Justia Contracts Opinion Summaries

Articles Posted in Supreme Court of Pennsylvania
by
In a case of first impression, the Pennsylvania Supreme Court granted review to determine whether the Commonwealth Court properly calculated the “cost” of steel products under the Steel Products Procurement Act (“Steel Act” or “the Act”), which required that “75% of the cost of the articles, materials and supplies [of a steel product] have been mined, produced or manufactured” in the United States. G. M. McCrossin, Inc. (“McCrossin”), a contracting and construction management firm, served as the general contractor for the Lycoming County Water and Sewer Authority (“Authority”) on a project known as the Montoursville Regional Sewer System Waste Water Treatment Plan, Phase I Upgrade (“Project”). In July 2011, McCrossin entered into an agreement with the Authority to supply eight air blower assemblies, which move air from one area to another inside the waste treatment facility. United Blower, Inc. (“UBI”), became a subcontractor on the Project. UBI was to supply the eight blowers required by the original specifications and was to replace the three digestive blowers as required by a change order. UBI prepared a submittal for the blowers which McCrossin in turn submitted to the Authority’s Project engineer, Brinjac Engineering (“Brinjac”). As part of the submittal, McCrossin provided Brinjac and the Authority with a form, which verified that 75% of the cost of the blowers was attributable to articles, materials, and supplies (“AMSs”) that were mined, produced, or manufactured in the United States. The total amount McCrossin paid UBI for the blower assemblies and digestive blowers was $239,800. The amount paid by the Authority to McCrossin for these items was $243,505. Authority employees began to question whether McCrossin and UBI provided products that complied with the Steel Act. The Supreme Court held the Commonwealth Court improperly calculated the cost of the steel products at issue, thereby reversing and remanding for further proceedings. View "United Blower, et al. v Lycoming Water & Sewer" on Justia Law

by
The United States Third Circuit Court of Appeals certified a question of law to the Pennsylvania Supreme Court involving the state's Motor Vehicle Financial Responsibility Law (“MVFRL”). In July 2015, Corey Donovan (“Corey”) suffered significant injuries due to a collision between a motorcycle, which he owned and was operating, and an underinsured vehicle. He recovered the $25,000 limit of coverage available under the policy insuring the underinsured vehicle as well as the $50,000 per person limit of UIM coverage available under Corey’s policy insuring the motorcycle, issued by State Farm Automobile Insurance Company. Corey then sought coverage under a policy issued by State Farm to his mother, Linda Donovan (“Linda”), under which he was insured as a resident relative. Linda’s Auto Policy insured three automobiles but not Corey’s motorcycle. Linda’s policy had a UIM coverage limit of $100,000 per person, and Linda signed a waiver of stacked UIM coverage on her policy which complied with the waiver form mandated by Section 1738(d) of the MVFRL. First, the Pennsylvania Court considered whether an insured’s signature on the waiver form mandated by 75 Pa.C.S. 1738(d) resulted in the insured’s waiver of inter-policy stacking of UIM coverage where the relevant policy insured multiple vehicles. To this, the Supreme Court held the waiver invalid as applied to inter-policy stacking for multi-vehicle policies in light of its decision in Craley v. State Farm Fire and Casualty Co., 895 A.2d 530 (Pa. 2006). The Court then determined whether the policy’s household vehicle exclusion was enforceable following its decision in Gallagher v. GEICO Indemnity Company, 201 A.3d 131 (Pa. 2019). Finally, after concluding that the household vehicle exclusion was unenforceable absent a valid waiver of inter-policy stacking, the Court addressed the third question posed by the Court of Appeals regarding the applicability of the policy’s coordination of benefits provision for unstacked UIM coverage. After review, the Supreme Court held that the policy’s coordination of benefits provision for unstacked UIM coverage did not apply absent a valid waiver of inter-policy stacking. Having answered these questions of law, the matter was returned to the Third Circuit. View "Donovan, et al. v. State Farm Mutual Ins. Co." on Justia Law

by
Appellants William "Billy" King, and Melanie (Frantz) King ("the Kings"), hired appellee Terra Firma Builders, LLC ("TF") to perform construction work in the backyard of their home. In December 2012, TF was removed from the project before completion due to a dispute about the work performed up to that point. In 2013, TF filed two lawsuits for breach of contract and unjust enrichment, a mechanics’ lien claim for alleged unpaid labor and materials. TF effectuated service of the mechanics’ lien on the Kings by sheriff, however a month later, TF withdrew the lien and filed a new one for the same amount of the discontinued lien; this lien was assigned a new docket number. TF did not file the required affidavit of service for this lien claim. The Kings answered the suit with their own counterclaim alleging breach of contract; they did not challenge TF’s failure to file an affidavit of service at this time. In 2015, TF sought to enforce and obtain judgment on its lien. The Kings did not file preliminary objections or otherwise raise TF’s failure to file an affidavit of service at this time. In 2017, the trial court consolidated TF’s mechanics’ lien and breach of contract actions and proceeded to a bench trial. The parties agreed that TF failed to complete the project but disputed the amount of work remaining unfinished and the quality of the work completed. The court ultimately found in favor of the Kings on all claims, including the Kings’ counterclaim, and awarded the Kings monetary damages. TF moved for a new trial, which was ultimately granted. At the conclusion of the second trial, the court again found in favor of the Kings on the merits, but did not award damages. In 2018, while the post-trial motions were pending, the Kings moved to strike the mechanics’ lien because TF’ failed to file an affidavit of service to perfect the lien. TF argued the Kings had waived their right to object to the lien when they accepted service of the complaint to enforce, never filed preliminary objections, and appeared in court to defend the action. The trial court granted the petition to strike. On appeal, a divided three-judge panel of the Superior Court reversed. The Pennsylvania Supreme Court reversed, finding the lien remained unperfected and invalid, "and the applicable statutes quite logically do not specify a time limit for objection to such a thing." View "Terra Firma Builders, LLC v. King, et al.." on Justia Law

by
Pittsburgh Logistics Systems, Inc. (“PLS”) was a third-party logistics provider that arranged the shipping of its customers’ freight with selected trucking companies. Beemac Trucking (“Beemac”) was a shipping company that conducted non-exclusive business with PLS. In 2010, PLS and Beemac entered into a one-year Motor Carriage Services Contract (“the Contract”), which automatically renewed on a year to year basis until either party terminated it. The Contract contained both a non-solicitation provision and the no-hire provision. In this appeal, the Pennsylvania Supreme Court considered whether no-hire, or “no poach,” provisions that were ancillary to a services contract between business entities, were enforceable under the laws of the Commonwealth. While the Contract was in force, Beemac hired four PLS employees. PLS sued Beemac, alleging breach of contract, tortious interference with contract, and a violation of the Pennsylvania Uniform Trade Secrets Act. PLS also sued the four former employees, alleging they had breached the non-competition and non-solicitation provisions of their employment contracts. The trial court held the worldwide non-compete clauses in the employees' contracts were “unduly oppressive and cannot be subject to equitable modification.” With respect to the contract between the companies, the trial court held the pertinent no-poach clause was void against public policy. “If additional restrictions to the agreement between employer and employee are rendered unenforceable by a lack of additional consideration, PLS should not be entitled to circumvent that outcome through an agreement with a third party.” Finding no reversible error in the trial court's judgments, the Supreme Court affirmed. View "Pgh. Logistics Systems, Inc. v. Beemac Trucking, et al." on Justia Law

by
In 1999, Gary and Mary Gregg sought the expertise of Robert Kovalchik, a financial advisor and insurance salesperson for Ameriprise Financial, Inc. Engaging in what the trial court concluded was deceptive sales practices, Kovalchik made material misrepresentations to the Greggs to induce them to buy certain insurance policies. The Greggs ultimately sued Ameriprise Financial, Inc., Ameriprise Financial Services, Inc., Riversource Life Ins. Co., and Kovalchik (collectively, Ameriprise) under Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (“CPL”). The Greggs’ complaint also asserted, inter alia, common law claims for negligent misrepresentation and fraudulent misrepresentation. The case proceeded to a jury trial on the common law claims, resulting in a defense verdict. The CPL claim proceeded to a bench trial. After the trial court ruled in favor of the Greggs on that CPL claim, Ameriprise filed a motion for post-trial relief arguing (among other points) that the Greggs failed to establish that Kovalchik’s misrepresentations were, at the very least, negligent, a finding that Ameriprise asserted was required to establish deceptive conduct under the CPL. The trial court denied relief, and the Superior Court affirmed. Like the trial court, the Superior Court concluded that the Greggs were not required to prevail on the common law claims of fraudulent misrepresentation or negligent misrepresentation in order to succeed on their CPL claim. The issue this case presented for the Pennsylvania Supreme Court's review centered on whether, as the Superior Court held, a strict liability standard applied to the Greggs’ CPL claim. The Court determined the relevant statutory provision lead it to conclude deceptive conduct under the CPL was not dependent in any respect upon proof of the actor’s state of mind. "The Superior Court’s holding is consistent not only with the plain language of the CPL, but also with our precedent holding that the CPL is a remedial statute that should be construed broadly in order to comport with the legislative will to eradicate unscrupulous business practices." View "Gregg v. Ameriprise Financial, et al." on Justia Law

by
In a matter of first impression, the Pennsylvania Supreme Court granted review in this case to consider whether Section 310.74(a) of the Insurance Department Act of 1921 prohibited a licensed insurance producer from charging fees in addition to commissions in non-commercial, i.e. personal, insurance transactions. During its investigation, the Department discovered that, between March 2011 and October 2015, appellants charged a non-refundable $60- $70 fee to customers seeking to purchase personal insurance products. These fees were collected from the customers before appellants prepared the insurance policy applications. One consumer complaint indicated appellants kept an “un- refundable broker application fee” when the consumer declined to buy a policy. The Department’s investigation also revealed appellants paid a “one-time” $50 referral fee to car dealership sales personnel when they referred their customers in need of insurance. The Department concluded appellants’ fee practices included improper fees charged to consumers “for the completion of an application for a contract of insurance” and prohibited referral payments to the car dealerships. The Supreme Court held lower tribunals did not err when they determined Section 310.74(a) of the Act did not authorize appellants to charge the $60-$70 non-refundable fee to their customers seeking to purchase personal motor vehicle insurance. The Commonwealth Court’s decision upholding the Commissioner’s Adjudication and Order was affirmed. View "Woodford v. PA Insurance Dept." on Justia Law

by
In consolidated appeals, the issue presented for the Pennsylvania Supreme Court's review centered on whether, under the terms of the “replacement cost coverage” policies at issue, the insurer was permitted to withhold from any actual cash value (“ACV”) payment general contractor’s overhead and profit (“GCOP”) expenses, unless and until the insureds undertook repairs of the damaged property, even though the services of a general contractor were reasonably likely to be needed to complete the repairs. Appellants Konrad Kurach and Mark Wintersteen (“Policyholders”) each purchased identical “Farmers Next Generation” insurance policies from Appellee Truck Insurance Company (“Insurer”), to cover their Pennsylvania residential dwellings. Subsequent to the purchase of these policies, both Policyholders sustained water damage to their houses in excess of $2,500, and both filed claims with Insurer under the policies. Thus, where, as here, the cost of repairing or replacing a policyholder’s damaged property exceeds $2,500, Insurer was first required to pay the ACV of the property at the time of the loss to the policyholder (“step one”). Once the repair or replacement of the damaged property is commenced, Insurer was then obligated (in “step two”) to pay the depreciated value of the damaged property and also the expense of hiring a general contractor, “unless the law of [Pennsylvania] requires” payment of GCOP as part of ACV. After careful review, the Pennsylvania Supreme Court affirmed the order of the Superior Court, which found the insurer was entitled to withhold such costs. View "Wintersteen v. Truck Ins. Exchange" on Justia Law

by
In this appeal by allowance, a covenant not to compete was executed by an employee after the first day of employment. The issue presented for the Pennsylvania Supreme Court's review was whether the employer could enforce that provision in the post-employment timeframe although no new consideration was supplied in connection with its execution. The Supreme Court concluded the trial court properly denied a motion for a preliminary injunction: there was no evidence suggesting that, as of the commencement of the employment relationship, there was a meeting of the minds as to the noncompete agreement (NCA), or that the employee otherwise manifested his assent to provisions of the NCA that he was given, or an intent to be bound by them. View "Rullex Co., LLC. v. Tel-Stream, Inc." on Justia Law

by
In 1997, Suffolk Construction Company entered into a contract with the University of Connecticut (“UConn”) for the construction of several buildings on UConn’s campus. UConn secured insurance policies from Reliance Insurance Company for the Project, naming Suffolk (and other contractors) as an insured. Suffolk completed the work in January 2001. The Reliance insurance policy was extended until January 2004. However, in late 2001, however, Reliance went into liquidation. In 2013 and 2014, UConn complained of defects in the construction that resulted in damage to its buildings. UConn initiated legal proceedings against Suffolk and other contractors. In 2016, Suffolk submitted a proof of claim to the Insurance Commissioner of Pennsylvania, as the statutory liquidator of Reliance. At issue before the Pennsylvania Supreme Court in this case involved the Pennsylvania Commonwealth Court's interpretation of certain contract language using Connecticut law. The Commonwealth Court found that the language of the contract was clear and unambiguous, thus precluding consideration of extrinsic evidence of the parties’ intent. The Supreme Court determined, however, a Settlement Agreement between the parties could have been construed as nothing more than a mutual general release between UConn and Suffolk: "The ambiguity stems not from Suffolk’s 'subjective perception' of the terms of the Settlement Agreement, but from the terms of the agreement itself, as the language releasing claims for 'insurance coverage' and 'indemnification' does not have a single, clear meaning." As such, the Commonwealth Court erred by failing to consider extrinsic evidence, outside of the terms of the Settlement Agreement, to discern the parties’ intent. The Supreme Court therefore vacated the Commonwealth Court decision and remanded for further proceedings. View "Suffolk Constr. v. Reliance Ins." on Justia Law

by
TSG Real Estate, LLC (“TSG”) was a real estate company that owned a commercial property in Montgomery County, Pennsylvania (the “Property”). Initially, TSG hired New Hart Corporation d/b/a Hart Corporation (“Hart”) as its broker to market the Property. As TSG’s agreement with Hart was to expire, TSG began considering replacement brokers, one of which was Binswanger of Pennsylvania, Inc. (“Binswanger”). Two days before TSG informed Binswanger of its decision to hire it as its broker, TSG received a written offer from TWA Holdings, LLC (“TWA”) to purchase the Property for $3.7 million. TSG negotiated an agreement with Binswanger culminating in a September 27, 2013 “Exclusive Right To Sell Or Lease Agreement” (“Broker Agreement”) with Binswanger. The Broker Agreement permitted TSG to continue using other brokers in connection with any sale to TWA, and provided, inter alia, (1) if Binswanger sold the Property, it would be entitled to a 5% commission; (2) all commissions would be considered to be earned and payable “at the time scheduled for closing on a sale;” (3) a “carve-out period” which allowed that if another broker “completed” a sale, exchange, or transfer of the Property to TWA on or before January 5, 2014, Binswanger would earn no commission; (4) if another broker completed a sale of the Property to TWA after January 5, 2014, the other broker and Binswanger would split a 5% commission; and (5) the duration of the agreement was for one year; however, TSG had the right to terminate the agreement after 6 months with 30 days prior written notice to Binswanger. Two days prior to the expiration of the carve-out period contained in the Broker Agreement, TSG, via Hart and another broker, Gelcor Realty (“Gelcor”), entered into an Agreement of Sale with TWA, selling the Property for $3.4 million. In this appeal by allowance, the Pennsylvania Supreme Court considered the entitlement to broker commissions for the sale of commercial property. Applying the plain and unambiguous language of the Broker Agreement, the Supreme Court found the sale of the Property was completed at the time of closing, i.e., on April 24, 2014. As the sale was not completed on or before January 5, 2014, but only after the carve-out period had expired, Binswanger was entitled to a commission pursuant to the Broker Agreement fee schedule. View "Binswanger of PA Inc v. TSG Real Estate LLC." on Justia Law