-17, 720 A.2d 1032, 1036 (1998).

In this case, based on the record and an analysis of the case law, the court grants defendant’s motion for summary judgment as to Count II of the complaint which alleges that the fire was caused due to the negligence and/or carelessness of defendant.

The court finds the general rule that “there is no duty to control the conduct of a third party to protect another from harm” applies because defendant does not stand in a special relationship with either (A) “the person whose conduct needs to be controlled,” or (B) “the intended victim.” Id.

A. The Person Whose Conduct Needs To Be Controlled

Plaintiffs’ complaint asserts that because defendant lived with Ms. Mahiai, they shared a special relationship sufficient to impose a duty on defendant and owed to RP Management Inc. to restrain Ms. Mahiai’s conduct. In other words, as defendant lived with Ms. Mahiai and was aware of her conduct, he owed a duty to RP Management Inc. to prevent Ms. Mahiai from disposing of her cigarettes in the combustible container. Although plaintiffs, in their memorandum of law in support of the plaintiffs’ response to the motion for summary judgment and partial summary judgment, somewhat appear to have withdrawn this argument, the court will briefly address the subject to clarify the matter.

“Those instances where a special relationship exists between the actor (defendant) and the third person (wrongdoer) which are sufficient to impose a duty are set forth in the Restatement in sections 316-319.” Brezenski v. World Truck Transfer Inc., 755 A.2d 36, 41 (Pa. Super. 2000). (footnote omitted)

Restatement section 316 involves the duty of a parent to control his or her child. Id. “Section 317 involves the duty of a master to control the conduct of a servant, [and] section 318 addresses the duty of a possessor of land or chattel to control the conduct of licensees.” Id.

Section 319 provides that “[o]ne who takes charge of a third person whom he knows or should know to be likely to cause bodily harm to others if not controlled is under a duty to exercise reasonable care to control the third person to prevent him from doing such harm.” Brisbine v. Outside in School of Experiential Education Inc., 799 A.2d 89, 93 (Pa. Super. 2002).

In this case, defendant’s connection to Ms. Mahiai does not fall within the class of relationships provided for in Restatement sections 316-319. Ms. Mahiai is not a child, a servant, or a licensee. Further, defendant has never taken charge of Ms. Mahiai. Rather, at the time of the fire, Ms. Mahiai was a 24-year-old independent adult.

“Adults cannot be charged with the supervision of other adults” merely because they live together. Brandjord v. Hopper, 455 Pa. Super. 426, 431-32, 688 A.2d 721, 724 (1997) (deciding that no duty of care existed between two adults merely because they traveled within the same vehicle). Creating “such a duty would open a veritable Pandora’s box of potential liability and responsibility problems.” Id.

Accordingly, the court finds that defendant does not stand in a special relationship with “the person whose conduct needs to be controlled.” Emerich v. Philadelphia Center for Human Development Inc., 554 Pa. 209, 216-17, 720 A.2d 1032, 1036 (1998).

B. The Intended Victim

Plaintiffs primarily argue that because defendant entered into a lease requiring that the unit be returned in good condition, defendant stood in a special relationship with RP Management Inc., sufficient to impose a duty of care owed to the company to protect the property from damage.

The gist of the action doctrine maintains “the conceptual [difference] between breach of contract claims and tort claims. ... As a practical matter, the doctrine precludes plaintiffs from re-casting ordinary breach of contract claims into tort claims.” eToll Inc. v. Elias/Savion Advertising Inc., 811 A.2d 10, 14 (Pa. Super. 2002).

Although breach of contract claims and tort claims “derive from a common origin,” differences between contract breach and civil actions for tort “have developed at common law.... To permit a promisee to sue his promisor in tort for breaches of contract inter se would erode the usual rules of contractual recovery and inject confusion into our well-settled forms of actions.” Id.

“The test is not limited to discrete instances of conduct; rather, the test is, by its own terms, concerned with the nature of the action as a whole.” Id. at 15. “A claim should be limited to a contract claim when the parties’ obligations are defined by the terms of the contracts, and not by the larger social policies embodied by the law of torts.” Id. at 14.

In this case, plaintiffs argue that defendant breached a duty of care to protect the premises from damage and that this duty of care arose from defendant’s lease. The duties regarding care of the premises were created and grounded solely in the lease. In other words, the alleged failure only “arose in the course of the parties’ contractual relationship[s].” Id. at 20.

Moreover, the damages are of a type that “would be compensable in an ordinary contract action; thus, the claim would essentially duplicate a breach of contract action” to recover the amount of the damage done to the premises. Id. at 21.

Accordingly, the court finds that defendant does not stand in a special relationship with “the intended victim of the conduct, which gives to the intended victim a right to protection.” Emerich v. Philadelphia Center for Human Development Inc., 554 Pa. 209, 216-17, 720 A.2d 1032, 1036 (1998).

As a special relationship between the parties does not exist, the court applies the general rule that “there is no duty to control the conduct of a third party to protect another from harm” and grants defendant’s motion for summary judgment as to plaintiffs’ Count II which alleges that the fire was caused due to the negligence and/ or carelessness of defendant. Id.

2. Breach of Contract

Because plaintiffs’ complaint, Count III, alleges that defendant is liable for breaching the lease, plaintiffs must establish the facts essential to a breach of contract action.

“Three elements are necessary to plead properly a cause of action for breach of contract: (1) the existence of a contract, including its essential terms, (2) a breach of a duty imposed by the contract and (3) resultant damages.” Omicron Systems Inc. v. Weiner, 860 A.2d 554, 564 (Pa. Super. 2004).

“Generally a party to a contract does not become liable for a breach thereof to one who is not a party thereto.” Evans v. Otis Elevator Co., 403 Pa. 13, 18, 168 A.2d 573, 575 (1961).

“When there has been no direct transaction between the plaintiff and the defendant, it is usually expressed by saying that they are not in ‘privity’ of contract. Privity of contract exists when there is a connection or relationship which exists between two or more contracting parties.” Global Payments Direct v. EVS Holding Co., no. 1373, 2005 WL 2100102, at *13 (Pa. Com. Pl. 2005). In other words, “[f]or parties to be considered to be in privity, a contractual relationship must exist between them.” Phillips v. Cricket Lighters, 576 Pa. 644, 654, 841 A.2d 1000, 1006 (2003).

“[P]rivity of contract is personal privity, and is confined to the persons of the contracting parties.” Deynzer v. Columbia Gas of Pennsylvania Inc., 875 A.2d 298, 301 (Pa. Super. 2005). (emphasis in original)

However, there are two circumstances under which a non-contracting party may bring a breach of contract action against a party to the contract: (A) where there has been an assignment of interests, and (B) where an agent is acting on behalf of a principal. Bird Hill Farms v. U.S. Cargo & Courier, 845 A.2d 900, 907 n.3 (Pa. Super. 2004) (“An assignment of a leasehold terminates only the privity of estate between lessor and lessee; the privity of contract survives.”); see generally, Scott v. Purcell, 490 Pa. 109, 117, 415 A.2d 56, 60 (1980) (explaining the basic elements of agency).

“The basic elements of agency are the manifestation by the principal that the agent shall act for him, the agent’s acceptance of the undertaking and the understanding of the parties that the principal is to be in control of the undertaking.” Scott v. Purcell, 490 Pa. 109, 117, 415 A.2d 56, 60 (1980).

“The burden of establishing agency rests upon the party asserting it... It is not necessary, however, to furnish direct evidence of the specific authority if it can be reasonably inferred from the circumstances of the case.” Id. at 117 n.8, 415 A.2d at 62 n.8. For example, an inference may be drawn from “the relation of the parties to each other and their conduct with reference to the subject matter of the contract, that there was at least an implied intention to create the relationship of principal and agent.” Id.

Once an agency relationship is created, a modification of that agency relationship “may occur when a principal acquiesces in conduct not included in the initial agreement.” Id. at 117 n.9, 415 A.2d at 62 n.9.

In this case, plaintiffs argue that Cloister Gardens L.P., the owner of the apartments, entered into a management agreement with RP Management Inc. and that, as a result, RP Management Inc. is Cloister Gardens L.P.’s agent.

Viewing the record “in the light most favorable to” plaintiffs, the court concludes that sufficient evidence exists to render Cloister Gardens L.P.’s relationship with RP Management Inc. “a genuine issue of material fact.” Pennsylvania State University v. County of Centre, 532 Pa. 142, 145, 615 A.2d 303, 304 (1992). Accordingly, the court denies defendant’s motion for summary judgment as to Count III of the complaint which alleges that defendant is liable for breaching the lease.

3. The “Pass Through” Provision

In his motion for summary judgment and partial summary judgment, defendant questioned the validity of the “pass through” provision of the lease. Defendant raised this issue because plaintiffs’ complaint appeared to rely on the portion of the lease, paragraph 14, entitled Condition of leased unit; Repair of damage, which states: “Resident agrees to pay as additional rent the cost of all other repairs, as soon as resident receives a bill from landlord. Resident must also pay landlord promptly for the cost of repairs to any part of the development for damage caused by resident or resident’s visitors.”

However, plaintiffs’ memoranda have clarified that their complaint was based on the section of the lease, paragraph 14, which provides that “ [r] esident must leave the leased unit clean and in as good condition as on the date this lease begins, except for ordinary wear and tear.”

This section of paragraph 14 does not contain a “pass through” provision. Accordingly, defendant’s third issue need not be considered, and his motion for summary judgment as to the “pass through” clause is denied.

4. Insurable Interest

Lastly, defendant questioned whether an insurance company subrogee may recover an amount in excess of the subrogor’s insurable interest. Defendant raised this issue because he believed RP Management Inc. asserted a cause of action against defendant that was independent of any claim Cloister Gardens L.P. may retain.

However, plaintiffs’ memorandum has clarified that RP Management Inc. claims to be the agent of Cloister Gardens L.P. This relationship renders RP Management Inc.’s insurable interest irrelevant. Accordingly, defendant’s fourth issue will not be considered, and the court denies his motion for partial summary judgment that requested a limitation on plaintiffs’ damages.

Therefore, the court enters the following:

ORDER

And now, October 6,2005, upon consideration of the motion of defendant Matthew D. Weaver for summary judgment on the issue of negligence, it is ordered that the motion is granted. The motions of defendant Matthew D. Weaver for summary judgment on the issues of breach of contract and the pass through clause are denied. The motion of defendant Matthew D. Weaver in the alternative for partial summary judgment on the issue of plaintiffs’ damages is denied.

      . Residential lease agreement, page 1; management agreement, para. 1.

      . Management agreement, para. 1.

      . Management agreement, para. 2(a).

      . Residential lease agreement, page 1.

      . Pennsylvania State Police Fire Investigation report/worksheet, pages 2-3.

      . Ms. Mahiai has not responded to plaintiffs’ complaint.

      . Plaintiffs have not alleged that Cloister Gardens L.P. assigned its interest to RP Management Inc., but rather rely solely on an agency theory.


author: WORTHINGTON, J.,

text:
    Commonwealth v. Kirkpatrick

      Robert Saurman, district attorney, for Commonwealth.

      James Swetz, for defendant.
    September 30, 2005
   WORTHINGTON, J.,

On March 16,2005, Detective Douglas A. Knowles, who is employed by the Stroud Area Regional Police Department and is also a member of the Pennsylvania State Police Area V Computer Task Force, received information from Gabriela Renda regarding possible child pornography. Ms. Renda relayed that she was having problems with her computer, located in the bedroom of her 756 Main Street, Stroudsburg, Pennsylvania residence. She communicated to the detective that while she was trying to figure out the problem, she opened a file that was located in a shared Network file. The Network was shared via a router and was connected to a computer that was owned by Christopher Kirkpatrick, defendant, who resides in another bedroom at the same address. When Ms. Renda opened the file, she observed that it contained file names that she thought were suspicious; namely files entitled “8-year-old boys,” “10-year-old girls,” “kindergarten kids,” and “dad with daughters.”

Upon hearing this information, Detective Knowles, along with Detective Wolbert and Officer Paul Gasper, executed a search warrant at defendant’s apartment. Included in the inventory of items seized during the search were several hundred DVDs and a computer gigabyte tower with two hard drives. A forensic analysis was done on both hard drives using a Digital Intelligence Forensic Fire Chief, a device that enables detectives to view images that are stored on a hard drive. The analysis revealed several images indicating child pornography, specifically photos that appeared to illustrate pre-teen girls participating in sexual acts with adult men. The detectives downloaded the suspect images onto an Imation CD-R DVD and delivered said DVD to Dr. Andrea Taroli, an employee of the PEGASUS Child Advocacy Center, for analysis. Dr. Taroli reviewed over 50 images and determined that 39 of them depicted children who were 12 years of age or younger.

As a result of the discovery of the aforementioned images, defendant was arrested on March 16, 2005 and charged with sexual abuse of children, in violation of 18 Pa.C.S. §6312, specifically subsection (d)(1), possession of child pornography. The foregoing count was included in a criminal Information filed by the Commonwealth. Defendant waived formal arraignment on June 1, 2005. On June 13, 2005, defendant served on the district attorney’s office a request for a bill of particulars. Seven days elapsed without the district attorney’s office furnishing the particulars and on June 20, 2005, defendant filed an application for order for bill of particulars. By order dated June 21, 2005, the Commonwealth was directed to file a bill of particulars within 10 days. To date, no bill has been filed.

On July 7, 2005, defendant filed a timely omnibus pretrial motion for relief, which included: (1) a motion to quash the information; (2) a motion to suppress any evidence seized under the Commonwealth’s search warrant; and (3) a motion for return of property. A hearing was held on July 26,2005. Both parties submitted briefs in support of their respective positions and defendant’s motions are now before us for disposition.

MOTION TO QUASH THE INFORMATION

Defendant’s initial request for relief is in the nature of a motion to quash the criminal Information. The Information reads:

“The attorney for the Commonwealth of Monroe County by this Information charges that in the County of Monroe, Pennsylvania, Christopher Kirkpatrick: “Count: 1 possession of child pornography — (F3) 18 §6312 §§D
“Defendant had many pornographic images on his computer of naked children under the age of 18-years-old.
“Citation of statute and section: 118 §6312 §§D (F3)
“All of which is against the Act of Assembly and the peace and dignity of the Commonwealth.”

Defendant alleges that the language of the preceding Information, as currently drafted, does not charge a violation of 18 Pa.C.S. §6312(d), which reads:

“Any person who knowingly possesses or controls any book, magazine, pamphlet, slide, photograph, film, videotape, computer depiction or other material depicting a child under the age of 18 years engaging in a prohibited sexual act or in the simulation of such act commits an offense.” 18 Pa.C.S. §6312(d)(1). Defendant argues that a picture of a naked child, without more, is not prohibited by the foregoing language. Additionally, the word “pornographic” is not defined in the statute. He therefore claims that the Information, as drafted, fails to charge him with a violation of the statutoiy section at issue. As such, defendant asks that we dismiss the charge pending against him.

Pennsylvania Rule of Criminal Procedure 560 sets forth the requirements for the filing of a criminal Information and provides:

“(A) After the defendant has been held for court, the attorney for the Commonwealth shall proceed by preparing an Information and filing it with the court of common pleas.
“(B) The Information shall be signed by the attorney for the Commonwealth and shall be valid and sufficient in law if it contains:
“(1) a caption showing that the prosecution is carried on in the name of, and by the authority of, the Commonwealth of Pennsylvania;
“(2) the name of the defendant, or if the defendant is unknown, a description of the defendant as nearly as may be;
“(3) the date when the offense is alleged to have been committed if the precise date is known, and the day of the week if it is an essential element of the offense charged, provided that if the precise date is not known or if the offense is a continuing one, an allegation that it was committed on or about any date within the period fixed by the statute of limitations shall be sufficient;
“(4) the county where the offense is alleged to have been committed;
“(5) a plain and concise statement of the essential elements of the offense substantially the same as or cognate to the offense alleged in the complaint; and
“(6) a concluding statement that ‘all of which is against the Act of Assembly and the peace and dignity of the Commonwealth.’ ” Pa.R.Crim.P. 560.

At the hearing, the Commonwealth conceded that the language of the original Information contains omissions and is not in accordance with the rules, but argued that said defects do not entitle defendant to his requested relief. We agree.

We find that the language of the Information put defendant on notice regarding the criminal act with which he was being charged, the statutory section that was, in turn, implicated, and his alleged conduct that gave rise to the charge. Therefore, the Commonwealth’s failure to include the date when the offense is alleged to have occurred or a plain and concise statement of the essential elements of the offense does not obviate the defendant from understanding the nature of the charge against him.

At the time of hearing, the Commonwealth, recognizing the deficiencies in the original Information, requested leave to file an amended Information. Pennsylvania Rule of Criminal Procedure 564 addresses amendments to In-formations and provides:

“The court may allow an Information to be amended when there is a defect in form, the description of the offense(s), the description of any person or any property, or the date charged, provided the Information as amended does not charge an additional or different offense.” Pa.R.Crim.P. 564.

Because of the defects in the original Information, we granted the Commonwealth leave to amend the Information to include the requisite language and conform to the rules.

An amended Information was electronically filed on July 25, 2005, charging:

“Count I
“The district attorney of Monroe County by this Information charges that on or about March 16, 2005, in the County of Monroe, in [sic] Borough of Stroudsburg, Pennsylvania, Christopher Kirkpatrick knowingly possessed or controlled a book, magazine, pamphlet, slide, photograph, film, videotape, computer depiction or other material depicting a child under the age of 18 years engaged in a prohibited sexual act or in the simulation of such act, to wit: Defendant had many pornographic images on his computer of naked children under the age of 18-years-old and the nudity of said children [w]as depicted for the purpose of sexual stimulation or gratification. All of which is against the Acts of Assembly and the peace and dignity of the Commonwealth of Pennsylvania.” 18 Pa.C.S. §6312(d) — F3.

This amended Information does not charge an additional or different offense; it merely fills in the gaps in the original Information. We find this amended Information to be satisfactory and in accordance with the rules governing the filing of Informations. As such, defendant’s motion to quash the Information is denied.

MOTION TO SUPPRESS ANY EVIDENCE SEIZED UNDER THE COMMONWEALTH’S SEARCH WARRANT

Defendant’s second pretrial motion is a motion to suppress any evidence seized under the Commonwealth’s search warrant. This motion is premised on two distinct allegations: (1) that the affidavit lacked probable cause; and (2) that the warrant violated particularity requirements. We will address defendant’s arguments in order.

Defendant initially claims that the affidavit of probable cause lacked the requisite probable cause to merit the issuance of a valid search warrant. Possession of child pornography, the statutory provision that defendant is charged with violating, is worded as follows:

“Any person who knowingly possesses or controls any book, magazine, pamphlet, slide, photograph, film, videotape, computer depiction or other material depicting a child under the age of 18 years engaging in a prohibited sexual act or in the simulation of such act commits an offense.” 18 Pa.C.S. §6312(d)(1).

The full text of the search warrant affidavit reads:

“That on March 16 2005 this affiant who is employed by the Stroud Area Regional Police Department received a [sic] information from Gabriela Renda regarding possible child pornography. She stated that she was having problems with her computer that is located in her bedroom at her residence of 756 Main St. She stated that while she was trying to figure the problem out, she opened a file that is located in a shared Network file. This network is shared via a router and is connected to a computer that [sic] owned by Christopher Kirkpatrick who lives in another bedroom at the same address. This is a LAN (Local Area Network) service that is subscribed from Blue Ridge Cable. This subscription is subscribed to Renda and she also pays for this service. When she opened this file it had files in to [sic] that she thought was [sic] suspicious. She saw several files that were named (8-year-old boys), (10-year-old girls), (kindergarten kids), and one named [Qdad with daughters[)].” Affidavit of probable cause, Commonwealth’s exhibit no. l,p.3.

Defendant argues that the preceding search warrant affidavit lacks probable cause because it merely alleges that defendant had computer files entitled “8-year old boys,” “10-year old girls,” “kindergarten kids,” and “dad with daughters”; and these titles, in and of themselves, do not necessarily suggest a violation of the statute. Defendant claims that a person is not prohibited from having computer files titled as these are, nor is a person prohibited from reading text about the categories of people named in these files. Defendant further argues that the affidavit contains no allegation that the computer files contained photographic depictions, as required by the statute, let alone that they portrayed children engaged in sexual intercourse, masturbation, sadism, masochism, bestiality, fellatio, cunnilingus, lewd exhibition of the genitals or nudity for the purpose of sexual stimulation or gratification, as required by the statute.

Furthermore, defendant cautions us that suspicion is not the same as probable cause and argues that computer files with the aforementioned titles, without more, do not violate the provisional language of section 6312(d). Defendant contends that in order for the affidavit to satisfy section 6312(d), it would have had to include, at a minimum, a statement that Gabriela Renda, the informant, had viewed the computer files and actually saw images that depicted acts that are prohibited under section 6312(a), as well as sufficient facts to demonstrate her reliability as an informant.

For the foregoing reasons, defendant maintains that the search warrant affidavit does not satisfy the “totality of the circumstances” test for the purposes of making and reviewing probable cause determinations as set forth by the United States Supreme Court in Illinois v. Gates, 462 U.S. 213, 103 S.Ct. 2317, 76 L.Ed.2d 527 (1983) and later adopted by our Supreme Court with respect to Article I, Section 8 of the Pennsylvania Constitution in Commonwealth v. Gray, 509 Pa. 476, 503 A.2d 921 (1985). Defendant therefore argues that the seized evidence should be suppressed as it was obtained via the execution of an unlawful warrant that was issued based upon a search warrant affidavit that lacked the requisite probable cause.

The Commonwealth, conversely, argues that the search warrant affidavit and the resulting warrant are lawful. The Commonwealth finds instructive the case of U.S. v. Cochran, 806 F. Supp. 560 (E.D. Pa. 1992), in which a search warrant was upheld where movers had observed photographs of naked children at the defendant’s home, despite the fact that no allegation was made that the children were engaged in sexual activity. The court ruled that “[t]he failure of the movers to describe an actual violation of the statute does not preclude a finding of probable cause.” The Commonwealth argues that this case is similar to Cochran in that, here, the informant for the warrant did not see children engaged in sexual activity, yet there was a clear indication that such unlawful material did exist. The Commonwealth therefore asserts that the totality of the circumstances demonstrate that the warrant was properly supported by probable cause in this instance.

Defendant is quick to challenge the Commonwealth’s reliance on U.S. v. Cochran, 806 F. Supp. 560 (E.D. Pa. 1992) and instead argues that Cochran supports the argument in favor of suppression. Defendant differentiates Cochran from the case at hand by pointing out that in Cochran the movers who reported the matter to the police had actually seen pictures of naked children, whereas, in this case, the informant merely saw suspicious titles; she did not see images at all, let alone images of children that would be in direct violation of the statute.

We note at the outset that this is a suppression hearing and “[i]t is incontrovertible that, here in Pennsylvania, the Commonwealth, and not defendant, has the burden of going forward with evidence and of establishing that the challenged evidence was not obtained in violation of defendant’s rights.” Commonwealth v. Ryan, 296 Pa. Super. 222, 228, 442 A.2d 739, 742 (1982); Pa.R.Crim.P. 323(h). It is thus the Commonwealth’s burden in this instance to prove that the search warrant affidavit upon which the warrant was based was supported by sufficient probable cause and that the warrant met the requisite particularity requirements.

Both the United States and the Pennsylvania Constitutions protect individuals from unreasonable searches and seizures, see United States Constitution Amendment IV and Pennsylvania Constitution Article I, Section 8, thereby ensuring the “right of each individual to be let alone.” Commonwealth v. Campbell, 862 A.2d 659, 663 (Pa. Super. 2004); citing Commonwealth v. Blair, 394 Pa. Super. 207, 214, 575 A.2d 593, 596 (1990), quoting Schneckloth v. Bustamonte, 412 U.S. 218, 236, 93 S.Ct. 2041, 36 L.Ed.2d 854 (1973). The Fourth Amendment provides:

“The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated; and no warrants shall issue but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.” United States Constitution Amendment IV.

The Pennsylvania Supreme Court has held that Article I, Section 8 of the Pennsylvania Constitution confers greater personal privacy protection to the citizens of the Commonwealth under certain circumstances. See Commonwealth v. Cleckley, 558 Pa. 517, 524-25, 738 A.2d 427, 431 (1999); see also, Commonwealth v. Reid, 571 Pa. 1, 811 A.2d 530 (2002); Commonwealth v. Acosta, 815 A.2d 1078 (Pa. Super. 2003). Article I, Section 8 of the Pennsylvania Constitution imparts:

“The people shall be secure in their persons, houses, papers and possessions from unreasonable searches and seizures, and no warrant to search any place or to seize any person or things shall issue without describing them as nearly as may be, nor without probable cause, supported by oath or affirmation subscribed to by the affiant.” Pennsylvania Constitution Article I, Section 8.

Additionally, Pennsylvania Rule of Criminal Procedure 2003 provides:

“(a) No search warrant shall issue but upon probable cause supported by one or more affidavits sworn to before the issuing authority. The issuing authority, in determining whether probable cause has been established, may not consider any evidence outside the affidavits.
“(b) At any hearing on a motion for the return or suppression of the evidence, or for suppression of the fruits of evidence obtained pursuant to a search warrant, no evidence shall be admissible to establish probable cause other than the affidavits provided for in paragraph (a).” Pa.R.Crim.P. 2003(a) and (b).

Thus, search warrants must satisfy several significant statutory and constitutional requirements, see Pa.R.Crim.P. 2001-2010, and a search or seizure is not reasonable unless it is conducted pursuant to a search warrant issued by a magistrate upon a showing of probable cause. See Commonwealth v. Edwards, 735 A.2d 723 (Pa. Super. 1999). Further, the issuing magistrate’s determination of probable cause “should be paid great deference by reviewing courts.” Commonwealth v. Macolino, 336 Pa. Super. 386, 389, 485 A.2d 1134, 1136 (1984), citing Commonwealth v. Frye, 242 Pa. Super. 144, 148, 363 A.2d 1201, 1203 (1976).

The U.S. Supreme Court, in the case of Illinois v. Gates, 462 U.S. 213, 238, 103 S.Ct. 2317, 2332, 76 L.Ed.2d 527 (1983), adopted a flexible “totality-of-the-circumstances” approach to determining whether probable cause has been established. In accordance with that test, the issuing magistrate is not permitted to consider any evidence outside of the four comers of the affidavit. See Pa.R.Crim.P. 2003(a), see also, Commonwealth v. Ryerson, 817 A.2d 510, 513 (Pa. Super. 2003). The underlying affidavit of probable cause, upon which the warrant is based, must establish probable cause that a crime has occurred and the evidence sought is an appropriate matter to be seized, i.e., evidence of a crime, under Pennsylvania Rule of Criminal Procedure 2002. Commonwealth v. Bagley, 408 Pa. Super 188, 596 A.2d 811 (1991). Simply stated, the affidavit must contain facts that would enable the issuing authority to make an independent determination that seizable evidence would be found in the premises to be searched. Illinois v. Gates, 462 U.S. 213, 103 S.Ct. 2317, 76 L.Ed.2d 527 (1983).

As a result, probable cause exists “when the facts and circumstances within the police officer’s knowledge, and of which the officer has reasonably trustworthy information, are sufficient in themselves to warrant a person of reasonable caution in the belief that an offense has been committed.” Commonwealth v. Gwynn, 555 Pa. 86, 723 A.2d 143, 148 (1999); Commonwealth v. Ryerson, 817 A.2d 510, 513 (Pa. Super. 2003). Then, the task of the issuing magistrate is “to make a practical, commonsense decision whether, given all of the circumstances set forth in the affidavit before him, there is a fair probability that contraband or evidence of a crime will be found in a particular place.” Illinois v. Gates, 462 U.S. 213, 103 S.Ct. 2317, 76 L.Ed.2d 527 (1983); Commonwealth v. Gray, 509 Pa. 476, 503 A.2d 921 (1985). Accordingly, any evidence found to be obtained from an unreasonable search or seizure is inadmissible at trial. Id. citing Katz v. United States, 389 U.S. 347, 88 S.Ct. 507, 19 L.Ed.2d 576(1967).

Our duty in reviewing the search warrant at issue “is simply to ensure that the magistrate had a substantial basis for concluding that probable cause existed.” Commonwealth v. Coleman, 574 Pa. 261, 271-72, 830 A.2d 554, 560 (2003). Although we recognize that the issuing magistrate’s determination of probable cause “should be paid great deference by reviewing courts,” Commonwealth v. Macolino, 336 Pa. Super. 386, 389, 485 A.2d 1134, 1136 (1984), we find that this affidavit lacked the requisite probable cause to withstand a four comers analysis and the magistrate lacked a substantial basis for concluding that probable cause existed.

The search warrant affidavit at issue is frustratingly sparse, merely setting forth the titles of four computer files without providing any clear indication as to what those files contained or to whom they belonged. We find that the suspect titles merely describe categories of individuals. To presuppose that the titles contain photographic depictions of children engaging in sexual behavior, rather than simply images of the categories of individuals so described, i.e., 6-year-old boys, 10-year-old girls, kindergarten children, or fathers with their daughters, is to go outside the language of the affidavit of probable cause and defy a proper four comers analysis. Similarly, the four corners of the warrant do not contain indicia demonstrating to whom the files belonged, as it was a shared network. The affidavit of probable cause contained no information regarding Officer Knowles’ involvement in the Pennsylvania State Police Computer Task Force, his experience investigating this type of crime, the sort of file names usually found in conjunction with this type of crime, or any other information that would bolster the affidavit and rise to the level of probable cause. Additionally, it is common practice in this jurisdiction for the affidavit to be reviewed by a member of the district attorney’s office prior to its submission to the magistrate for signature; a safeguard that is in place to ensure that the affidavit is adequate to pass constitutional review. Unfortunately, this affidavit raises a mere suspicion. We therefore find that the titles in question are not significantly recognizable, based upon the four comers analysis, as indicating “child pornography” so as to substantiate a finding of probable cause to support the issuance of a lawful search warrant.

Defendant further alleges that there was insufficient proof of the veracity of the informant to support the issuance of a valid warrant. A search warrant may issue upon hearsay, but, where it does, facts must be stated that will enable the issuing authority to independently determine that the source of the hearsay statement was factual and reliable. Commonwealth v. Jones, 506 Pa. 262, 484 A.2d 1383 (1984); see also, Commonwealth v. Yount, 455 Pa. 303, 314 A.2d 242 (1974). Thus, a tip from an informant can properly form the basis for probable cause, provided there is adequate evidence of the informant’s reliability when examined under the totality of the circumstances test. Commonwealth v. Valenzuela, 408 Pa. Super. 399, 412, 597 A.2d 93, 100 (1991), citing Commonwealth v. York, 381 Pa. Super. 55, 552 A.2d 1092 (1989).

Under the totality of the circumstances test, specifically in instances like the present case, when an informant’s statements are being used to establish probable cause, the relevant considerations include the informant’s veracity, reliability, and basis of knowledge. Id. After examination of the affidavit, we find that the credibility of the informant, Ms. Renda, was not suitably established. Although the affidavit delineates her very limited basis of knowledge by describing how and why she came to view the suspect titles, the affidavit fails to include any information that would tend to demonstrate her veracity or reliability in this regard. Her only “knowledge” is that she came across several files with certain titles.

Where, as here, the reliability of the informant is not established, “then the facts and circumstances surrounding the tip must provide sufficient indicia of reliability.” Commonwealth v. Smith, 784 A.2d 182, 188 (Pa. Super. 2001). For example, when police are relying on an informant’s tip, “[i]f the tip provides inside information, then police corroboration of this inside information can impart additional reliability to the tip.” Commonwealth v. Smith, 784 A.2d 182, 187 (Pa. Super. 2001). Here, Ms. Renda related the relevant information to the affiant in this case, who is a member of the Pennsylvania State Police Area V Computer Task Force. Again, there is no language in the affidavit to demonstrate that the affiant attempted or was able to corroborate the information he received. We therefore find that within the confines of the four comers of the affidavit, the issuing authority had no substantial basis upon which to assess the reliability of the information provided by the informant to the affiant. See Commonwealth v. Torres, 564 Pa. 86, 97, 764 A.2d 532, 537 (2001). Because the facts stated in the affidavit were not sufficient to enable the magistrate to independently determine the reliability of Ms. Renda’s statements or the affiant’s reliance thereon, the search warrant was not properly granted.

In order for there to be sufficient probable cause to support the issuance of a valid search warrant, “the facts contained in the [affidavit of probable cause] for a search warrant must be such that an independent, issuing authority, exercising reasonable caution, can conclude that the items sought are connected with criminal activity and that they will be found in the place to be searched.” Commonwealth v. Riffert, 379 Pa. Super. 1, 12, 549 A.2d 566, 572 (1988), citing Commonwealth v. Council, 491 Pa. 434, 443, 421 A.2d 623, 627 (1980); see also, Commonwealth v. Ryan, 300 Pa. Super. 156, 167, 446 A.2d 277, 283 (1982). For the reasons previously stated, we find that the affidavit filed in support of the application for the warrant failed to sufficiently establish probable cause that a crime had occurred, and that the evidence sought, in this case, depictions of minor children engaging in prohibited sexual behavior, was evidence of a crime and thus appropriate material to be seized. See Commonwealth v. Bagley, 408 Pa. Super. 188, 596 A.2d 811 (1991). Despite the substantial deference that we afford the issuing authority’s probable cause determination, we must find, “after considering all of the information included in the affidavit and balancing the relative weights of the indicia of reliability attending that information,” that the affidavit of probable cause failed to provide a substantial basis upon which to issue a warrant to search defendant’s apartment. Commonwealth v. Torres, 564 Pa. 86, 101, 764 A.2d 532, 540 (2001). Accordingly, the search conducted in execution of the warrant was unlawful, and the evidence that was seized as a result thereof must be suppressed.

Defendant’s second major argument regarding the legality of the search warrant is that the warrant violates the specificity requirements for a valid search warrant under both the United States and Pennsylvania Constitutions. In light of our foregoing determination that the search warrant was unlawful because the affidavit upon which it was issued lacked probable cause, we will not address the specificity deficiencies within the warrant itself.

MOTION FOR RETURN OF PROPERTY

Defendant’s omnibus motion included a motion for the return of property. Defendant alleges that, at the time of his arrest, the Commonwealth seized his Nikon digital camera and other items of personal property which are neither contraband per se nor derivative contraband. Defendant claims that a majority of the items seized have no evidentiary value and thus requests that we direct the return of the personal property seized from his residence pursuant to the search warrant that is not contraband and lacks evidentiary value.

In a motion for the return of property, “the moving party is required to demonstrate lawful possession of the property; the burden then shifts to the Commonwealth to defeat the motion by showing that the property is contraband or derivative contraband.” Pa.R.Crim.P. 588; Commonwealth v. Reynolds, 876 A.2d 1088, 1092 (Pa. Commw. 2005). We make no factual findings regarding defendant’s claim of lawful entitlement to the property in question. Because the Commonwealth does not obj ect to this request, defendant’s motion for return of property is granted.

Finally, we are mindful of defendant’s articulated dissatisfaction with the fact that the Commonwealth had failed to furnish a bill of particulars, despite the court order requiring it to do so. We note that “the traditional function of a bill of particulars is to clarify the pleadings and to limit the evidence which can be offered to support the information.” See Pa.R.Crim.P. 572, Official comment. In light of our disposition of defendant’s motions delineated by this opinion, no relief is necessary with regard to this issue.

Accordingly, we enter the following:

ORDER

And now, September 30, 2005, in consideration of defendant’s omnibus pretrial motion, we enter the following order:

(1) Defendant’s motion to quash the Information is denied;

(2) Defendant’s motion to suppress any evidence seized under the Commonwealth’s search warrant is granted.

(3) Defendant’s motion for return of property is granted.

      . This is a Local Area Network (LAN) service that is subscribed from Blue Ridge Cable to Ms. Renda.

      . Defendant also reminds us that he has sought particulars and, despite court order, the Commonwealth has not filed its bill.


author: JONES II, J.,

text:
    Jeffries-Baxter v. Incognito

      Jonathan J. Sobel, for plaintiff.

      Lionel Sharpless, for defendants, Incognito.

      John Mullen, for defendant Eichler & Moffley Realtors.
    September 26, 2005
   JONES II, J.,

This action arises from the sale of residential property. Plaintiff Roxanne Jeffries-Baxter instituted a lawsuit against David and Cynthia Incognito (defendant sellers), Elfant Wissahickin Realtors, plaintiff’s real estate agent, and Eichler & Moffley Realtors, defendant sellers’ realtor, alleging fraud and rescission of contract for failure to disclose the existence of mold. Presently before the court are the parties’ respective motions for summary judgment. For the reasons discussed below, summary judgment is granted as to defendants Elfant Wissahickin Realtors and Eichler & Moffley Realtors and denied as to defendant sellers.

BACKGROUND

Defendant sellers decided to sell their home at 511 East Mt. Pleasant Avenue in Philadelphia. Thereafter, plaintiff expressed an interest to purchase the property and was given a copy of defendant sellers’ disclosure statement along with the disclosure statement prepared by the owners who occupied the premises prior to defendant sellers.

On or about April 24, 2003, plaintiff entered into a written agreement of sale to purchase the property located at 511 East Mt. Pleasant Avenue, Philadelphia, Pa. The agreement of sale obligated plaintiff to pay the sum of $425,000 to defendant sellers. For the purposes of the transaction, plaintiff was represented by real estate broker Elfant Wissahickon Realtors. Defendant seller was represented by Eichler & Moffley Realtors (collectively referred to as defendant realtors).

The agreement of sale contains a release provision which provides in relevant part:

“Buyer hereby releases, quit claims and forever discharges Seller, All Brokers, their Licensees, Employees and any Officer or Partner of any one of them and any other Person, Firm or Corporation who may be liable by or through them, from any and all claims, losses or demands, including, but not limited to, personal injuries and property damage and all of the consequences thereof. Whether now known or not, which may arise from . . . environmental hazards [or] . . . any defect or condition on the property.” (Agreement of sale ¶25.)

The agreement also contains an “integration” clause, which states, in relevant part:

“(A) Buyer understands that any representations, claims, advertising, promotional activities, brochures or plans of any kind made by seller, brokers, their licensees, employees, officers or partners are not a part of this agreement unless expressly incorporated or stated in this agreement. It is further understood that this agreement contains the whole agreement between seller and buyer and there are no other terms, obligations, covenants, representations, statements or conditions, oral or otherwise of any kind whatsoever concerning this sale. Furthermore, agreement will not be altered, amended, changed or modified except in writing executed by the parties.
“(B) It is understood that buyer has inspected the property before signing this agreement (including fixtures and any personal property specifically scheduled herein) or has waived the right to do so, and has agreed to purchase the property in its present condition unless otherwise stated in this agreement. Buyer acknowledges that brokers, their licensees, employees, officers or partners have not made an independent examination or determination of the structural soundness of the property, the age or condition of the components, environmental conditions, the permitted uses or of conditions existing in the locale where the property is situated; nor have they made a mechanical inspection of any of the systems contained therein.” (Agreement of sale ¶26.)

Attached to the agreement of sale is a notice titled “Notice and Information.” The notice states in pertinent part:

“Mold/fungi and indoor air quality: Indoor mold contamination and the inhalation of bioaerosaols (bacterial, mold spores, pollen and viruses) have been associated with allergic responses including upper respiratory congestion, cough, mucous membrane irritation, fever, chills, muscle ache or other transient inflammation or allergy. Claims have asserted that exposure to mold contamination and bioaerosols has led to serious infection, immunosuppresion and illness of neuro or systemic toxicity. Sampling of indoor air quality and other methods exist to determine the presence and scope of any indoor contamination. Because individuals may be affected differently, or not affected at all, by mold contamination, the surest approach to determine the presence of contamination is to engage the services of a qualified professional to undertake an assessment and/ or sampling. Assessments and samplings for the presence of mold contamination can be performed by qualified industrial hygienists, engineers, laboratories and home inspection companies that offer these services. Information pertaining to indoor air quality is available through the United States Environmental Protection Agency and may be obtained by contacting IAQ INFO, P.O. Box 37133, Washington, D.C. 20013-7133, 1-800-438-4318.” (Attachment to the agreement of sale.)

Additionally, the agreement of sale contained a property inspection contingency clause which the plaintiff exercised. Plaintiff retained Daniel Banks P.E. to inspect the property for structural, mechanical and electrical deficiencies. Banks inspected the property on May 16, 2003, in plaintiff’s presence. An inspection for hazardous materials, including mold, was not performed.

After receiving and reviewing the report written by Banks, plaintiff wrote a letter dated May 21, 2003, and gave defendant sellers an opportunity to negotiate repairs identified in the letters.

On May 24,2003, plaintiff and defendant sellers signed an endorsement to the agreement of sale and therein agreed that at the time of settlement sellers would credit plaintiff the sum of $12,750 in lieu of making the repairs.

The parties proceeded to settlement on June 30,2003. In July 2003, plaintiff allegedly discovered that the property was subject to mold damage and was structurally unsound. Plaintiff alleges that she became ill and noticed water spots on the wall leading down into the basement and in the laundry room. Plaintiff allegedly called a plumber who allegedly stated the problem was mold. Plaintiff allegedly moved out of the house in August 2003.

Thereafter plaintiff filed a complaint in equity seeking rescission of the agreement of sale (Count I) and damages for fraudulent misrepresentation (Count II). An amended complaint was subsequently filed.

DISCUSSION

I. Standard of Review

In determining whether to grant summary judgment, the trial court must view the record in the light most favorable to the non-moving party and must resolve all doubts as to the existence of a genuine issue of material fact against the moving party. Potter v. Herman, 762 A.2d 1116, 1117-18 (Pa. Super. 2000). Summary judgment is proper only when the uncontraverted allegations in the pleadings, depositions, answers to interrogatories, admissions of record, and submitted affidavits demonstrate that no genuine issue of material fact exists, and that the moving party is entitled to judgment as a matter of law. Id. In sum, only when the facts are so clear that reasonable minds cannot differ, may a trial court properly enter summary judgment. Basile v. H&R Block Inc., 563 Pa. 359, 363, 761 A.2d 1115, 1118 (2000).

II. PlaintiffHas Failed To Produce Sufficient Evidence To State a Prima Facie Case of Fraud Against Defendants Eichler & Moffley Realtors and Elfant Wissahickon Realtors

Count II of the amended complaint purports to state a claim for fraudulent misrepresentation against Eichler & Moffley and Elfant Wissahickon Realtors. Specifically, plaintiff alleges that defendant realtors failed to disclose the existence of mold at the property. In real estate transactions, fraud arises when a seller knowingly makes a misrepresentation, undertakes a concealment calculated to deceive, or commits non-privileged failure to disclose. Blumenstock v. Gibson, 811 A.2d 1029 (Pa. Super. 2002).

To state a claim for fraudulent inducement, a party must allege “(1) a representation; (2) which is material to the transaction at hand; (3) made falsely with knowledge of its falsity or recklessness as to whether it is true or false; (4) with the intent of misleading another into relying on it; (5) justifiable reliance on the misrepresentation; and, (6) the resulting injury was proximately caused by the reliance.” Bortz v. Noon, 556 Pa. 489, 499, 729 A.2d 555, 560 (1999) (citation omitted); see also, Blumenstock v. Gibson, supra at 1034.

Keeping these principles in mind, the court is left to consider whether Eichler & Moffley Realtors and Elfant Wissahickon Realtors knew of the existence of mold at the subject property and misrepresented its existence to plaintiff. Real estate agents are responsible for misrepresentations, both willful and negligent. Aiello v. Ed Saxe Real Estate Inc., 508 Pa. 553, 499 A.2d 282 (1985).

Even when a real estate broker’s representation is innocent, a material misrepresentation could be found where he was bound to ascertain the truth before making the representation. Glanski v. Ervine, 269 Pa. Super. 182, 192, 409 A.2d 425, 430 (1979). In Glanski, the seller informed the broker of termite infestation and directed the broker to inform potential buyers, which he did not. Deliberate nondisclosure is as culpable as a misrepresentation as an intentional affirmation of falsity. See Quashnock v. Frost, 299 Pa. Super. 9, 15, 445 A.2d 121, 124 (1982). The duty to disclose known latent defects is imposed upon the seller and his broker with whom he deals. Id.

Reviewing the record in a light most favorable to plaintiff, it is clear that plaintiff fails to make out a prima facie case of fraudulent misrepresentation against defendant realtors. Plaintiff fails to produce any evidence that defendant realtors knew that mold existed on the property. Plaintiff relies upon the following facts to establish her claim for fraud: (1) the seller resided in the subject home for a short period of time, approximately one month; (2) the freshly painted wall leading to the basement on the right hand, painted sometime between plaintiff’s initial “walk-through” and settlement on the home; (3) conflicting stories as to why the property was being sold; and (4) the failure of defendant sellers to identify a water problem in the basement area on the disclosure statement which was identified in the prior owner’s property disclosure statement. These facts fail to establish that defendant realtors were aware that mold existed. At this stage in the litigation plaintiff cannot rely upon mere allegations. As the non-moving party, plaintiff is required to come forward with evidence in the record establishing the facts essential to the cause of action, in this case, fraud. See Pa.R.C.P. 1035.3(a)(2). Unsupported assertions and conclusoiy accusations cannot create genuine issues of fact as to the existence of fraud. Blumenstock v. Gibbons, supra. Consequently, since plaintiff fails to establish that defendant realtors knew that mold existed at the property, this court must grant summary judgment.

III. Summary Judgment Is Inappropriate as It Pertains to Defendant Sellers

Count II of the amended complaint also purports to state a claim for fraudulent misrepresentation against defendant sellers. Fraud is a generic term used to describe “anything calculated to deceive, whether by single act or combination, or by suppression of truth, or suggestion of what is false, whether it be by direct falsehood or by innuendo, by speech or silence, word of mouth, or look or gesture.” Sewak v. Lockhart, 699 A.2d 755, 759 (Pa. Super. 1997) (quoting Moser v. DeSetta, 527 Pa. 157, 163, 589 A.2d 679, 682 (1991)). Concealment of a material fact can amount to actionable fraud if the seller intentionally concealed a material fact to deceive the purchaser. Id. “Active concealment of defects known to be material to the purchaser is legally equivalent to an affirmative misrepresentation.” Id. (quoting Sevin v. Kelshaw, 417 Pa. Super. 1, 11, 611 A.2d 1232, 1237-38 (1992)). (emphasis in original)

The Restatement (Second) of Torts §550 provides that a vendor of real property, or its agent, may be liable for failure to disclose “material information” concerning the property. To be liable under this section, the concealment must be intentional and must relate to material in formation. Roberts v. Estate of Barbagallo, 366 Pa. Super. 559, 569, 531 A.2d 1125, 1130-31 (1987). A misrepresentation or concealment will be considered “material” if “it is of such character that had it not been made, ... the transaction would not have been consummated.” Sevin, 417 Pa. at 10, 611 A.2d at 1237. Finally, liability for fraudulent concealment exists if a defendant prevents a plaintiff from making an investigation he would have otherwise made. Roberts, 366 Pa. Super, at 570, 531 A.2d at 1131.

Sellers claim that plaintiff failed to satisfy two of the elements necessary to state a claim for fraud, a representation and justifiable reliance. After considering the evidence presented in a light most favorable to the plaintiff, a jury could reasonably conclude that the defendant sellers knew that mold existed on the property and failed to disclose same to plaintiff. According to plaintiff: (1) the seller resided in the subject home for a short period of time; (2) the wall leading to the basement on the right hand side was freshly painted sometime between plaintiff’s initial “walk-through” and settlement on the home; (3) conflicting stories existed as to why the property was being sold; and (4) the conflicting disclosure statements as to the existence of a water problem in the basement area. If proven, a jury could reasonably conclude that the defendant sellers knew that mold existed and failed to disclose same to plaintiff. Accordingly, the court finds that genuine issues of material fact exist which preclude the entry of summary judgment.

In the alternative, defendant sellers argue that the parol evidence rule acts as a bar to plaintiff’s claim. Pennsylvania case law makes a distinction between barring parol evidence to vary the terms of the agreement and admitting parol evidence to prove fraud in the inducement. Blumenstock v. Gibson, 811 A.2d. 1029, 1037 (Pa. Super. 2002) (citing 1726 Cherry St. Partnership v. Bell Atlantic Properties, 439 Pa. Super. 141, 150 n.2, 653 A.2d 663, 668 n.2 (1995)). In the latter case, the theory holds that, since fraud induced the agreement, no valid agreement came into being and parol evidence is admissible to show that the alleged agreement is void. Id. Nevertheless, the case law clearly holds that a party cannot justifiably rely upon prior representations yet sign a contract denying the existence of those representations. Id. at 152, 653 A.2d at 669. An exception to this general formulation of the impact of the parol evidence rule has been created for “real estate inspection” cases. See LeDonne v. Kessler, 256 Pa. Super. 280, 389 A.2d 1123 (1978).

The exception, commonly referred to as the LeDonne test, requires a balancing between the extent of the party’s knowledge of objectionable conditions derived from a reasonable inspection against the extent of the coverage of the contract’s integration clause in order to determine whether that party could justifiably rely upon oral representations without insisting upon further contractual protection or the deletion of an overly broad integration clause. LeDonne v. Kessler, 256 Pa. Super. 280, 294, 389 A.2d 1123, 1130(1978).

Application of the balancing test to the facts presently before the court leads the court to conclude that evidence of the fraudulent misrepresentations is not barred by the parol evidence rule. Here, plaintiff testified that prior to the settlement she was not concerned about mold since the seller’s disclosure did not disclose any indication of same. (Plaintiff’s deposition January 28, 2005, pp. 161-62.) Daniel Banks, the home inspector, inspected the property on May 16,2003, and found no visible signs of mold at the time the inspection was performed. (Banks dep. pp. 31, 69, 96, 97.) Plaintiff also testified that she observed a freshly painted wall in the basement sometime between the initial walk-through and settlement on the home. (Plaintiff dep. January 28, 2005 pp. 180-81.) Based on the foregoing it is reasonable to conclude that the mold was not ascertainable by reasonable inspection.

On the other hand, the integration clause in the agreement of sale provides in pertinent part that: (1) the agreement contains the whole agreement between the parties; (2) the buyer inspected the property and agreed to purchase the property and agreed to purchase it as a result of said inspection and not in reliance upon any representation made by the seller; and (3) the buyer agreed to purchase the property in its present condition unless otherwise specified in the agreement. This contractual integration clause, however, covers only those conditions reasonably apparent from an inspection of the premises and not those which have been concealed. After consideration of the balance between the buyer’s knowledge of the defect and the integration clause, the court concludes that the integration clause does not bar evidence of the alleged fraudulent misrepresentations. See Mancini v. Morrow, 312 Pa. Super. 192, 458 A.2d 580 (1983) (integration clause in sales contract did not preclude evidence of fraudulent concealment of water damage in basement); National Building Leasing Inc. v. Byler, 252 Pa. Super. 370, 381 A.2d 963 (1977) (integration clause in sales agreement would not bar evidence that seller fraudulently concealed existence of debris-fill hole, knowing it made the property unsuitable for intended use); Glanski v. Ervine, 269 Pa. Super. 182, 409 A.2d 425 (1979) (judgment upheld allowing rescission of contract for sale of property “as is” where vendor fraudulently concealed extensive termite damage); Silverman v. Bell Savings & Loan Association, 367 Pa. Super. 464, 533 A.2d 110 (1987) (rescission of contract allowed where seller fraudulently misrepresented zoning of property).

Accordingly, defendant sellers’ motion for summary judgment is denied.

CONCLUSION

For the foregoing reasons, the motions for summary judgment of defendant realtors are granted and all claims are dismissed against them and the motion for summary judgment of defendant sellers is denied.

An order consistent with this opinion will follow.

ORDER

And now, September 26, 2005, upon consideration of the motions for summary judgment of defendant Echler & Moffley Realtors (cn 051372), defendants David and Cynthia Incognito (cn 051542) and defendant Elfant Wissahickon Realtors (cn 051174), plaintiff’s responses in opposition, memoranda, in accord with the contemporaneous memoranda opinion to be filed forthwith and all matters of record, it hereby is ordered and decreed that

(1) Defendant Echler & Moffley’s motion for summary judgment is granted and all claims are dismissed against it.

(2) Defendants David and Cynthia Incognito’s motion for summary judgment is denied.

(3) Defendant Elfant Wissahickon Realtor’s motion for summary judgment is granted and all claims are dismissed against it.

      . Plaintiff alleges in the amended complaint that she justifiably relied upon the report of Daniel Banks and his inspection of the structural, mechanical and electrical components of the property in proceeding with the purchase of the property. Amended complaint ¶11. Daniel Banks is not a defendant in this action.

      . In order to hold an agent liable for concealing a defect from the buyer actual knowledge is required. See 68 Pa.C.S. §7310.

      . In Count I of the amended complaint, plaintiff seeks rescission of the sales agreement. A right to rescission may only be granted against a seller. See Boyle v. Odell, 413 Pa. Super. 562, 605 A.2d 1260 (1992). Since defendant realtors are not the sellers of the property, plaintiff’s claim for rescission is also dismissed against these defendants.

      . Section 550 Liability for fraudulent concealment provides as follows:
      “One party to a transaction who by concealment or other action intentionally prevents the other from acquiring material information is subject to the same liability to the other, for pecuniary loss as though he had stated the nonexistence of the matter that the other was thus prevented from discovering.”

      . The court finds that any arguments made with respect to the release provision contained within ¶25 of the agreement of sale is premature and must await resolution of the issue concerning fraudulent inducement.