Beaumont Condominium Assoc. v. Brown, J. ( 2017 )

J-A13012-17
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
BEAUMONT CONDOMINIUM IN THE SUPERIOR COURT OF
ASSOCIATION PENNSYLVANIA
Appellee
v.
JEFFREY M. BROWN ASSOCIATES, INC.,
CARSON CONCRETE, CORP., BEAUMONT
CORP., MONTIVUE CONSTRUCTION AND
PENNONI ASSOC., INC.
APPEAL OF: JEFFREY M. BROWN
ASSOCIATES, INC.
No. 2177 EDA 2016
Appeal from the Judgment Entered September 9, 2016
In the Court of Common Pleas of Philadelphia County
Civil Division at No(s): 1896, January Term, 2014
*****
JEFFREY M. BROWN ASSOCIATES, INC. IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellant
v.
CARSON CONCRETE CORPORATION
Appellee No. 2181 EDA 2016
Appeal from the Order Entered June 7, 2016
In the Court of Common Pleas of Philadelphia County
Civil Division at No(s): 02440, December Term, 2013
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BEFORE: LAZARUS, J., OTT, J., and FITZGERALD, J.*
MEMORANDUM BY LAZARUS, J.: FILED NOVEMBER 03, 2017
In these consolidated1 appeals (2177 EDA 20162 and 2181 EDA 20163)
Jeffrey M. Brown Associates, Inc. (JMB) appeals from the trial court’s order
granting in part and denying in part its motion for post-trial relief, granting
Appellee Carson Concrete Corporation’s (Carson) post-trial motion, and
striking an award of $62,510.73 in favor of JMB, and from the court’s final
judgment entered in favor of Carson and against JMB. After careful review,
we are constrained to affirm.
Beaumont Corporation (Owner) and Montvue Construction, Inc.
(Builder)4 hired JMB as a construction manager for a project (the “Project”)
at Beaumont Condominiums, a 13-story condominium complex (the
“Building”) located on South Front Street in Philadelphia. Accordingly,
Builder executed a “Standard Form of Agreement Between Owner and
Construction Manager” on June 30, 2003. On March 22, 2004, JMB hired
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*Former Justice specially assigned to the Superior Court.
1 On January 17, 2017, our Court entered an order granting JMB’s
application to consolidate the two cases, 2177 EDA 2016 and 2181 EDA
2016, as they involve related issues and parties. See Pa.R.A.P. 512.
2 Beaumont Condominium Association lawsuit (“Association Action”).
3 Referred to as “JMB lawsuit.”
4 Owner hired Montvue to erect the Building and appurtenances on the
subject property. See Beaumont Condominium Association’s Complaint,
2/3/14, at ¶ 8.
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Carson,5 for $1.8 million, as a subcontractor6 to design and build the entire
concrete superstructure for the Project using a structural system known as
“post-tension” concrete. With this type of tension system, structural support
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5The parties entered into a “Design Build Subcontract” to memorialize this
agreement.
6 In Turner Construction, Inc. v. American States Ins. Co., 579 A.2d
915 (Pa. Super. 1990), our Court explained the nature of this type of
relationship:
Typically when major construction is involved an owner has
neither the desire nor the ability to negotiate with and supervise
the multitude of trades and skills required to complete a project.
Consequently an owner will engage a general contractor. The
general contractor will retain, coordinate and supervise
subcontractors. The owner looks to the general contractor, not
the subcontractors, both for performance of the total
construction project and for any damages or other relief if there
is a default in performance. Performance and the payment of
damages are normally assured by the bond of a surety on which
the general contractor is principal and the owner is the obligee.
The general contractor, in turn, who is responsible for the
performance of the subcontractors, has a right of action against
any subcontractor which defaults. Performance and payment of
damages by a subcontractor are normally assured by the bond of
a surety on which the subcontractor is principal and the general
contractor is the obligee.
Thus the typical owner is insulated from the subcontractors both
during the course of construction and during the pursuit of
remedies in the event of a default. Conversely, the
subcontractors are insulated from the owner. The owner deals
with and, if necessary, sues the general contractor, and the
general contractor deals with and, if necessary, sues the
subcontractor.
Id. at 918 n.2, citing Pierce Associates, Inc. v. Neumours Foundation,
865 F.2d 530, 535-36 (3rd Cir.1989).
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for the building is provided by reinforced concrete, with unstressed steel
cables embedded within the concrete floor slabs, which are then tensioned
after the concrete is poured. With post-tensioning, the cables are generally
pulled or tensioned a few days after the concrete is poured. The design for
Carson’s post-tension system included, in part, the use of certain U-shaped
pieces of steel rebar called “hairpins” to reinforce and confine the cables in
locations where the cables had to bend, or “sweep,” within the concrete.
In April 2004, Owner hired an engineering firm, Pennoni Associates
(“Pennoni”), to perform testing and inspection services during the
construction process. On July 6, 2004, Pennoni inspected the reinforcing
steel and post-tensioning for the 10th floor of the condominium complex and
reported that “[h]airpins were placed @ sweeps as designed.” Def.’s Ex. 4.
Shortly thereafter, the concrete for the 10th floor was poured. The Project
was completed in 2005.
Around New Year’s Day 2013, a post-tensioned cable in the concrete
floor of the 10th floor unit of the condominium complex lost its tension and
ripped out of the concrete floor, causing damage to the unit owned by the
Bergamo Trust (“the Trust”) as well as compromising the structural integrity
of the Building. Specifically, the blowout dislodged hardwood flooring and a
toilet in the 10th floor unit. JMB was immediately notified of the incident; it
sent personnel to investigate the damage.
At trial, JBM presented an expert who testified that a number of
hairpins, which were included in the original Project drawings, were missing
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at the location where the blowout occurred. The expert further opined that
“the lack of hairpins in this section of the tendon that was curving directly
led to the failure of the concrete in this area[,] because the hairpins serve to
restrain the tendons from moving the exact direction that they did[,]” and
that had the hairpins been present the cables “would not have been able to
pull out of the concrete and move in that direction.” N.T. Non-Jury Trial,
2/1/16, at 151-52. While JMB’s expert agreed with Carson’s expert that the
68-mile per hour winds from Hurricane Sandy7 could have affected the
structure, he did not think that the damage would have occurred if the
hairpins had been in place. Id. at 152 (“[H]ad the hairpins been present,
the failure would not have happened.”).
The Beaumont Condominiums Association (Association), the unit
owners’ association of the Beaumont Condominiums, engaged an expert
from a post-tension firm to design and implement a remediation plan.
Ultimately, the Association expended approximately $180,000 to investigate
the blowout, repair the structural defect, and repair the physical damage to
the Trust’s condominium unit.
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7Hurricane Sandy became a Category 1 hurricane that made landfall in the
Unites States about 8 p.m. EDT on October 29, 2014, near Atlantic City, NJ,
with winds as strong as 80 miles per hour. See
www.livescience.com/24380-hurricane-sandy-status-data.html (last visited
7/7/17).
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Despite the Association’s demands to be reimbursed for the repair
costs, Carson refused to resolve the matter. As a result, in December 2013
JMB instituted a lawsuit (“JMB lawsuit”), sounding in breach of contract,
negligence, and contractual indemnification, against Carson. In January
2014, the Association (“Association Action”) commenced an action against
various defendants, pursuant to the Pennsylvania Uniform Condominium Act
(PUCA),8 including JMB, Carson, the original condominium sponsors, and
Pennoni seeking reimbursement of the costs incurred as a result of the
blowout. The Trust later intervened as a plaintiff in the Association Action,9
seeking rental income for the time it was unable to use the 10 th floor unit as
a result of the blowout. In the Association Action, the Association and the
Trust asserted claims against JMB for breach of implied warranty, negligence
and strict liability in tort; JMB asserted a cross-claim for contractual
indemnification, common law contribution and indemnity, breach of contract,
and negligence against Carson. JMB ultimately settled with the Association
for $140,000 and with the Trust for $36,000.10
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8 See 68 Pa.C.S. §§ 3101-3414.
9 The trial court granted the Trust’s petition to intervene on October 24,
2014.
10 Pennoni participated in the settlement, contributing $35,999 to the
settlement with the Association and $9,000 to the settlement with the Trust.
Pennoni is not a party to this appeal.
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Following settlement, JMB continued to pursue its claims against
Carson in both cases. In March 2015, JMB filed a motion for summary
judgment against Carson, arguing that the undisputed facts of record left no
doubt that Carson’s negligence caused the blowout and, therefore, that JMB
was entitled to $210,154.88, representing the amount it paid in its
settlement with the Association and the Trust, as well as engineering fees
and legal fees paid in the matter. The trial court denied JMB’s motion,
finding that JMB had not established that its settlement with the Association
and the Trust was reasonable, and, therefore, that an issue of material fact
still remained in the case.
On February 1, 2016, the court granted Carson’s motion to consolidate
the two cases for trial. See Pa.R.C.P. 213(c). In February 2016, the trial
court held a three-day bench trial before the Honorable Patricia A.
McInerney. At the conclusion of trial, the court found the following facts:
 Hairpins were missing;
 Carson did not put the hairpins in the area of the blowout;
 The hairpins were not there when the concrete was poured; and
 The blowout would not have occurred but for the absence of the
hairpins.
Based upon these facts, the court made the following legal conclusions:
 Carson, as subcontractor, was negligent and breached its subcontract
with JMB “in failing to place hairpins at the sweep at issue in this
case;”
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 Pennoni, as the inspector for the original owner and developer, was
negligent “in failing to detect the absence of the hairpins at issue. . .
upon its inspection of the 10th Floor before the concrete was poured.”
 Liability was apportioned as follows: Carson 60%/Pennoni 40%; and
 JMB’s claims against Carson for breach of contract and negligence
failed where it did not prove that it had the inability to know Carson
failed to place the hairpins despite the exercise of reasonable diligence
where JMB “had representatives on the job site daily with ample
opportunity to inspect the construction prior to the pour.”
 JMB was entitled to indemnification against Carson on the Trust’s
underlying claim for breach of the implied warranty of habitability;
 The Association had no valid claim for breach of implied warranty of
habitability against JMB because it was not a “first purchaser” in privity
with the developer.
On February 11, 2016, the court entered an order awarding JMB
$62,510.7311 on its contractual indemnification claim against Carson and in
favor of Carson on all other claims. On February 26, 2016, JMB filed post-
trial motions. Subsequently, Carson filed post-trial motions. After oral
argument on the motions, the trial court granted in part and denied in part
JMB’s post-trial motion and granted Carson’s post-trial motion on June 7,
2016. Specifically, the court found that the missing hairpins were not
reasonably discoverable by JMB. However, because JMB only suffered
economic damages as result of its settlement of the underlying Plaintiffs’
claims, the court concluded it could not recover on its breach of contract and
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11This figure represents the amount JMB paid to settle its claims with the
Trust for lost rent ($36,000), reasonable attorneys’ fees ($13,488.23) and
engineering costs incurred ($13,022.50).
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negligence claims against Carson. The trial court also reversed its finding
that the Trust was the first purchaser of the 10th floor unit for purposes of
establishing the third parties’ underlying claims for breach of an implied
warranty of habitability. Accordingly, the court struck its $62,510.73
damage award in favor of JMB and against Carson on JMB’s indemnification
claim.
JMB filed timely notices of appeal from the court’s post-trial motion
order and the final judgment, as well as a timely court-ordered Pa.R.A.P.
1925(b) concise statement of errors complained of on appeal. On appeal, 12
JMB raises the following issues for our consideration:
(1) Did the trial court err as a matter of law by failing to apply
the appropriate measure of damages for Carson’s breach
of contract, where Pennsylvania law unambiguously holds
that a general contractor who receives deficient
performance from a subcontractor is entitled to the benefit
of its bargain, as measured by the cost of repairing the
defective work?
(2) Did the trial court err as a matter of law in rejecting JMB’s
indemnification claim against Carson, where its settlement
of the underlying Plaintiffs’ negligence claims was
reasonable under all of the circumstances presented at the
time?
(3) Did the trial court err as a matter of law by holding that
the Beaumont Condominium Association’s underlying claim
against JMB for breach of implied warranty of habitability
was invalid, and, therefore, rejecting JMB’s indemnification
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12JMB filed two identical briefs raising the same “Questions Presented.” We
have only listed the issues once to avoid redundancy.
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claim against the culpable subcontractor for the cost of
that settlement?
(4) Was the trial court’s finding that JMB failed to prove that
the Bergamo Trust . . . was the first purchaser of the
damaged condominium unit unsupported by competent
evidence, where the Trustee testified at trial that he had
represented the Trust since the condominium was formed?
Breach of Contract (JMB-Carson)
In its first issue on appeal, JMB asserts that the trial court incorrectly
determined that it did not prove actual damages on its breach of contract
claim13 against Carson. Specifically, JMB claims that it is entitled to cost-of-
repair damages as a recipient of a defective construction project where it
was damaged by losing the benefit of its bargain.
Pursuant to the Restatement (Second) of Contracts, § 348:
(1) If a breach delays the use of property and the loss in value
to the injured party is not proved with reasonable certainty, he
may recover damages based on the rental value of the property
or on interest on the value of the property.
(2) If a breach results in defective or unfinished
construction and the loss in value to the injured party is
not proved with sufficient certainty, he may recover
damages based on
(a) the diminution in the market price of the
property caused by the breach, or
(b) the reasonable cost of completing performance
or of remedying the defects if that cost is not clearly
disproportionate to the probable loss in value to him.
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13There is a six-year statute of limitations on this breach of contract action.
See 42 Pa.C.S. § 5527. Instantly, the statute of limitations began to run at
the time JMB was aware of the defects in Carson’s concrete work, which
would have been when the accident occurred in January 2013.
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(3) If a breach is of a promise conditioned on a fortuitous event
and it is uncertain whether the event would have occurred had
there been no breach, the injured party may recover damages
based on the value of the conditional right at the time of breach.
Restatement (Second) of Contracts, § 348 (emphasis added).
Carson contends that JMB is not entitled to cost-of-repair damages
because it presented no evidence of diminution in value of the building. In
fact, JMB suffered no loss in value to the unit. Rather, it was the Trust that
suffered the loss in value. Moreover, JMB was not affected by any change in
market price of the unit. Here, it was the Association that paid to remedy
the damage to the unit and repair any structural defects in the Building as a
result of the blowout. While JMB reimbursed the Association for those costs,
it was not contractually obligated to do so. Thus, under section 348 of the
Restatement, JMB is not the intended “injured party” that is entitled to the
reasonable cost to remedy the defects.
JMB relies on Douglass v. Liccardi Constr. Co., 562 A.2d 913 (Pa.
Super. 1988), to support its argument that it is entitled to section 348
damages for Carson’s defective concrete work. In Douglass, a builder
breached its contract with owners of a home when it failed to construct the
dwelling in accordance with the parties’ contract and also performed some of
the construction work in a defective and unworkmanlike manner. The jury
entered a verdict in favor of the owners, awarding them $15,000, which
represented the cost to correct the defects and complete the construction.
The court noted, “the [owners] had contracted for [certain] things . . . and
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they clearly had value to them. The jury was not compelled to accept the
same or in reliance thereon conclude that the cost of repairing the defects in
construction was disproportionate to the loss of value to [owners] because of
such defects.” Id. at 916.
On appeal, the builder argued that the jury’s award was unsupported
by the evidence. In upholding the verdict, the court cited to section 348,
stating that because it is often difficult to prove with certainty the loss in
value to the injured party, “he or she may elect to calculate the loss in value
in accordance with Section 348(2) of the Restatement (Second) of
Contracts.” Id. at 915. Notably, the court recognized that our courts have
generally allowed damages for defective performance of a building contract
to be measured by the cost of completing the work or correcting the defects
by another contractor.
Here, JMB was not in the same position as the owners in Douglass
who were forced to correct the defective and non-compliant work performed
by their builder. Rather, the Association paid the costs to repair the damage
from the blowout and complete the work to fix structural issues from the
accident. JMB simply did not have any “cost to remedy the construction
defects” which is the measure of damages under section 348.
Indemnification Claims
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In its next three issues, JMB argues that its settlement of the
underlying claims with the Association and the Trust was both reasonable
and makes Carson subject to its indemnification14 obligation.
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14 Instantly, the JMB-Carson subcontract provides the following
indemnification clause:
Article 8 - Indemnification
8.1 The Subcontractor agrees for ¡tself and its insure[d] to
indemnify, defend and hold harmless Owner, Contractor,
Architect, Engineer, and their parent, subsidiary and affiliated
companies and their respective agents, officers, directors,
employees and assigns from and against any and all
liabilities, claims, losses, damages, penalties, costs or
expenses (including but not limited to court costs and
reasonable attorney's fees) for damage to property
whatsoever kind or nature or injury to persons (including, but
not limited to death) arising out of or due to or claimed to
have arisen out of or been due to design, manufacture,
delivery, installation, use, maintenance, repair, or operation of
any part of all of the goods, material and equipment, if any,
supplied by Subcontractor, or the performance of the Work
by Subcontractor, its agents, Independent Contractors, Sub-
Subcontractors, vendors, and each of their agents, officers or
employees, or any other of their operations, no matter by
whom performed for or on behalf of the Subcontractor.
Subcontractor’s obligations under this indemnity shall not extend
to property damage or personal injury caused by the sole
negligence of indemnitee or its agents, officers, directors,
employees and assigns.
* * *
8.3 The Subcontractor shall bear any expense of an
indemnitee because of any claim or other matter
indemnified against hereunder, including reasonable
attorney’s fees and court costs in the defense of, or
preparing for the defense of, or preparing for the defense
against, any such claim; even if such claim or any lawsuit
(Footnote Continued Next Page)
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It is well-settled in Pennsylvania that provisions to indemnify for
another party's negligence are to be narrowly construed, requiring a clear
and unequivocal agreement before a party may transfer its liability to
another party. Integrated Project Servs. v. HMS Interiors, Inc., 931
A.2d 724, (Pa. Super. 2007). Accordingly, indemnification provisions are
given effect only when clearly and explicitly stated in the contract between
two parties. Moreover,
[I]n Pennsylvania . . . provisions to indemnify for another party's
negligence are to be narrowly construed, requiring a clear and
unequivocal agreement before a party may transfer its liability to
another party. Ruzzi v. Butler Petroleum Co., [] 588 A.2d 1,
7 (Pa. 1991); Perry v. Payne, [] 66 A 553 (Pa. 1907).
Bernotas v. SuperFresh Food Mkts., Inc., 863 A.2d 478, 482-83 (Pa.
2004). Finally,
To establish the right to indemnification, the indemnitee must
establish: the scope of the indemnification agreement; the
nature of the underlying claim; its coverage by the
indemnification agreement; the reasonableness of the alleged
(Footnote Continued) _______________________
arising therefore is groundless, false or fraudulent. If any such
claims has not been settled or discharged when the Work is
finished, final settlement between the Contractor and the
Subcontractor and final payment of the Subcontract Price and
the acceptance of the Work shall be deferred until any such
claim is paid or settled or the Subcontractor provides a bond,
acceptable to the Contractor, in its sole discretion, to satisfy
such claim.
Moreover, Carson assumed all the design responsibility for “converting the
structure and foundations from structural steel and metal deck to post[-]
tension reinforced concrete.” Id. at 2.
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expenses; and, where the underlying action is settled
rather than resolved by payment of a judgment, the
validity of the underlying claim and the reasonableness of
the settlement.
Burlington Coat Factory of Pa., LLC v. Grace Constr. Mgmt. Co., LLC,
126 A.3d 1010, 1022 (Pa. Super. 2015) (citing McClure v. Deerland Corp.,
585 A.2d 19, 22 (Pa. Super. 1991) (emphasis added). See Martinique
Shoes, Inc. v. New York Progressive Wood Heel Co., 217 A.2d 781,
783 (1966) (to recover indemnity where there has been voluntary payment,
party paying must himself be legally liable and show that he could have
been compelled to satisfy claim).
Thus, in order for Carson to be legally obligated to indemnify JMB for
settling with the Association and the Trust, the question boils down to
whether those parties had valid causes of action against JMB.15
In speaking to that question, JMB claims that the trial court erred in
concluding that its settlement with the Association and the Trust was not
subject to Carson’s duty to indemnify. Specifically, JMB asserts that it
reasonably settled its claims with the Association, that the Trust was the
first-purchaser of the damaged unit, and that the Association had a valid
implied warranty of habitability in the common area where the accident
occurred.
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15 Notably, there was no contractual privity between the Association and JMB
or the Trust and JMB. In fact, JMB had only contracted with Builder.
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Negligence
Instantly, the Association sued JMB for negligence as the project
manager. Essentially, the Association alleged that JMB was liable for
professional negligence where it did not ensure that its subcontractor,
Carson, properly placed the hairpins in the post-tensioning system of the
concrete superstructure for the Building.
The trial court concluded that JMB could not recover on this negligence
theory, however, because it:
failed to establish any [direct harm or] damages in regard to . . .
negligence as the only damages in this case related to the
settlement of underlying plaintiffs’ causes of action and JMB’s
claims for indemnification of the settlement payments that were
made to those plaintiff[s] and for legal expenses and
investigating and engineering expenses pursuant to a
contractual indemnification clause.
Post-Trial Trial Court Opinion, 9/12/16, at 11. Specifically, the trial court
found that JMB failed to demonstrate either the causal relationship between
the breach and the resulting injury suffered by it, or the actual loss suffered
by it, necessary to support a cause of action for negligence. Id. at 23.
While JMB suffered a monetary loss by paying the Association and the
Trust for the expenses it incurred in remedying the physical damage to the
units and Building and lost rent, the trial court is correct in concluding that it
did not suffer any actual physical or property damage. See Adams v.
Copper Beach Townhome Communities, L.P., 816 A.2d 301 (Pa. Super.
2003) (explaining economic loss doctrine which provides that no cause of
action exists for negligence that results solely in economic damages
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unaccompanied by physical injury or property damage). Thus, while there
was actual property damage to the building as a result of Carson’s
negligence, JMB did not suffer any actual property or physical injury
recoverable under a negligence theory.
Breach of Implied Warranty of Habitability
The Association and the Trust also sued JMB under a theory of breach
of an implied warranty of habitability.
Pennsylvania law recognizes implied warranties in construction
contracts where a builder sells a home to a residential purchaser. Conway
v. Cutler Group, Inc., 99 A.3d 67, 69-70 (Pa. 2014), citing Elderkin v.
Gaster, 288 A.2d 771 (Pa. 1972). “[T]he warranties of habitability and
reasonable workmanship are not created by representations of a builder-
vendor[,] but rather are implied in law and as such, exist independently of
any representations of a builder-vendor.” Tyus v. Resta, 476 A.2d 427,
433 (Pa. Super. 1984). An implied warranty may be waived by clear and
unambiguous contract language; however, “such language must be
sufficiently particular to inform the home purchaser of the right he or she is
waiving.” Pontiere v. James Dinert, Inc., 627 A.2d 1204, 1206 (Pa.
Super 1993) (quoting Tyus, 476 A.2d at 432 (Pa. Super. 1984)). “To supply
proper notice, language of disclaimer must refer to its effect on specifically
designated, potential latent defects.” Tyus, 476 A.2d at 432. Latent
defects are those “which would not be apparent to an ordinary purchaser as
a result of a reasonable inspection.” Tyus, 476 A.2d at 433.
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In 1000 Grandview Assoc’n v. Mt. Washington Assoc’n, 434 A.2d
796 (Pa. Super. 1981), our Court concluded that a condominium association
did have standing under PUCA’s predecessor statute, the Unit Property Act, 16
to assert such warranty claims, stating:
[A]n association may have representational standing to assert
the rights of its individual members, if it alleges an immediate,
direct and substantial injury to any one of them. The allegations
of the second count of the complaint, which are admitted for the
purposes of the demurrer, . . . state that the appellees failed to
comply with their implied and express warranties for the
common areas resulting in, inter alia, cracked masonry, water
leakage, a defective sewage pump, etc. Surely these are
allegations of a direct injury to the interests of the
association's members which permit the association to
claim standing.
Id. at 798 (emphasis added). Notably, the Grandview panel specifically
stated that PUCA was not applicable to its case;
In concluding the discussion on the standing issue, we note that
since this appeal was taken, the Pennsylvania legislature has
repealed the Unit Property Act and has adopted the Uniform
Condominium Act [PUCA], 68 Pa.C.S. § 3101 et seq. (Adopted
on July 2, 1980, effective in 120 days). The new act specifically
states that the condominium association, even if
unincorporated, may "[i]nstitute, defend or intervene in litigation
. . . ." 68 Pa.C.S. § 3302(a)(4). Moreover, even if the unit
owners' association was formed before the effective date of the
act, the association would still have standing to sue under the
new statute if the complained of injury occurred after the act's
effective date. 68 Pa.C.S. § 3102(a). Of course, the Uniform
Condominium Act is not applicable to [the] instant case.
Id.
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16 68 P.S. § 700.101, et seq.
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Here the Association’s complaint, filed pursuant to PUCA, alleges that:
As a result of the blow-out and shifting of the tendons, the
tendons lost their necessary and designed tensioning, and thus
failed to provide the concrete with the necessary and designed
support. As a result of the aforesaid failure and the undermined
structural integrity of the concrete floor, the habitability of all
Units in The Building was compromised and posed a serious risk
of harm, including the risk of potential collapse of the entire 10th
floor, with the consequent impact upon all other floors above and
below.
The defects in the construction of the post-tensioning system
posed a substantial risk of harm and undetermined the structural
integrity of the entire Building. The aforesaid structural defect
and consequent blow-out of the post-tensioning cables seriously
and dangerously compromised and negatively impacted the
habitability of The Building and all of the Units therein.
Association’s Complaint, 2/3/2014, at ¶¶ 20, 22, 41-42. However, the
Association stated in its complaint that pursuant to section 3302(a)(4) of
PUCA, it was “acting in its own name[,] . . . independent of any right of any
individual Unit owner, past or present,” and it did so “on a matter affecting
the condominium.” Association’s Complaint, 2/3/2014, at ¶ 3. Cf. Valley
Forge Towers South Condominium v. Ron-Ike Foam Insulators, Inc.,
574 A.2d 641 (Pa. Super. 1990) (condominium association, acting as legally
authorized representative of unit owners under section 3302(4) of PUCA,
sued roofing membrane manufacturer to honor its warranty; court reinstated
association’s cause of action under Pennsylvania’s UTPCPL); see 68 Pa.C.S.
§ 3302(a)(4) of the Act, a condominium association may “[i]nstitute, defend
or intervene in litigation . . . in its own name on behalf of itself or two or
more unit owners on matters affecting the condominium.”).
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Thus, where the Association clearly chose not to assert the individual
rights of any of the unit owners, but merely pursued its own interest in
litigating the matter as explicitly stated under section 3302(4) of PUCA, we
cannot apply the standing analysis announced in Grandview. We also
decline to extend the implied warranty to an association in its own right
where the Association had the opportunity to sue on behalf of the unit
residents as their legally authorized representative and chose not to.
With regard to the Trust, we note that the implied warranty of
habitability is not limited to first purchasers. See Spivack v. Berks Ridge
Corp., 586 A.2d 402 (Pa. Super. 1990). Rather, it is limited to first user-
purchasers. Conway v. Cutler Group, Inc., 99 A.3d 67 (Pa. 2014).
To prove that it was the first purchaser of Unit 10, the damaged unit,
David Rasner, Esquire, testified on behalf of the Trust. Rasner testified that
he is the co-trustee of the Trust which was established by his co-trustee’s
grandmother. He testified that the only asset that the Trust has is the 10 th
floor unit at the Beaumont and that the unit was rented out to tenants.
Rasner testified that he thought he had been the co-trustee of the Trust
since the unit was established and that he was co-trustee at the time of the
blowout. N.T. Waiver Trial, 2/1/2016, at 69. The tenants renting the unit at
the time of the blowout vacated the premises in March 2013, concluding that
“the unit was uninhabitable and that they were concerned for their safety.”
Id. at 70-71. The Trust did not secure a new tenant until April 2014. Id. at
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71. The Association paid the Trust approximately $19,000 to make the
needed repairs to the damaged unit. Id. at 73-73.
Instantly, the Trust attached a copy of its agreement of sale for Unit
10 to its petition to intervene in the underlying matter. The agreement,
entered into on March 9, 2007, indicates that The Bergamo Trust, c/o Laura
Zarett, is purchasing “Unit 1000” at Beaumont Condominiums for
$1,725,000.00. The agreement lists the Beaumont Corporation as the seller
of the unit. However, as the trial court acknowledges, not only does that
agreement purport to waive any implied warranty of habitability, Pontiere,
supra; Tyus, supra, the statute of limitations on an action to enforce any
warranty within the agreement had run by the time the Association sued
JMB and the Trust intervened. Thus, we reluctantly agree with the trial
court that neither the Association nor the Trust had a valid cause of action
for breach of implied warranty against JMB.
Judgment and order affirmed.
Judge Ott joins this Memorandum.
Justice Fitzgerald files a Concurring and Dissenting Memorandum.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 11/3/2017
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