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HomeMy WebLinkAbout2011-2507 QEI CONSTRUCTION GROUP, LLC, : IN THE COURT OF COMMON PLEAS OF PLAINTIFF : CUMBERLAND COUNTY, PENNSYLVANIA : V. : : LACOUR PAINTING, INC., : DEFENDANT : 11-2507 CIVIL TERM IN RE: PRELIMINARY OBJECTIONS TO PLAINTIFF’S AMENDED COMPLAINT OPINION AND ORDER OF THE COURT Masland, J., July 17, 2012:-- Before this Court are the preliminary objections raised by Lacour Painting, Inc. (“Defendant”) to the amended complaint filed by QEI Construction Group, LLC (“Plaintiff”). Defendant contends that Plaintiff’s Count I, Count II, and Count III of the amended complaint (1) are not ripe for adjudication and (2) fail to state a claim upon which relief can be granted. This Court now overrules in part and sustains in part Defendant’s preliminary objections. STATEMENT OF FACTS The facts of this case, as averred by Plaintiff within its amended complaint, are as follows. On May 30, 2007, Plaintiff entered into a construction agreement for the erection of a warehouse distribution facility. Defendant provided painting services for this project under the Standard Subcontract Agreement (hereinafter “Subcontract”). (Am. Compl. ¶ 11). During construction, an employee of Defendant was severely injured on the jobsite. The present matter arises from a third-party lawsuit in which the injured worker is suing Plaintiff, among others, for injuries sustained during the accident. (Am. Compl.22). The parties dispute who bears the defense and indemnification ¶ burdens of the third-party lawsuit. 11-2507 CIVIL TERM Both parties look to the language of the Subcontract and the incorporated documents to define their responsibilities in relation to the third-party lawsuit. Specifically, the Subcontract requires Defendant to defend and indemnify Plaintiff against any claims arising from Defendant’s negligence or fault. (Am. Compl. Ex. B at 9). The Subcontract also requires Defendant to include Plaintiff as an additional insured on Defendant’s insurance policy. (Am. Compl. ¶ 16). Plaintiff alleges (1) a breach of contract for Defendant’s failure to defend Plaintiff in the third-party suit; (2) a breach of contract for Defendant’s failure to include Plaintiff as an additionally insured on Defendant’s insurance policy; and, (3) entitlement to indemnification and contribution because Defendant has waived its protections under 77 P.S. §481(b) and is therefore liable to Plaintiff for any judgment imposed upon Plaintiff from the underlying lawsuit. (Am. Compl. ¶¶ 64-87). Defendant has objected to the amended complaint on two bases: (1) the claims are not ripe for adjudication and (2) Plaintiff has failed to state a claim upon which relief can be granted. DISCUSSION I. Standard of Review for Preliminary Objections in General When considering preliminary objections, all material facts set forth in the challenged pleadings are admitted as true, as well as all inferences reasonably deducible therefrom. Discover Bank v. Stucka, 33 A.3d 82, 86 (Pa. Super. Ct. 2011). Preliminary objections which seek the dismissal of a cause of action should be sustained only in cases in which it is clear and free from doubt that the pleader will be unable to prove facts legally sufficient to establish the right to relief. Id. If any doubt -2- 11-2507 CIVIL TERM exists as to whether a demurrer should be sustained, it should be resolved in favor of overruling the preliminary objections. Id. II. Standard of Review for Ripeness Defendant raised objections to Counts I, II, and III as not ripe for disposition. This Court disagrees with Defendant with regard to Count I and II but agrees with Defendant with regard to Count III. To be ripe, an actual case or controversy must exist at every stage of the judicial process. Treski v. Kemper Nat. Ins. Companies, 674 A.2d 1106, 1113 (Pa. Super. Ct. 1996). The rationale for the ripeness doctrine is to prevent premature adjudications. Id. A. Count I Defendant objects that Count I is not ripe for disposition. Here Defendant claims the third-party lawsuit has not been settled, thus there is no ripe controversy before this Court. We disagree. Count I contains an actual controversy because Plaintiff and Defendant are disputing who bears the defense costs to the third-party action. This issue is not a hypothetical controversy, but rather it is an actual controversy as evinced by the costs being incurred. Accordingly, having been presented with an actual legal dispute, we find Count I is ripe for adjudication. B. Count II Defendant contends that Count II is not ripe for adjudication because Plaintiff has not suffered any damages from the breach. We disagree. Plaintiff has alleged damages, such as attorney’s fees, which would be reasonably present from Defendant’s breach. Like Count I, this issue is not a hypothetical controversy, but rather it is an -3- 11-2507 CIVIL TERM actual controversy as evinced by the costs being incurred by Plaintiff. Accordingly, Plaintiff’s Count II is ripe for adjudication. C. Count III Defendant also objects to Count III indemnification/contribution. Defendant states that the matter is not ripe for adjudication and we agree. The right of contribution may be pursued in a separate action by an original defendant who has previously been held liable to the original plaintiff. MIIX Insurance Co. v. Epstein, 937 A.2d 469, 472 (Pa. Super. Ct. 2007). Additionally, it is clear that before the right of indemnification arises, the indemnitor must in fact pay damages to a third party. Any action before such payment is premature. McClure v. Deerland Corp., 585 A.2d 19, 23 (Pa. Super. Ct. 1991). Plaintiff argues that the holding in Muth v. Rondel at Atlas Terrace, LLC, 2009 U.S. Dist. Lexis 926 (E.D. Pa. 2009), suggests that Plaintiff’s Count III is not premature. We disagree. Plaintiff has relied upon a case that does not examine the issue of ripeness and is not controlling on this Court. Rather, the case law that is controlling in this matter requires a payment of damages be made before an action for indemnification can be pursued. Plaintiff has not alleged the incurrence of damages from a verdict or settlement in the third-party lawsuit. Therefore, the necessary circumstances are not satisfied, the current Plaintiff has not been held liable in the third-party lawsuit. Accordingly, this issue is not ripe for adjudication. Defendant’s objection to Count III is sustained. III. Standard of Review for a Demurrer A demurrer, under Pa.R.C.P. Rule 1028(a)(4), is an assertion that a complaint does not set forth a cause of action or a claim on which relief can be granted. Lerner v. -4- 11-2507 CIVIL TERM Lerner, 954 A.2d 1229, 1234 (Pa. Super. Ct. 2008). In ruling on a demurrer, the court may consider only matters that arise out of the complaint itself; it cannot supply a fact in the complaint. Hess v. Fox Rothschild, LLP, 925 A.2d 798, 805 (Pa. Super. Ct. 2007). In evaluating a demurrer, all material facts set forth in the complaint and all inferences reasonably deducible therefrom must be admitted as true. Id. at 806. The question presented in a demurrer is whether, on the facts averred, the law indicates with certainty that no recovery is possible. Bayada Nurses, Inc. v. Commonwealth, Dep’t of Labor & Indus., 8 A.3d 866, 884 (Pa. 2010). If there is any doubt as to whether a demurrer should be sustained, the doubt should be resolved in favor of overruling it. Lerner, 954 A.2d at 1234. Therefore, a preliminary objection in the nature of a demurrer may be properly granted only where the contested pleading is legally insufficient. Hess, 925 A.2d at 805. A. Count I To survive a demurrer, a breach of contract claim must establish: (1) there was a contract; (2) the defendant breached it; and (3) the plaintiff suffered damages from the breach. McShea v. City of Philadelphia, 995 A.2d 334, 340 (Pa. 2010). In the instant case, the Subcontract incorporates by reference the agreement between Plaintiff and the owner of the worksite. (Am. Compl. Ex. B at 7). The Subcontract incorporates those terms to the extent that they do not conflict with specific provisions set forth in the Subcontract. Defendant argues that only the language of the Subcontract’s defense and indemnification provisions apply and not the language found in the agreement between Plaintiff and owner. Defendant gives two reasons to support this assertion: (1) the -5- 11-2507 CIVIL TERM terms of the subcontract conflict with the language of the incorporated agreement; and (2) our Supreme Court’s holding in Bernotas v. Super Fresh Food Markets, 863 A.2d 478 (Pa. 2004), prohibits the passing through of indemnification obligations by standard incorporation clauses. Defendant’s assertions are not without adequate legal support. The language of the Subcontract states, [Defendant] agrees to defend, indemnify and hold harmless (collectively “indemnify”) [Plaintiff] and the Owner and their agents and employees, from and against any and all claims . . . to the extent any Claim is caused by or results from the [Defendant’s] negligent, improper or inadequate the Work required by this agreement. Am. Compl. Ex. B at 9. The Subcontract further notes “. . . nothing contained herein is intended to require [Defendant] to indemnify [Plaintiff] . . . from and against any Claim arising out of or resulting from the independent negligence or other fault based act or omission of [Plaintiff] or their agents and employees.” (Am. Compl. Ex. B at 9). This language serves as the basis for Defendant’s first argument. Defendant’s second argument is based on our Supreme Court’s holding in the Bernotas case. This case requires that indemnification obligations be explicitly stated in the contract and cannot be incorporated merely by reference. Bernotas, 863 A.2d at 484. Accordingly, Defendant contends that only the indemnification provision of the subcontract applies. This argument likewise has merit; however, both arguments are insufficient in a single aspect. The third-party lawsuit states twenty-nine causes of action against Plaintiff and all but two of these are based on direct liability. (Am. Compl. Ex. C ¶¶ 42-49.) The two -6- 11-2507 CIVIL TERM remaining causes of action are vicarious liability claims which attempt to hold Plaintiff liable for Defendant’s actions. (Am. Compl. Ex. C ¶ 47(h)). While Defendant has presented a persuasive argument with regard to twenty-seven of the claims, it has made no arguments concerning the two claims of vicarious liability. Therefore, even if Defendant is correct about the appropriate terms of the contract, Defendant is still required to defend and indemnify Plaintiff from those claims that are expressly covered in the Subcontract. Accordingly, Plaintiff has presented a claim sufficient for relief to be granted upon. B. Count II Defendant contends that Count II must be dismissed because Plaintiff does not allege damages. Defendant argues Plaintiff did not allege that in the absence of Defendant’s breach Plaintiff would not have suffered damages. Therefore, Defendant asserts that Plaintiff has not alleged damages. We find Defendant’s argument lacks merit. Plaintiff alleges the damages were a “direct result” of the breach. (Am. Compl. ¶ 75). Plaintiff does not need to plead the same facts in the negative. The necessary material facts that must be alleged for a breach of contract are simple: there was a contract, the defendant breached it, and plaintiff suffered damages from the breach. McShea v. City of Philadelphia, 995 A.2d 334, 340 (Pa. 2010). It is undisputed that Defendant needed to include Plaintiff as a named insured on their policy. (Am. Compl. ¶ 72). It is further alleged that Defendant failed to do as required. (Am. Compl. ¶ 72). Plaintiff has averred injury. (Am. Compl. ¶ 75). Now this Court must give Plaintiff an opportunity to demonstrate that injury. Accordingly, Defendant’s objections to Count II are overruled. -7- 11-2507 CIVIL TERM C. Count III - Demurrer Having sustained the previous objection to Count III, the demurrer filed against Count III has become moot. Accordingly this Court will not devote further consideration to it. CONCLUSION Accordingly, the following order is entered. ORDER OF COURT AND NOW, this __________ day of July, 2012, upon consideration of Defendant’s Preliminary Objections and Plaintiff’s response thereto, ARE a. Defendant’s Preliminary Objections to Count I – Breach of Contract OVERRULED. ARE b. Defendant’s Preliminary Objections to Count II – Breach of Contract OVERRULED. c. Defendant’s Preliminary Objection to Count III – Indemnification/Contribution IS SUSTAINED. d. Plaintiff is granted leave to amend the complaint within twenty (20) days of the issuance of this order. By the Court, _______________________ Albert H. Masland, J. -8- 11-2507 CIVIL TERM Francis J. Deasey, Esquire Ward A. Rivers, Esquire 1601 Market St., 34th Floor Philadelphia, PA 19103 For Plaintiff Bart W. Holmes, Esquire 2595 Interstate Drive, Suite 101 Harrisburg, PA 17110 For Defendant -9-