HomeMy WebLinkAbout2010-188
V.
TRENT ROTZ, : IN THE COURT OF COMMON PLEAS OF
Plaintiff : CUMBERLAND COUNTY, PENNSYLVANIA
:
:
v. : CIVIL ACTION
:
:
:
CHET SHANK and :
MICHELLE SHANK, :
Defendants : No. 10-188 CIVIL TERM
IN RE: DEFENDANTS’ PRELIMINARY
OBJECTIONS TO PLAINTIFF’S COMPLAINT
BEFORE OLER and EBERT, JJ.
OPINION and ORDER OF COURT
OLER, J., August 26, 2010.
In this civil case involving a business which Plaintiff was allegedly led to believe
he had an interest in, Plaintiff has sued Defendants for breach of contract (Count 1),
breach of an implied covenant of good faith and fair dealing (Count 2), fraud (Count 3),
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an accounting (Count 4), and “remedies” (Count 5). In response, Defendants have filed
preliminary objections in the form of a demurrer to Counts 2, 3, 4, and 5, and in the form
of a motion to strike or, alternatively, a motion to plead with greater specificity certain
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paragraphs in Counts 1, 2, 3, and 5.
Argument was held on Defendants’ preliminary objections on July 7, 2010. For
the reasons stated in this opinion, Defendants’ preliminary objections will be sustained in
part and denied in part.
1
Plaintiff’s Complaint, filed January 5, 2010 (hereinafter Plaintiff’s Complaint, ¶__).
2
Defendants’ Preliminary Objections to Complaint, filed January 21, 2010 (hereinafter Defs’ Prelim.
Objs. to Compl.).
STATEMENT OF THE FACTS
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The facts alleged in Plaintiff’s complaint may be summarized as follows:
Plaintiff, Trent Rotz, is an adult individual who resides in Shippensburg, Cumberland
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County, Pennsylvania. Defendants, Chet Shank and Michelle Shank, are adult
individuals, husband and wife, who also reside in Shippensburg, Cumberland County,
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Pennsylvania. At all times relevant to this action, Defendants were acting as the
proprietors and/or members of businesses known as Thinking Green Systems and/or
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Thinking Green Systems, LLC.
On or about January 22, 2008, Plaintiff and Defendants entered into a business
relationship, the object of which was to operate a company that installed insulation for
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customers. Defendants persuaded Plaintiff to participate in this enterprise, known as
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Thinking Green Systems, by a “ruse,” assuring Plaintiff that he was a participant in the
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company and would receive 50% of the company’s profits, with an additional hourly
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wage of $19.00 per hour as compensation for his services. Prior to this business
agreement, Plaintiff had been employed by Defendant Chet Shank in a construction
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business.
During October of 2007 through October of 2008, Plaintiff, on behalf of
Defendants, secured outside services for the purpose of creating a web-site and web
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In summarizing the allegations of Plaintiff’s complaint the court is not expressing an opinion as to their
accuracy.
4
Plaintiff’s Complaint, ¶1.
5
Plaintiff’s Complaint, ¶2.
6
Plaintiff’s Complaint, ¶17.
7
Plaintiff’s Complaint, ¶3.
8
Plaintiff’s Complaint, ¶18.
9
Plaintiff’s Complaint, ¶15.
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Plaintiff’s Complaint, ¶16.
11
Plaintiff’s Complaint, ¶3.
2
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hosting for Thinking Green Systems. Neither Plaintiff nor the service provider was
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compensated for the web-site and web hosting service, valued at $2,453.87. On or about
January 24, 2008, Plaintiff, on behalf of the business, met with various sales
representatives to prepare for the introduction of Thinking Green System’s insulation
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product to the public. Between February and March of 2008, Plaintiff represented the
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business at the Pennsylvania Home Show in Harrisburg, Pennsylvania. Between March
and April of 2008, Plaintiff attended training with BioBased Technologies to become a
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certified spray applicator for Thinking Green Systems’ insulation product. On March
19, 2008, Defendants registered the business as a limited liability company with the
Commonwealth’s Department of State, utilizing the name “Thinking Green Systems,
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LLC.”
From January 24, 2008 through July 28, 2008, Plaintiff rendered 400.5 hours of
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service and labor to the business. In late July of 2008, Defendants informed Plaintiff
that he no longer worked for Thinking Green Systems, LLC, and forced Plaintiff to
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vacate the business premises. On August 14, 2008, Defendants “filed a notice” stating
that they intended to do business as Thinking Green Systems Contracting Services and
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would no longer be known as Thinking Green Systems, LLC.
In August of 2008, Plaintiff requested an accounting and payment for the services
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he had performed for Thinking Green Systems and Thinking Green Systems, LLC.
12
Plaintiff’s Complaint, ¶13.
13
Plaintiff’s Complaint, ¶14.
14
Plaintiff’s Complaint, ¶4.
15
Plaintiff’s Complaint, ¶5.
16
Plaintiff’s Complaint, ¶6.
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Plaintiff’s Complaint, ¶8.
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Plaintiff’s Complaint, ¶7.
19
Plaintiff’s Complaint, ¶9.
20
Plaintiff’s Complaint, ¶11.
21
Plaintiff’s Complaint, ¶10.
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Defendants refused to render such an accounting for either business. Defendants, as
proprietors of Thinking Green Systems and Thinking Green Systems, LLC, failed to
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compensate Plaintiff for services rendered and for the procurement of the web-site and
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web hosting service. Plaintiff suffered an aggregate loss of income in the amount of
$7,609.50 as a result of Defendants’ actions, with an additional loss in the amount of
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$2,265.16 for the use of Plaintiff’s personal vehicle for business purposes.
Plaintiff asserts that Defendants’ actions resulted in damages to Plaintiff in the
following particulars: (a) loss of value and future earnings with respect to the business
ventures; (b) an aggregate loss of income, for services rendered and expenses for the use
of Plaintiff’s personal vehicle, of $9,874.66; (c) loss of future income from the business;
and (d) loss related to web-site and web-hosting services procured in the amount of
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$2,453.87.
Defendants filed preliminary objections to Plaintiff’s complaint which may be
summarized as follows: (1) a demurrer as to Counts 2, 3, 4, and 5 of Plaintiff’s complaint
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for failure to state legally cognizable causes of action; and (2) a motion to strike or,
alternatively, a motion for a more specific pleading as to various paragraphs in Counts 1,
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2, 3, and 5 of Plaintiff’s complaint.
DISCUSSION
Demurrers, in general. A preliminary objection to a complaint in the nature of a
demurrer is appropriate where the complaint is legally insufficient to sustain a cause of
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Plaintiff’s Complaint, ¶11.
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Plaintiff’s Complaint, ¶12.
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Plaintiff’s Complaint, ¶14.
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Plaintiff’s Complaint, ¶16.
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Plaintiff’s Complaint, ¶23.
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Defs’ Prelim. Objs. to Compl.
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Defs’ Prelim. Objs. to Compl.
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action recognized by the law. Pa. R.C.P. 1028(a)(4). The court must resolve the issues
solely on the basis of the challenged pleading and generally no testimony or other
evidence outside of the pleading may be considered to dispose of the legal issues
presented. Hess v. Fox Rothschild, LLP, 2007 PA Super 133, ¶18, 925 A.2d 798, 805.
When considering a demurrer, the court must accept all material facts set forth in
the complaint, as well as all inferences reasonably deducible therefrom, as true, and
“decide whether, based on the facts averred, recovery is impossible as a matter of law.”
Wagner v. Waitlevertch, 2001 PA Super 100, ¶6, 774 A.2d 1247, 1250, citing Wiernik v.
PHH US Mortg. Corp., 1999 PA Super 193, 736 A.2d 616 (citations omitted). A
demurrer should be sustained only if the plaintiff “has failed to assert a legally cognizable
cause of action” and cannot prevail. Lerner v. Lerner, 2008 PA Super 183, ¶11, 954 A.2d
1229, 1234, citing Kramer v. Dunn, 2000 PA Super 101, ¶18, 749 A.2d 984, 990.
Demurrer to Count 2 (breach of an implied covenant of good faith and fair
dealing). In their preliminary objections, Defendants argue that Plaintiff has not set forth
a claim cognizable at law or in equity for an alleged breach of an implied covenant of
good faith and fair dealing, and thus has not stated a valid cause of action at Count 2.
Pennsylvania courts have consistently recognized the Second Restatement of Contracts
§205, which states that there is a “general duty of good faith and fair dealing in the
performance of a contract.” Somers v. Somers, 418 Pa. Super. 131, 136, 613 A.2d 1211,
1213 (1992). The Pennsylvania Supreme Court has additionally recognized the doctrine
of necessary implication, whereby,
[i]n the absence of an express provision, the law will imply an agreement
by the parties to a contract to do and perform those things that according to
reason and justice they should do in order to carry out the purpose for
which the contract was made and to refrain from doing anything that would
destroy or injure the other party’s right to receive the fruits of the contract.
Id. at 137-38, citing Frickert v. Deiter Bros. Fuel Co., Inc., 464 Pa. 569, 347 A.2d 701
(1957) (citations omitted).
However, a breach of the implied covenant of good faith and fair dealing is not
generally a cause of action in and of itself, but rather is subsumed within a breach of
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contract claim. LSI Title Agency, Inc. v. Evaluation Services, Inc., 2008 PA Super 126, ¶
19, 951 A.2d 384, 392. Accordingly, Plaintiff’s allegations in this regard will be deemed
to be included in his breach of contract claim in Count 1 and the demurrer as to Count 2
as a separate cause of action will be sustained.
Demurrer to Count 3 (fraud). In their preliminary objections, Defendants further
argue that Plaintiff has failed to state a cause of action upon which relief can be granted
at Count 3 for fraud, and argue that under Pennsylvania Rule of Civil Procedure 1019(b)
Plaintiff has failed to allege fraud with particularity. Pennsylvania practice requires that
“[a]verments of fraud or mistake shall be averred with particularity.” Pa. R.C.P. 1019(b).
Although Pennsylvania Rule of Civil Procedure 1019(b) requires that a complaint allege
fraud with particularity, it does not require that the facts said to constitute the fraudulent
act proceed in the pleading in a perfectly logical order and sequence. Borelli v. Barthel,
205 Pa. Super. 442, 448, 211 A.2d 11, 14 (1965). To sufficiently allege fraud, however,
the claimant must plead more than a mere legal conclusion. Id.
Plaintiff’s complaint, viewed in its entirety, alleges more than a legal conclusion
of fraud. Plaintiff avers that Defendants, in the course of a “ruse,” entered into an
agreement with Plaintiff, and offered to pay him 50% of the profit from Thinking Green
Systems, with an additional hourly rate of $19.00, in exchange for his participation in the
company. Plaintiff relied on this agreement and received training specifically for the
product being distributed by Thinking Green Systems, according to the complaint.
Plaintiff alleges that he represented Defendants’ company at the Pennsylvania Home
Show in Harrisburg and advertised Thinking Green System’s product to the public. The
complaint further asserts that Defendants terminated Plaintiff from Thinking Green
System and/or Thinking Green Systems, LLC, and refused to compensate Plaintiff for
work already rendered. When viewed in its entirety, Plaintiff’s complaint states a valid
cause of action and does not simply plead fraud as a legal conclusion. Therefore,
Defendants’ demurer as to Count 3 will be denied.
Demurrer to Count 4 (for an accounting). In their preliminary objections,
Defendants further argue that Plaintiff has failed at Count 4 to set forth a legal or
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equitable basis upon which to require an accounting from Defendants. When reviewing a
request for an accounting, "it is reasonable for the court to permit some latitude since
often times it is not certain what claims a plaintiff may have until the accounting is
completed." Shared Commc’n Servs. of 1800-80 JFK Blvd., v. Albert M. Greenfield &
Co., 2001 Phila. Ct. Com. Pl. LEXIS 63, citing In re Estate of Hall, 517 Pa. 115, 136,
535 A.2d 47, 58 (1987). “An equitable accounting is proper where a fiduciary
relationship exists between the parties, where fraud or misrepresentation is alleged, or
where the accounts are mutual or complicated, and plaintiff does not possess an adequate
remedy at law.” Id., citing Rock v. Pyle, 720 A.2d 137, 142 (Pa. Super. 1998) (citations
omitted).
As noted previously, Plaintiff has alleged a valid cause of action for fraud
committed by Defendants. As such, a request for an accounting is also permissible.
Accordingly, Defendants’ demurer as to Count 4 will be denied.
Demurrer to Count 5 (“remedies”). In their preliminary objections, Defendants
also argue that Plaintiff has failed to set forth a legal or equitable basis at Count 5
sufficient to support a cause of action for “remedies.” Under Pennsylvania Rule of Civil
Procedure 1021(a), “[a]ny pleading demanding relief shall specify the relief sought.” Pa.
R.C.P. 1021(a).
Plaintiff’s complaint properly specified his claims for relief under the
Pennsylvania Rules of Civil Procedure. However, this specification is not in and of itself
a separate cause of action. Accordingly, the claims for relief constituting Count 5 of
Plaintiff’s complaint will be deemed part of the complaint’s general claim for relief
clause and Defendants’ demurrer to the Count as a separate cause of action will be
granted.
Motion to strike or for more specific pleading, in general. When a preliminary
objection is based upon a purported lack of specificity in a pleading, a motion to strike is
not a substitute for a motion for a more specific pleading. Huguet v. Foodsales, Inc., 3 Pa.
D. & C.3d 136, 138 (C.P. Chester Co. 1977). With respect to the latter type of motion,
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Pennsylvania Rule of Civil Procedure 1028(a)(3) allows a party to preliminarily object to
an opponent’s pleading for “insufficient specificity.” In this regard, the Pennsylvania
Superior Court has stated that
[t]he pertinent question under Rule 1028(a)(3) is “whether the complaint is
sufficiently clear to enable the defendant to prepare his defense,” or
“whether the plaintiff’s complaint informs the defendant with accuracy and
completeness of the specific basis on which recovery is sought so that he
may know without question upon what grounds to make his defense.”
Rambo v. Greene, 2006 Pa. Super. 231, ¶11, 906 A.2d 1232, 1236, citing Ammlung v.
City of Chester, 224 Pa. Super. 47 n.36, 302 A.2d 491, 498 (1973). To determine the
sufficiency of the pleadings in the complaint, the court must not simply focus upon one
portion or one paragraph of the complaint, but “such paragraphs must be read in context
with all other allegations in the complaint.” Yocoub v. Lehigh Valley Med. Assocs. P.C.,
2002 Pa. Super. 251, ¶17, 805 A.2d 579, 589.
The Commonwealth is a fact-pleading state in which “the complaint must provide
the defendant notice of the basis of the claim as well as a summary of the facts essential
to support that claim.” Latniak v. Von Koch, 70 Pa. D. & C. 4th 489, 494 (Lackawanna
Co. 2004), citing Alpha Tau Omega Fraternity v. Univ. of Pa., 318 Pa. Super. 293, 464
A.2d 1349 (1983). Pennsylvania Rule of Civil Procedure 1019 states that “material facts
on which a cause of action or defense is based shall be stated in a concise and summary
form.” Pa. R.C.P. 1019(a). Averments of fraud must be pled with particularity in order
to allow “an inference that the claim is not without foundation nor offered simply to
harass the opposing party and to delay the pleader’s own obligations.” Mansaray v.
Gerolamo, 2007 Phila. Ct. Com. Pl. LEXIS 259, quoting Bata v. Central-Penn Nat’l
Bank of Philadelphia, 423 Pa. 373, 224 A.2d 174 (1966). The court has broad discretion
in determining the amount of detail that must be averred since the standard of pleading
set forth in the rule is incapable of precise measurement. Pike County Hotels Corp. v.
Kiefer, 262 Pa. Super. 126, 134, 396 A.2d 677, 681 (1978).
Finally, where the object of a motion can be assumed to be more within the
knowledge of the non-pleader, the details requested can be relegated to the discovery
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process. Bethlehem Steel Corp v. Litton Indus., Inc., 71 Pa. D. & C.2d 635, 644-45 (C.P.
Allegheny Co. 1974).
Specificity with respect to Count 1 (breach of contract). In their preliminary
objections, Defendants argue that Plaintiff has failed to plead, with sufficient specificity,
his claim for breach of contract. To support a breach of contract claim, the claimant must
plead: “(1) the existence of a contract, including its essential terms, (2) a breach of a duty
imposed by the contract, and (3) resultant damages.” Hart v. Arnold, 2005 PA Super 328
¶ 29, 884 A.2d 316, 332. According to Pennsylvania Rule of Civil Procedure 1019(h),
“[w]hen any claim . . . is based upon an agreement, the pleading shall state specifically if
the agreement is oral or written.” Pa.R.C.P. 1019(h).
Plaintiff has alleged that an agreement was made between himself and Defendants
and averred the essential terms of the agreement in the following particulars: (1)
Defendants and Plaintiff agreed to provide insulation installation services, through
Thinking Green Systems, to customers; (2) Defendants would share 50% of the profit
from Thinking Green Systems with Plaintiff and would further compensate Plaintiff with
an hourly wage of $19.00 per hour for his services and labor; and (3) damages in certain
amounts were incurred by Plaintiff as a result of Defendants’ failure to compensate him
for services rendered and Defendants’ termination of the relationship. However, Plaintiff
has not stated whether the agreement was oral or written. Plaintiff has thus sufficiently
pled the facts to fulfill the breach of contract standard, but has failed to comply with the
aforesaid Rule of Civil Procedure by indicating whether the agreement was oral or
written. Therefore, Defendants’ preliminary objection requesting a more specific
pleading in this limited aspect as to Count 1 will be granted.
Specificity with respect to Count 2 (breach of an implied covenant of good faith
and fair dealing). In their preliminary objections, Defendants also argue that Plaintiff has
failed to plead with sufficient specificity the actions of Defendants that breached an
implied covenant of good faith and fair dealing. As noted previously in this opinion, a
demurrer to Plaintiff’s claim in this regard as an independent cause of action will be
granted and the averments as to a breach of an implied covenant of good faith and fair
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dealing will be deemed a constituent of his breach of contract claim in Count 1. Further
specification of this basis for relief in the pleading is not, in the court’s view, necessary
for Defendants to prepare a proper response to the allegation.
Specificity with respect to Count 3 (fraud). In their preliminary objections,
Defendants further argue that Plaintiff failed to plead fraud at Count 3 with the requisite
specificity. Under Pennsylvania Rule 1019(b), “[a]verments of fraud or mistake shall be
averred with particularity.” Pa.R.C.P. 1019(b). To establish fraud, a plaintiff 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.”
Mansaray v. Gerolamo, 2007 Phila. Ct. Com. Pl. LEXIS 259, citing Bortz v. Noon, 556
Pa. 489, 499, 729 A.2d 555, 560 (1999).
Plaintiff’s complaint, viewed in its entirety, in the court’s view alleges the
elements required to sustain fraud with sufficient particularity. Plaintiff’s complaint
alleges that Defendants led Plaintiff to enter into a business agreement, through a “ruse,”
in which Plaintiff believed that he was a participant in Thinking Green Systems and
would receive payment for his labor, including 50% of the business’s profit and a $19.00
hourly wage, which Plaintiff did not receive. Plaintiff avers he subsequently rendered
400.5 hours of service for Thinking Green Systems and Thinking Green Systems, LLC.
Plaintiff alleges significant injury as a proximate cause of these events including (a) loss
of value of future earnings of the business ventures, (b) loss of income and expenses of
$9,874.66, (c) loss of future income from the business, and (d) loss related to outside
services procured in the amount of $2,453.87. Plaintiff has properly pled the facts
necessary to support a fraud claim in sufficient detail to enable Defendants to prepare any
defense they have to the claim. Accordingly, Defendants’ motion for greater specificity
as to Count 3 will be denied.
Specificity with respect to Count 5 (“remedies”). In their preliminary objections,
Defendants argue finally that Plaintiff has failed to itemize sufficiently the damages
10
claimed in Plaintiff’s complaint. As noted previously in this opinion, Count 5 of
Plaintiff’s complaint will be regarded as an addendum to his claim for relief relating to
other causes of action rather than as a separate cause of action. The un-pled precise
amounts of certain losses claimed by Plaintiff would appear to be more within the
knowledge of Defendants than Plaintiff and the ascertainment of those amounts can be
relegated to the discovery process.
Based upon the foregoing, the following order will be entered:
ORDER OF COURT
th
AND NOW, this 26 day of August, 2010, upon consideration of Defendants’
Preliminary Objections to Plaintiff’s Complaint, following oral argument on July 7, 2010,
and for the reasons stated in the accompanying opinion, it is ordered and directed as
follows:
1. Defendants’ demurrer relating to Plaintiff’s claim against
Defendants at Count 2 is sustained to the extent that the allegations
therein will be deemed part of Plaintiff’s breach of contract claim in
Count 1.
2. Defendants’ demurrer relating to Plaintiff’s claim against
Defendants at Count 5 is sustained to the extent that the demands for
relief therein will be deemed part of the complaint’s general claim
for relief clause.
3. Defendants’ preliminary objections to the complaint, in the nature of
a motion for greater specificity, are granted to the extent that
Plaintiff is directed to file an amended complaint within 20 days of
the date of this order stating whether the alleged agreement between
Plaintiff and Defendants was oral or written.
4. In all other respects, Defendants’ preliminary objections to
Plaintiff’s complaint are denied.
BY THE COURT,
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s/ J. Wesley Oler, Jr.
J. Wesley Oler, Jr. J.
H. Anthony Adams, Esquire
49 West Orange Street, Suite 3
Shippensburg, PA 17257
Attorney for Plaintiff
Donald L. Kornfield, Esquire
17 North Church Street
Waynesboro, PA 17268
Attorney for Defendants
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V.
TRENT ROTZ, : IN THE COURT OF COMMON PLEAS OF
Plaintiff : CUMBERLAND COUNTY, PENNSYLVANIA
:
:
v. : CIVIL ACTION
:
:
:
CHET SHANK and :
MICHELLE SHANK, :
Defendants : No. 10-188 CIVIL TERM
IN RE: DEFENDANTS’ PRELIMINARY
OBJECTIONS TO PLAINTIFF’S COMPLAINT
BEFORE OLER and EBERT, JJ.
ORDER OF COURT
th
AND NOW, this 26 day of August, 2010, upon consideration of Defendants’
Preliminary Objections to Plaintiff’s Complaint, following oral argument on July 7, 2010,
and for the reasons stated in the accompanying opinion, it is ordered and directed as
follows:
1. Defendants’ demurrer relating to Plaintiff’s claim against
Defendants at Count 2 is sustained to the extent that the allegations
therein will be deemed part of Plaintiff’s breach of contract claim in
Count 1.
2. Defendants’ demurrer relating to Plaintiff’s claim against
Defendants at Count 5 is sustained to the extent that the demands for
relief therein will be deemed part of the complaint’s general claim
for relief clause.
3. Defendants’ preliminary objections to the complaint, in the nature of
a motion for greater specificity, are granted to the extent that
Plaintiff is directed to file an amended complaint within 20 days of
the date of this order stating whether the alleged agreement between
Plaintiff and Defendants was oral or written.
4. In all other respects, Defendants’ preliminary objections to
Plaintiff’s complaint are denied.
BY THE COURT,
_________________
J. Wesley Oler, Jr. J.
H. Anthony Adams, Esquire
49 West Orange Street, Suite 3
Shippensburg, PA 17257
Attorney for Plaintiff
Donald L. Kornfield, Esquire
17 North Church Street
Waynesboro, PA 17268
Attorney for Defendants
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