HomeMy WebLinkAbout2010-4348
MCCORKEL CONSTRUCTION : IN THE COURT OF COMMON PLEAS OF
SERVICES, INC. : CUMBERLAND COUNTY, PENNSYLVANIA
PLAINTIFF :
:
V. :
:
M. WEBSTER CONSTRUCTION, :
INC. AND MICHAEL J. WEBSTER :
:
DEFENDANTS : NO. 10-4348 CIVIL
IN RE: NON-JURY TRIAL
ORDER OF COURT
th
AND NOW
, this 9 day of January, 2013, after a non-jury trial in the above-
captioned matter, the verdict of the Court is as follows:
1. On McCorkel Construction Services, Inc.’s claim of breach of written
contract by M. Webster Construction, Inc. (Plaintiff’s Complaint, Count I) the Court finds
in favor of M. Webster Construction, Inc. and against McCorkel Construction Services,
Inc. Accordingly, Judgment is entered in favor of M. Webster Construction, Inc.
2. On McCorkel Construction Services, Inc.’s claim of breach of oral contract
by M. Webster Construction, Inc. (Plaintiff’s Complaint, Count II) the Court finds in favor
of M. Webster Construction, Inc. and against McCorkel Construction Services, Inc.
Accordingly, Judgment is entered in favor of M. Webster Construction, Inc.
3. On McCorkel Construction Services, Inc.’s claim of piercing the corporate
veil against Michael J. Webster (Plaintiff’s Complaint, Count III) the Court finds in favor
of Michael J. Webster and against McCorkel Construction Services, Inc. Accordingly,
Judgment is entered in favor of Michael J. Webster.
4. On M. Webster Construction, Inc.’s claim of breach of contract by
McCorkel Construction Services, Inc. (Defendant’s Counterclaim, Count I) the Court
finds in favor of M. Webster Construction, Inc. and against McCorkel Construction
Services, Inc. Judgment is entered in favor of M. Webster Construction, Inc. and
damages are awarded in the amount of $28,450.00 with legal interest date from
January 9, 2013.
5. On M. Webster Construction, Inc.’s claim of unjust enrichment by
McCorkel Construction Services, Inc. (Defendant’s Counterclaim, Count II) the Court
finds that the claim is rendered moot by this Court’s finding that a contract existed
between the parties. Accordingly, M. Webster construction, Inc.’s claim for unjust
enrichment is denied as being moot.
6. On M. Webster Construction, Inc.’s claim under the Contractor and
Subcontractor Payment Act, 73 Pa.C.S.A § 501 et seq. (Defendant’s Counterclaim,
Count III) the Court finds in favor of McCorkel Construction Services, Inc. and against
M. Webster Construction, Inc. Accordingly, Judgment is entered in favor of M. Webster
Construction, Inc. and Michael Webster.
By the Court,
_________________________
M. L. Ebert, Jr., J.
Theodore Adler, Esquire
Attorney for Plaintiff
2
Darrell C. Dethlefs, Esquire
Attorney for Defendant
3
MCCORKEL CONSTRUCTION, : IN THE COURT OF COMMON PLEAS OF
: CUMBERLAND COUNTY, PENNSYLVANIA
PLAINTIFF :
:
V. :
:
M. WEBSTER CONSTRUCTION, :
INC. AND MICHAEL J. WEBSTER :
:
DEFENDANTS : NO. 10-4348 CIVIL
IN RE: NON-JURY TRIAL
OPINION and ORDER OF COURT
Ebert, J., January 9, 2013 -
PROCEDURAL HISTORY
On July 1, 2010, the Plaintiff, McCorkel Construction, Inc. (hereinafter
“McCorkel”) filed a Complaint against M. Webster Construction, Inc. (hereinafter
“Webster”) and Michael J. Webster. McCorkel alleges three counts in the Complaint:
(1) breach of written contract, (2) breach of oral contract, and (3) piercing the corporate
1
veil. On July 22, 2010, Webster and Michael J. Webster filed an Answer, New Matter
and Counterclaim. Defendants also allege three counts in their Counterclaim: (1)
breach of contract, (2) unjust enrichment, and (3) contractor and subcontractor payment
2
act. On October 17, 2011, the Court ordered each party to file a Pre-trial
3
Memorandum. A non-jury trial was held on Monday, April 2 and Tuesday, April 3,
2012. The Plaintiff is seeking reimbursement in the amount of $60,860.38 (total paid
1
Complaint, filed July 1, 2010
2
Answer, New Matter and Counterclaim, filed July 22, 2010
3
Order of Court, filed October 17, 2011
4
out of $84,310.38 less the contract amount of $23,450.00) for the cost to cover the
repairs to the first and second concrete floors. The Defendant is seeking payment of
$28,450.00, which represents the contract amount for the labor to do the concrete
5
work.
FINDINGS OF FACT
The Plaintiff, McCorkel, is a Pennsylvania corporation with its principal place of
business at 1405 Zimmerman Road, Carlisle, Cumberland County, Pennsylvania
6
17015. McCorkel contracted with Sovran Self Storage, Incorporation (hereinafter
“Sovran”) to build a storage facility at 6358 Bay Shore Drive in Mechanicsburg,
7
Pennsylvania. McCorkel hired the Defendant, Webster, as a subcontractor for the
8
concrete work of the storage facility.
Defendant, Webster, is a Pennsylvania corporation with its principal place of
9
business at 805 Pershing Street, Lebanon, Pennsylvania 17042. Defendant, Michael
J. Webster, is an adult individual residing at the same address as Webster’s principal
1011
place of business. Michael J. Webster is the sole shareholder of Webster’s stock
12
and is the only officer of Webster Construction.
4
Plaintiff’s Brief, filed October 24, 2012.
5
Answer, New Matter and Counterclaim, filed July 22, 2010
6
Complaint, filed July 1, 2010
7
In Re: Non-Jury Trial, April 2, 2012 – April 3, 2012, J. Ebert, p. 14 (hereinafter “N.T. __); Joint Exhibit #7
8
N.T. 17
9
Complaint, filed July 1, 2010; Answer, New Matter and Counterclaim, filed July 22, 2010
10
Complaint, filed July 1, 2010; Answer, New Matter and Counterclaim, filed July 22, 2010
11
N.T. 118, 139
12
N.T. 118, 139
2
Webster initially submitted a bid to do the entire concrete project, which was
13
rejected by McCorkel. Then, Webster submitted a handwritten bid to provide labor
only for the concrete work of the two floor structure to McCorkel’s project manager, Jim
14
Boggs. Before submitting the service invoice, Webster reviewed a set of plans and
15
blueprints provided by McCorkel. However, Webster was never shown the contract
for all the project requirements between Sovran and McCorkel before his bid was
16
submitted. On Webster’s service invoice the bid for the first floor was $16,000.00,
17
labor only. The second floor bid was for $12,450.00, labor only, with Webster also to
18
provide a pump. McCorkel orally accepted Webster’s bid to provide only the labor for
19
the concrete work sometime after November 18, 2009.
There is some disagreement between the parties on what the term “labor only”
meant on the service invoice. McCorkel understood that the term meant that Webster
20
would pour and finish the concrete slabs in a workmanlike manner. Michael J.
Webster agrees that Webster was hired to pour and finish the concrete, but maintains
that Webster was not responsible for anything other than providing the labor and the
21
pump for the second floor pour. In fact, Webster was not responsible for providing any
13
N.T. 95
14
N.T. 18-19; Joint Exhibit #6. This bid is often referred to as the service invoice and/or contract and these terms
will be used interchangeably throughout this opinion.
15
N.T. 122
16
N.T. 249
17
Joint Exhibit #6. While there was controversy between the parties on the cost of the first floor, based on the
written bid, this Court finds it was for $16,000.00 and not $11,000.00. McCorkel added the total dollar amount,
but there was no testimony that it was faxed back to Webster as a counteroffer or clarification of the cost.
Therefore McCorkel accepted the bid as is.
18
Joint Exhibit #6.
19
N.T. 20, 80, 81
20
N.T. 18, 19, 81, 102
21
N.T. 120
3
22
materials under the contract. McCorkel was responsible for supplying the materials
2324
including: concrete, lumber, tarps, wire, rebar, and lighting. The Court finds that
McCorkel Construction, Inc. was totally responsible for procuring the concrete used in
this project and for the quality of the concrete used in this project. During the entire
project McCorkel Construction, Inc. retained command supervision over M. Webster
Construction and its employees.
Webster began working on the project in mid-December by setting the forms and
25
placing the steel for the first floor pour. Pennsy Supply (hereinafter “Pennsy”) supplied
26
the concrete for the project. McCorkel, as the overall supervisor of the project, was
responsible for scheduling the pours with Pennsy on dates Webster helped select
27
based on when he would have the manpower and the pump to perform the job.
28
McCorkel ordered the cement through Pennsy per the specs. Additionally, Webster
requested that the maximum amount of calcium be added to the cement mix as an
29
accelerant. The concrete supplied for the project was a standard commercial mix,
3031
suitable for a self-storage unit. The concrete did contain an accelerant.
Webster began pouring the concrete for the first floor on December 29, 2009,
32
beginning around 3:00 a.m. The temperature on December 29, 2009, ranged from 17
22
N.T. 19, 81
23
N.T. 53
24
N.T. 82
25
N.T. 20-21
26
N.T. 98-99
27
N.T. 82-84, 136
28
N.T. 98-99
29
N.T. 121, 223
30
N.T. 171
31
N.T. 172
32
N.T. 21, 84
4
33
to 33 degrees with high winds and wind gusts. McCorkel employees were present
during the pour to help install the stone, do the gradings, help with the lumber, lay the
34
blankets, and provide lights. During the pour, Webster noticed problems in certain
35
areas where the cement was not setting up. This delay in the cement setting up
prevented the concrete work from being finished on December 29, 2009. McCorkel
Construction, Inc. was responsible for the concrete which was used. Consequently,
when the quality of the concrete used prevented Webster from satisfactorily completing
36
the project, this Court finds that the ultimate fault lies with McCorkel.
Webster employees left the work site around 5:00 p.m. on December 29, 2009,
37
before the first floor was finished. The first floor could not be finished because the
cement was not setting up and because of freezing temperatures. It was McCorkel who
provided the lighting for the project. Apparently the lights were rented, and McCorkel’s
employees took them down at 5:00 p.m. leaving the project in the dark. Webster
decided that the only thing to do was to cover the slab to protect it from the cold and
38
come back in the morning. Both McCorkel and Webster employees covered the first
39
floor slab with blankets to help protect it from the weather before they left for the night.
Both sets of employees walked on the wet concrete. The clear message sent by
McCorkel to Webster as a result of these actions was that work was over for that day
and that the project would be completed on the next day. This record is completely
devoid of any evidence that McCorkel as the general contractor in charge of
33
N.T. 130-31; Joint Exhibit #16
34
N.T. 102, 103
35
N.T. 220-21, 223
36
N.T. 254
37
N.T. 22, 188, 220
38
N.T. 188-89, 193
39
N.T. 23, 194
5
construction ever ordered or even asked Webster’s employees to finish the project on
December 29, 2009.
40
The condition of the first floor was unacceptable to Sovran. There were footprints
41
and cracks in the slab. The surface was not level and the top of the concrete was
42
lifting off in places, exposing the stone underneath. Since there were visible problems
with the concrete, McCorkel had Pennsy test the first floor slab on January 5, 2010.
Pennsy, who was ultimately responsible for preparation of the concrete and including
the proper accelerant, found that the finishing of the concrete was “terrible” but that the
43
.
concrete did not freezeand appeared to be hard and at strength
44
Webster attempted to fix the finishing of the first floor slab. McCorkel
suggested on over pour of the slab, but Webster said that would not be necessary,
45
believing at that time he could properly repair the slab. However, the condition of the
first floor slab continued to get worse between January and March 2010 because the
46
slab was not covered and protected from snow, ice, and water.
On or about March 16, 2010, two and one half months after the December 29
first floor pour, which McCorkel now claims was totally unsatisfactory, they had Webster
47
pour the concrete for the second floor slab. McCorkel says he noticed problems with
48
the second floor slab, which was also unacceptable to Sovran. Jim Boggs informed
40
N.T. 34, 131, 234
41
N.T. 23, 25, 107, 131, 234
42
N.T. 26, 131-32
43
N.T. 30, 107-8
44
N.T. 30, 132, 214-15
45
N.T. 31, 88, 233
46
N.T. 136, 214-16
47
N.T. 31
48
N.T. 34, 89, 133-34
6
Webster that Sovran was not satisfied with either the first or second floor slabs and that
49
they were not going to accept them.
At some point after Webster poured the second floor slab, he stopped attempting
50
to repair the first floor slab and told Jim Boggs there was nothing more he could do.
Webster never sent an additional bill to McCorkel for the concrete work, other than the
51
initial service invoice.
McCorkel attempted to make more repairs to the slabs, but ultimately hired C.A.
52
Prep Rite to make the repairs. McCorkel paid its subcontractors, including C.A. Prep
53
Rite, $59,910.00 to fix the concrete slabs. In total, McCorkel paid $80,506.38 to its
54
employees, subcontractors, and in renting equipment to fix the concrete slabs. In
addition, McCorkel paid $3,804.00 for installation of carpet on the second floor slab to
55
hide some of the problems in the concrete. McCorkel made no payments to Webster
56
for any of the labor for the concrete work.
DISCUSSION
This case presents the issue of whether the general contractor or subcontractor
should bear the responsibility for concrete work that required extensive repairs in order
to be acceptable to the project owner. The general contractor, McCorkel, argues that
they should not be responsible for the repairs because they expected that Webster
would complete the project in a workmanlike manner and make sure the concrete was
49
N.T. 89-90.
50
N.T. 90-91, 135, 136
51
N.T. 34, 135
52
N.T. 34-35, 92-93
53
N.T. 39; Joint Exhibit #15
54
N.T. 41; Joint Exhibit #15. This total also includes a $2800.00 charge for ThyssenKrupp to store the elevator
while the concrete was being fixed. See N.T. 37 and Plaintiff’s Exhibit #1
55
N.T. 42; Plaintiff’s Exhibit #1
56
N.T. 34, 214, 228
7
acceptable. Additionally, McCorkel argues that Webster’s corporate veil should be
pierced in order to hold Michael J. Webster personally responsible for the repairs. The
subcontractor, Webster, maintains they should be paid for their work because, they
were not in charge of the actual concrete project, but were only hired to provide labor for
the concrete pour, which they provided.
The causes of action to be decided by the Court in this case are as follows:
1. McCorkel’s claim of breach of written contract by Webster (Plaintiff’s
Complaint, Count I).
2. McCorkel’s claim of breach of oral contract by Webster (Plaintiff’s Complaint,
Count II).
3. McCorkel’s claim of piercing the corporate veil against Michael J. Webster
(Plaintiff’s Complaint, Count III).
4. Webster’s claim of breach of contract by McCorkel (Defendant’s
Counterclaim, Count I).
5. Webster’s claim of unjust enrichment (Defendant’s Counterclaim, Count II).
6. Webster’s claim under the Contractor Subcontractor Payment Act
(Defendant’s Counterclaim, Count III).
The Court will discuss the causes of action seriatim.
I. Breach of Contract
Both parties have claimed that the other has breached the contract. To support a
claim for breach of contract in Pennsylvania, a plaintiff must allege three elements: (1)
the existence of a contract, including its essential terms, (2) a breach of a duty imposed
by the contract, and (3) resulting damages. Pittsburg Const. Co. v. Griffith, 834 A.2d
572, 580 (Pa. Super. 2003), citing CoreStates Bank, N.A. v. Cutillo, 723 A.2d 1053,
1058 (Pa. Super. 1999). The purpose of damages in a breach of contract case is to
8
return the parties to the position they would have been in but for the breach. Griffith at
580, citing Birth Center v. St. Paul Companies, Inc., 787 A.2d 376 (Pa. 2001).
Webster submitted a written bid for the concrete work, indicating that the bid was
for “labor only”. McCorkel orally accepted this bid. McCorkel does not dispute that a
contract was formed between the parties, but alleges that Webster breached the
contract by failing to install the concrete foundation and slab work in accordance with (1)
the contract drawings upon which the bid was based, (2) applicable industry standards,
57
and (3) acceptable workmanship standards. Webster argues that they provided the
“labor only” agreed upon and were not responsible for other aspects of the project,
which could have caused the damage to the slabs, including selecting the date for the
pour or ordering the concrete. Webster also maintains that McCorkel breached the
contract because they have failed to pay Webster for the labor provided.
When dealing with a mixed written and oral contract, the fact finder determines
the contents of the contract. Peugeot Motors of America, Inc. v. Stout, 456 A.2d 1002,
1005 (Pa. Super. 1983). A major issue in any contract case is the intent of the parties.
Peugeot, 456 A.2d at 1006. Courts will use the plain meaning of clear and
unambiguous words used in the written contract in order to ascertain the parties’ intent.
Steuart v. McChesney, 444 A.2d 659, 661 (Pa. 1982). However, even though the words
of the contract are used to determine intent, some of the context surrounding the
contract must be known before it can be determined whether the contract words are
clear and unambiguous. Id. at 662.
In this case the parties disagree over the meaning of the term “labor only” in the
contract. The contract stated that Webster would provide “labor only” for the concrete
57
Complaint, filed July 1, 2010, Count I and II, ¶ 33, 34, 35, 40
9
work for both the first and second floors. This Court determines that the term “labor
only” as used in this contract meant exactly that; that Webster would provide only the
labor or manpower necessary to pour and finish the two concrete slabs. This work
would be performed under the direct supervision of McCorkel.
When looked at in the context of the parties’ negotiations, it is important to note
that Webster initially submitted a bid to be in charge of the entire concrete project,
including supplying the materials. This bid was rejected by McCorkel. McCorkel then
accepted Webster’s bid to provide “labor only” indicating that they really only wanted
Webster to provide manpower for the concrete pours. This fact is significant. The
Court finds that McCorkel thought he could maximize his profit by assuming
responsibility for procuring and pouring the concrete with only labor being provided by
Webster. When McCorkel made this decision, it assumed command and supervision of
the entire concrete pouring project. Accordingly, any fault in the final concrete product
must be assumed by McCorkel.
It does not appear that there was much discussion between the parties other
than the written bid submitted by Webster. Both parties were in agreement that
58
Webster was not to provide materials for the project. However, there was some
disagreement over whether it was Webster or McCorkel who was ultimately in charge of
determining the dates of the concrete pours and selecting the concrete mix. It was
McCorkel’s job to actually order the concrete, giving McCorkel control over what kind of
concrete mix to order. Since they did the ordering and provided other materials, it was
also up to McCorkel to finalize the dates for the concrete pours. While Webster may
58
Webster was responsible for providing the pump for the second floor slab as stated in the contract. Webster
was not responsible for providing any other materials.
10
have had an input into those decisions, the final executive decisions relating to the
concrete work were McCorkel’s as the general contractor in charge of the entire
59
concrete project. Therefore, as discussed in more detail, infra, Webster did not breach
the contract with McCorkel. McCorkel breached the contract with Webster by failing to
make payment.
A. Contract Drawings
As the Plaintiff, McCorkel has the burden to prove that the drawings and
blueprints were part of the essential terms of the contract. Griffith, 834 A.2d at 580.
McCorkel has failed to show that the drawings and blueprints Webster based his bid on
were part of the contract. While Webster was given a copy of those drawings in order to
make his bid, there was no discussion by McCorkel that those drawings would become
an enforceable part of the contract. Webster was never shown, and therefore was not
bound by, the contract between McCorkel and Sovran, which included the drawings and
concrete requirements for the project. It stands to reason that since it was McCorkel
who had reviewed the drawings and blueprints and that he was the general contractor
responsible for supervising the project, that he bears the responsibility for not sharing or
enforcing these requirements with Webster.
In fact, neither the drawings nor the contract between McCorkel and Sovran were
referenced in the bid at all. The only thing referenced in the contract was the size of the
slabs to be poured. Since Webster was only to provide the labor to pour and finish
those slabs, Webster did not breach the contract for failing to adhere to drawings that
were not made part of the contract.
59
Webster helped select the dates for the pours based on when he could have the pump available and working.
He also indicated that he would like the maximum accelerant added to the concrete mix on account of the cold
weather.
11
B. Industry Standards
McCorkel also has the burden to prove that the International Building Code
(2006) (hereinafter “I.B.C. (2006)”) and American Concrete Institute (hereinafter “ACI”)
standards were essential terms of the contract. Griffith, 834 A.2d at 580. McCorkel has
failed to show that those standards were incorporated into the contract. These
standards were notated on the blueprints and drawings for the project. As discussed
supra those blueprints and drawings were not incorporated and made an enforceable
part of the contract. The contract also does not make separate mention of the
guidelines and standards to be followed. Since Webster was only to provide the labor
to pour and finish those slabs, they did not breach the contract by failing to install the
concrete in accordance with the I.B.C. (2006) and ACI standards that were not made an
enforceable part of the contract. It is clear from the record that Webster had a lot of
professional experience in pouring and finishing concrete. However, there is nothing in
the record that shows that McCorkel ever brought to Webster’s attention that he comply
with the International Building Code or the American Concrete Institute standards.
These items were simply never discussed. It stands to reason that given the fact that
McCorkel was hiring “labor” to pour concrete that he was ultimately in charge of the
project and therefore had both the ability and responsibility to enforce any conditions
required to pour the concrete properly. McCorkel simply failed to do this.
C. Workmanship Standards
Pennsylvania courts have found “that with regard to building contracts there is an
implied warranty of reasonable workmanship and fitness for the intended purpose.”
Elderkin v. Gaster, 288 A.2d 771, 775 (Pa. 1972). Indeed, this Court has long
12
recognized that “a builder impliedly warrants that his construction will be performed in a
good and workmanlike manner.” Bodan v. Fickett, 24 Pa. D. & C.3d 115, 119 (Common
Pleas 1982) (see footnote 2), citing Koval v. Country & Town Homes, Inc., 9
Cumberland 109, 112 (1958). However, “[r]easonable workmanship is not the
equivalent of building perfection, but must be viewed as meaning reasonable under the
circumstances.” Elderkin, 288 A.2d at 776 (see footnote 13).
Webster, as an experienced concrete contractor, was well aware of how to
properly pour concrete. Here, the Court finds that there were too many intervening
factors that contributed to the condition of the concrete slabs to say that Webster did not
pour and finish the concrete reasonably under the circumstances. The first floor slab
was poured during freezing temperatures, on a day ultimately chosen by McCorkel.
60
McCorkel employees, who are admittedly not concrete workers, also attempted to
make repairs. Additionally, the slab was exposed to the winter elements for some time.
In fact, no one contradicted Michael J. Webster’s testimony that exposure to snow, ice,
and water damaged the slab beyond his ability to repair it.
Furthermore, there is a significant question of the quality of the cement mix used
during this project, which McCorkel was responsible for ordering. During trial both
Michael J. Webster and his son, Michael R. Webster, who was present during the first
floor pour, stated that they thought there was something wrong with the concrete
61
because it did not set up correctly in some areas. Webster also introduced the batch
reports for the cement mix showing some trucks with a lower amount of accelerant,
60
See N.T. 102-3
61
See N.T. 133, 205-206.
13
62
consistent with the theory that the cement did not set up in some areas. Additionally,
there were problems with the second floor pour which occurred in good weather.
McCorkel has not shown that Webster breached the contract for a failure to
follow workmanship standards. Webster was not required to pour and finish the
concrete perfectly in order to meet the workmanship standards. Webster provided the
labor as required under the contract. Additionally, Webster performed the concrete pour
reasonably under the circumstances, which included freezing temperatures and
apparent problems with the cement mix. Webster also acted reasonably when he
attempted to make repairs to the concrete slabs before determining that the slabs were
beyond his ability to repair. Webster did not breach the contract to supply labor only by
failing to meet implied workmanlike standards. It only stands to reason that if Webster’s
work was so defective and unsatisfactory on December 29, 2009, why in the world
would McCorkel have him back to do the second floor over two and a half months later.
McCorkel has not shown that Webster breached the contract by (1) failing to
follow the construction drawings and blueprints, (2) failing to follow applicable industry
standards, or (3) failing to perform the job in a workmanlike manner. McCorkel is
therefore not entitled to damages.
D. Webster’s Breach of Contract Claim
This Court finds Webster has proven the three elements necessary to satisfy
their breach of contract claim against McCorkel. There is no dispute that a contract
existed between the parties. The contract contained the amount that McCorkel owed to
Webster for completing the concrete pours. Webster performed under the contract by
providing the labor and manpower necessary to pour and finish the concrete slabs with
62
See N.T. 246-48.
14
the materials provided by McCorkel. McCorkel did not perform under the contract since
they have yet to pay Webster for their labor. Webster has suffered damages in the
amount of $28,450.00. Therefore, McCorkel has breached the contract with Webster
and is ordered to pay damages to Webster in the amount of $28,450.00.
II. Piercing the Corporate Veil
The corporate veil can be pierced in situations where the controlling shareholder
of a corporation treats the corporation as his alter ego, making it appropriate to hold the
shareholder personally liable. Good v. Holstein, 787 A.2d 426, 430 (Pa. Super. 2001).
In this case, McCorkel alleges that the corporate veil of Webster should be pierced
because controlling shareholder Michael J. Webster treats the corporation as his alter
ego.
There is no need for this Court to address whether piercing the corporate veil is
appropriate in this case. It has already been determined that Webster has not breached
the contract and therefore neither Webster nor Michael J. Webster are liable to
McCorkel for damages.
III. Unjust Enrichment
Generally speaking, the doctrine of unjust enrichment is inapplicable when the
relationship between the parties is founded on a written agreement or express contract.
Roman Mosaic & Tile Co., Inc. v. Vollrath, 313 A.2d 305, 307 (Pa. Super. 1973). Since
there is no dispute that a contract was formed between the parties, and this Court has
already made a determination that Webster’s breach of contract claim is valid, the
unjust enrichment claim is denied.
15
IV. Contractor and Subcontractor Payment Act, 73 Pa.C.S.A. §50 et seq.
The purpose of the Contractor and Subcontract Payment Act (hereinafter
“CASPA”) is “to encourage fair dealing among parties to a construction contract” and to
protect the parties involved. Zimmerman v. Harrisburg Fudd I, L.P., 984 A.2d 497, 500-
501 (Pa. Super. 2009), quoting Ruthrauff, Inc. v. Ravin, Inc., 914 A.2d 880, 890 (Pa.
Super. 2006). The CASPA entitles a subcontractor to payment if the subcontractor has
performed in accordance with the contract. 73 Pa.C.S.A. §507(a). Payment to a
subcontractor should be made fourteen days after receipt of the subcontractor’s invoice.
63
73 Pa.C.S.A. §507(c).
A. Penalty Fees
The CASPA contains a mandatory penalty provision, which states:
[if] arbitration or litigation is commenced to recover payment due under
this act and it is determined that an owner, contractor or subcontractor has failed
to comply with the payment terms of this act, the arbitrator or court shall award,
in addition to all other damages due, a penalty equal to 1% per month of the
amount that was wrongfully withheld. An amount shall not be deemed to have
been wrongfully withheld to the extent it bears a reasonable relation to the value
of any claim held in good faith by the owner, contractor or subcontractor against
whom the contractor or subcontractor is seeking to recover payment. 73
Pa.C.S.A. §512(a) (emphasis added).
Therefore, whether to award penalty damages to Webster under the CASPA depends
on whether McCorkel withheld payments from Webster in good faith.
This Court finds that McCorkel did withhold payment from Webster in good faith.
A contractor is entitled to withhold payment from a subcontractor for deficient work as
long as notice is provided within seven days. 73 Pa.C.S.A. §511. There is no question
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In this case, Webster failed to send an invoice for payment after the concrete work was completed. However,
due to the fact that McCorkel knew what it owed Webster based on the previously received bid and the fact that
payment is also due fourteen days after receipt of a final report, it can be construed that McCorkel was required
to make payment to Webster fourteen days after Webster completed the concrete work.
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in this case that Webster had notice that McCorkel felt that the slabs were defective,
especially since Webster attempted to repair them. Since McCorkel did not wrongfully
withhold payment, Webster is not entitled to a penalty of 1% per month.
B. Attorney’s Fees and Expenses
In addition to the penalty provision, the CASPA also contains a mandatory
provision to award attorney’s fees and expenses which states:
Notwithstanding any agreement to the contrary, the substantially
prevailing party in any proceeding to recover any payment under this act shall be
awarded a reasonable attorney fee in an amount to be determined by the court or
arbitrator, together with expenses. 73 Pa.C.S.A. §512(b) (emphasis added).
This Court finds that Webster is not a substantially prevailing party under the
meaning of the CASPA and therefore is not entitled to recover the attorney fees or
expenses.
The determination of whether a party is a substantially prevailing one is left to the
trial court’s discretion. Zavatchen v. RHF Holdings, Inc., 907 A.2d 607, 610 (Pa. Super.
2006). The Pennsylvania Superior Court has stated that to be determined a
substantially prevailing party, the subcontractor needs to recover on its claim and also
must prove that the contractor, without a good faith reason, failed to comply with the
CASPA’s prompt payment. Zimmerman, 984 A.2d at 503. The Pennsylvania Superior
Court was persuaded by LBL Skysystems (USA), Inc. v. APG-America, Inc., 514
F.Supp.2d 704 (E.D.Pa. 2007). In LBL Skysystems, the District Court held that a
subcontractor was not a substantially prevailing party, even though the subcontractor
prevailed on its breach of contract counterclaim, since the contractor rightfully withheld
payment because of pending litigation with the subcontractor. Zimmerman, 984 A.2d at
503, citing LBL Skysystems, 514 F.Supp.2d at 712-13.
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In this case, McCorkel did not wrongfully withhold payment. As discussed above
McCorkel not only withheld payment because of a claim of defective workmanship, but
also withheld payment in good faith because of pending litigation with Webster.
Therefore, Webster is not entitled to attorney’s fees or expenses.
Accordingly, the following order will be entered:
th
AND NOW
, this 9 day of January, 2013, after a non-jury trial in the above-
captioned matter, the verdict of the Court is as follows:
1. On McCorkel Construction Services, Inc.’s claim of breach of written
contract by M. Webster Construction, Inc. (Plaintiff’s Complaint, Count I) the Court finds
in favor of M. Webster Construction, Inc. and against McCorkel Construction Services,
Inc. Accordingly, Judgment is entered in favor of M. Webster Construction, Inc.
2. On McCorkel Construction Services, Inc.’s claim of breach of oral contract
by M. Webster Construction, Inc. (Plaintiff’s Complaint, Count II) the Court finds in favor
of M. Webster Construction, Inc. and against McCorkel Construction Services, Inc.
Accordingly, Judgment is entered in favor of M. Webster Construction, Inc.
3. On McCorkel Construction Services, Inc.’s claim of piercing the corporate
veil against Michael J. Webster (Plaintiff’s Complaint, Count III) the Court finds in favor
of Michael J. Webster and against McCorkel Construction Services, Inc. Accordingly,
Judgment is entered in favor of Michael J. Webster.
4. On M. Webster Construction, Inc.’s claim of breach of contract by
McCorkel Construction Services, Inc. (Defendant’s Counterclaim, Count I) the Court
finds in favor of M. Webster Construction, Inc. and against McCorkel Construction
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Services, Inc. Judgment is entered in favor of M. Webster Construction, Inc. and
damages are awarded in the amount of $28,450.00 with legal interest to date from
January 9, 2013.
5. On M. Webster Construction, Inc.’s claim of unjust enrichment by
McCorkel Construction Services, Inc. (Defendant’s Counterclaim, Count II) the Court
finds that the claim is rendered moot by this Court’s finding that a contract existed
between the parties. Accordingly, M. Webster construction, Inc.’s claim for unjust
enrichment is denied as being moot.
6. On M. Webster Construction, Inc.’s claim under the Contractor and
Subcontractor Payment Act, 73 Pa.C.S.A § 501 et seq. (Defendant’s Counterclaim,
Count III) the Court finds in favor of McCorkel Construction Services, Inc. and against
M. Webster Construction, Inc. Accordingly, Judgment is entered in favor of M. Webster
Construction, Inc. and Michael Webster.
By the Court,
_________________________
M. L. Ebert, Jr., J.
Theodore Adler, Esquire
Attorney for Plaintiff
Darrell Dethlefs, Esquire
Attorney for Defendant
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