Sparrow v. PACE/CM, Inc.

22 Pa. D. & C.5th 5
CourtPennsylvania Court of Common Pleas, Lackawanna County
DecidedFebruary 7, 2011
Docketno. 10 CV 5086
StatusPublished

This text of 22 Pa. D. & C.5th 5 (Sparrow v. PACE/CM, Inc.) is published on Counsel Stack Legal Research, covering Pennsylvania Court of Common Pleas, Lackawanna County primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Sparrow v. PACE/CM, Inc., 22 Pa. D. & C.5th 5 (Pa. Super. Ct. 2011).

Opinion

NEALON, J.,

The defendants in this commercial litigation which has been instituted by a construction subcontractor have presented seven demurrers contesting the legal sufficiency of various claims set forth in the amended complaint, four additional preliminary objections challenging other averments on the grounds of insufficient specificity, and one additional objection based upon Pa. R.C.P. 1019(i). For the reasons set forth below, the demurrers of one construction project owner, RGMOB, L.P., will be sustained since: (1) no contractual relationship existed between the owner and the subcontractor; (2) the single entity theory for piercing the corporate veil is not recognized in Pennsylvania and the alter ego theory of liability is inapplicable based upon the facts averred in the amended complaint; and (3) the alleged enrichment of the owner was not “unjust” in that the subcontractor has not alleged that the owner misled him into providing a benefit. Based upon the gist of the action doctrine, the demurrers to the subcontractor’s claims for tortious interference with existing and prospective contractual relations will be sustained, and as a consequence of the dismissal of those only tort claims, the subcontractor’s claims for punitive damages will also be stricken. Flowever, the general contractor’s demurrer to the subcontractor’s parking garage project claim will be overruled. Additionally, with the exception of those allegations premised upon the single entity or alter ego theories, the preliminary objections on the grounds of insufficient specificity will be overruled. Finally, the [9]*9objection asserting a failure to attach certain documents to the amended complaint pursuant to Rule 1019(i) will likewise be overruled.

I. FACTUAL BACKGROUND

This civil action stems from services and materials that plaintiff Joseph Sparrow, Jr. d/b/a J. Sparrow Excavating (“Sparrow”) allegedly provided pursuant to subcontract agreements with defendant PACE/CM, Inc. d/b/a PACE Construction Managers, Inc. (“PACE”) in connection with three construction projects: (1) the Roberta Glinton Medical Office Building, lower parking lot and pedestrian bridge projects in Port Jervis, NY (“Port Jervis projects”); (2) the Tobyhanna State Park Area and Campground project (“Tobyhanna project”); and (3) the Rickets Glen State Park Development project (“Rickets Glen project”). Sparrow also asserts claims based upon a subcontract agreement that Sparrow had with PACE relative to the Washington Avenue and Spruce Street parking facility project (“Washington/Spruce project”), for which Sparrow’s services were never utilized as allegedly promised (plaintiff’s amended complaint, ¶¶1, 3, 22-23).

In his amended complaint, Sparrow contends that defendant RGMOB, L.P. (“RGMOB”) was the owner of the Roberta Glinton Medical Office Building, parking lot and pedestrian bridge which were the subjects of the Port Jervis projects (Id., ¶¶5-6, 41). Sparrow avers that PACE and RGMOB are integrated companies with common ownership, addresses, officers and control such that the two companies operate as a single entity (Id., ¶¶7-8,12-13, 41-42,58). Specifically, Sparrow maintains that defendant Robert W. Pettinato (“Pettinato”) is an owner and officer [10]*10of PACE and the president of Hal Holdings, Inc. which is the corporate general partner of RGMOB (Id., ¶¶10, 12, 41). Pettinato’s daughter, defendant Natalie Pettinato O’Hara (“O’Hara”), is also allegedly an officer and owner of PACE and RGMOB (Id., ¶¶11-12). Consequently, Sparrow submits that RGMOB is the alter ego of PACE and vice-versa, as a result of which RGMOB and PACE are both deemed to be owners and contractors relative to the Port Jervis projects (Id., ¶¶43-45).

Sparrow contends that upon completing specified work, he submitted monthly applications and certificates for payment to PACE in conjunction with the Port Jervis, Tobyhanna and Rickets Glen projects, but PACE either delayed or withheld payments even though it had already received funds from the owners of each project (Id., ¶¶25-26, 46-54, 65-72, 81-88, 90-92). Sparrow asserts that payments were intentionally withheld from him in order to leverage Sparrow to perform additional work beyond the scope of the subcontracts (Id., ¶¶26-28). According to Sparrow, he is owed $102,827.15 on the Port Jervis projects, $168,505.94 on the Tobyhanna project and $336,407.04 on the Rickets Glen project (Id., ¶¶55-57, 59-62, 73-77, 89, 93).

Sparrow submits that as a result of his failure to receive timely payments and his corresponding inability to pay his own vendors and workers for those projects, he “was forced to enter into certain memoranda of understanding and/or joint check agreements, whereby PACE was to submit payments to certain of Sparrow’s vendors, suppliers and laborers” for the foregoing projects1 (Id, [11]*11¶31). The execution of the memoranda of understanding and joint check agreements enabled PACE to invoke a provision of the subcontract agreements authorizing it to assess Sparrow a service charge of 25% on all amounts that PACE paid to his vendors, suppliers or laborers (Id., ¶¶35-36). Sparrow alleges that PACE did not pay Sparrow’s vendors as promised, but nevertheless charged Sparrow a fee of 25% on amounts that PACE had falsely represented were paid (Id, ¶37, 63-64, 78-80, 95-96).

With regard to the Washington/Spruce project, Sparrow contends that after the Scranton Parking Authority retained PACE as the general contractor for that project, PACE entered into a subcontract agreement with Sparrow in the amount of $249,000.00 to perform certain work “when notified to do so by PACE” (Id., ¶¶97-105). Sparrow asserts that although he invested considerable time and expense to prepare for that project, PACE failed to notify Sparrow to perform his work and instead utilized the services of other subcontractors (Id, ¶¶106-108). Sparrow claims that PACE wrongfully terminated the subcontract agreement and seeks damages for lost revenue and his time and expense related to pricing, budgeting and planning for that project (Id., ¶¶109-111).

The first ten counts of Sparrow’s amended complaint concern the Port Jervis projects and set forth causes [12]*12of action against PACE, RGMOB and defendant International Fidelity Insurance Company (“IFIC”) which issued a labor and material payment bond to PACE for the Port Jervis projects. Sparrow asserts claims against PACE for breach of contract (count I), quantum meruit (count II), unjust enrichment (count III), account stated (count IV), and violations of the Contractor and Subcontractor Payment Act (“CASPA”), 73 P.S. §§501-516 (count V). RGMOB has been sued for breach of contract (count VI), quantum meruit (count VII), unjust enrichment (count VIII) and violation of CASPA (count IX). Count X names IFIC as a defendant in its capacity as the surety and alleges breach of contract liability based upon the actions of PACE.

Counts XI through XVI of the amended complaint relate to the Tobyhanna project and aver claims against PACE for breach of contract (count XI), quantum meruit (count XII), unjust enrichment (XIII), account stated (count XIV) and violation of the commonwealth procurement code, 62 Pa. C.S.A. §§101-4604 (count XV), and IFIC for breach of contract (count XVI) based upon the payment bond that it issued to PACE for the Tobyhanna project.

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Bluebook (online)
22 Pa. D. & C.5th 5, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sparrow-v-pacecm-inc-pactcompllackaw-2011.