Tedesco Excavating v. FWH Development

2024 Pa. Super. 129

• Court: Superior Court of Pennsylvania
• Decided: June 24, 2024
• Docket: 995 WDA 2022
• Status: Published

Opinion

J-A29017-23

2024 PA Super 129

TEDESCO EXCAVATING & PAVING, : IN THE SUPERIOR COURT OF INC. : PENNSYLVANIA : : v. : : : FWH DEVELOPMENT, LLC : : No. 995 WDA 2022 Appellant :

Appeal from the Judgment of Sentence Entered August 1, 2022 In the Court of Common Pleas of Allegheny County Civil Division at No(s): GD 19-006017

BEFORE: BOWES, J., KUNSELMAN, J., and MURRAY, J.

CONCURRING AND DISSENTING OPINION BY BOWES, J.: FILED: June 24,

I concur with my learned colleagues’ decision to affirm the jury verdict

in favor of Tedesco Excavating & Paving, Inc. (“Tedesco”) and against FWH

Development, LLC (“FWH”) for breach of contract. However, I disagree with

the majority’s creative statutory construction of the Contractor and

Subcontractor Payment Act (“CASPA”) to extend the application of the act’s

penalty provisions to contractors and subcontractors who are seeking

unliquidated damages for breach of contract as opposed to payment for work J-A29017-23

actually performed.1 As characterized by the trial court, “this case dealt with

a los[t] profit on the job that Tedesco contracted for but did not perform[.]”

Trial Court Opinion, 4/8/23, at 5. Thus, notwithstanding the majority’s broad

application of CASPA under the guise of statutory construction, I would

conclude that, while Tedesco may be entitled to six percent interest pursuant

to the terms of its contract and post-judgment interest at the legal rate as

determined by the Pennsylvania Judicial Code,2 it is not entitled to the

supplementary awards of augmented interest (12%), counsel fees, and

litigation costs pursuant to the provisions outlined in CASPA.

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1 Blacks Law Dictionary defines unliquidated damages as “Damages that cannot be determined by a fixed formula and must be established by a judge or jury.” Unliquidated Damages Definition, Black's Law Dictionary (11th ed. 2019), available at Westlaw. Here, Tedesco sought the anticipated thirty-five percent profit and overhead on the project as outlined in the contract; however, it was still required to satisfy its burden of proving that amount to the jury. See Majority Opinion at 21-23.

2 Specifically, 42 Pa.C.S. § 8101 provides, “Except as otherwise provided by

another statute, a judgment for a specific sum of money shall bear interest at the lawful rate from the date of the verdict or award, or from the date of the judgment, if the judgment is not entered upon a verdict or award.”

As to the allotment of attorney fees and expenses, Pennsylvania generally applies the American Rule, which provides, “absent an express agreement or statutory authority to the contrary, litigants presumptively are responsible for their own costs and attorney's fees.” Clean Air Council v. Dep't of Envtl. Prot., 289 A.3d 928, 934 n.19 (Pa. 2023); Mosaica Acad. Charter Sch. v. Com. Dep't of Educ., 813 A.2d 813, 822 (Pa. 2002). CASPA is an exception to this rule. As explained in the body of this dissenting opinion, in my view, CASPA does not provide a basis for those expenses in this breach-of contract litigation.

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Our Supreme Court recently reiterated the components of statutory

construction as follows:

The Statutory Construction Act of 1972 (Statutory Construction Act) provides that the object of all statutory interpretation “is to ascertain and effectuate the intention of the General Assembly.” 1 Pa. C.S. § 1921(a). Generally, the plain language of the statute “provides the best indication of legislative intent.” Miller v. Cnty. of Centre, 643 Pa. 560, 173 A.3d 1162, 1168 (2017) (citing 1 Pa.C.S. § 1921(b)). If the statutory language is clear and unambiguous in setting forth the intent of the General Assembly, then “we cannot disregard the letter of the statute under the pretext of pursuing its spirit.” Fletcher v. Pa. Prop. & Cas. Ins. Guar. Ass'n, 603 Pa. 452, 985 A.2d 678, 684 (2009) (citing 1 Pa.C.S. § 1921(b)). In this vein, “we should not insert words into a statute that are plainly not there.” Frazier v. Workers’ Comp. Appeal Bd. (Bayada Nurses, Inc.), 616 Pa. 592, 52 A.3d 241, 245 (2012).

Commonwealth v. Lehman, ___ A.3d ___, 2024 WL 1201184, at *4 (Pa.

Mar. 21, 2024) (footnote omitted).

As it relates to ambiguity, the High Court explained,

A statute is ambiguous when it is susceptible to . . . at least two reasonable interpretations. While we must consider the statutory language in its full context before we assess ambiguity, we must not overlabor to detect or manufacture ambiguity where the language reveals none. We strive to give effect to each word.

Greenwood Gaming & Entm't, Inc. v. Dep't of Revenue, 306 A.3d 319,

329 (Pa. 2023) (cleaned up) (citations and quotations omitted) (emphasis

added).

Instantly, the majority ponders why, in enacting CASPA, the General

Assembly would intend to punish obligors for breaching after performance “but

not also intend to punish obligors for materially breaching before

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performance[?]” Majority Opinion at 27. While the majority goes to great

lengths to divine the proposed legislative intent, the answer to the inquiry is

remarkably obvious from the plain and ordinary language of the statute:

“Performance by a contractor or a subcontractor in accordance with the

provisions of a contract shall entitle the contractor or subcontractor to

payment from the party with whom the contractor or subcontractor has

contracted.” 73 P.S. § 504. While CASPA does not define performance, “the

lack of statutory definitions does not preclude a plain-language analysis[.]”

Greenwood Gaming & Entm't, 306 A.3d at 331. Hence, the crux of § 504

is that performance entitles a contractor to payment.

While the majority focuses on the fact that § 504 does not exclude its

novel interpretation, nothing in the plain language of the Section 504 (or any

other section) endorses it. The foregoing statutory language conveys a clear

and definite meaning: performance is the sine qua non that entitles the

contractor to payment and the economic sanctions outlined in the subsequent

sections of the statute.

Indeed, § 504 embodies the oft-cited principle that CASPA was enacted

to

cure abuses within the building industry involving payments due from owners to contractors, contractors to subcontractors, and subcontractors to other subcontractors. The underlying purpose of CASPA is to protect contractors and subcontractors and to encourage fair dealing among parties to a construction contract. The statute provides rules and deadlines to ensure prompt payments, to discourage unreasonable withholding of payments, and to address the matter of progress payments

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and retainages. Under circumstances prescribed in the statute, interest, penalty, attorney fees and litigation expenses may be imposed on an owner, contractor or subcontractor who fails to make payment to a contractor or subcontractor in compliance with the statute.

Prieto Corp. v. Gambone Const. Co., 100 A.3d 602, 607 (Pa.Super. 2014)

(emphasis added).

The remedial nature of the statutory scheme does not nullify the plain

and ordinary meaning of “performance.” CASPA clearly and unambiguously

requires that a contractor or subcontractor perform work in order to invoke

the protections and remedies that the act provides. By way of example, within

months of executing the July 2015 construction contract, Tedesco acquired

signal poles for the project and submitted Payment Application No. 1 to FWH

seeking $56,873.84 compensation for that performance, which was paid by

FWH. See N.T. Trial Volume Three, 5/11/22, at 314-21, 363. Had FWH failed

to pay Tedesco for its performance and Tedesco sued for recompense, CASPA

would have undoubtedly applied. However, that is not the posture of this case

because, as explained infra, the instant litigation does not involve the non-

payment of an invoice for performance. Instead, it concerns a dispute over

the breadth of damages for FWH’s breach of the construction contract.

Significantly, this is not a case that turns upon an ambiguous definition

of “performance” or even one that requires us to consider whether Tedesco’s

actions should be deemed tantamount to performance. However, rather than

interpret the statute as written, the majority finds ambiguity because the plain

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and ordinary language of the statute does not contemplate the desired

application under the facts presented in this case. It reasons “[n]othing in the

plain language of Section 504 (or any other section) excludes anticipatory-

repudiation claims from the statutory coverage.” Thus, instead of accepting

the clear omission of any non-performance-based entitlement to the

statutory remedies as the facial exclusion that it is, the majority ignores the

unmistakable performance-entitles-payment edict and manufactures a

perceived ambiguity for the express purpose of extending the penalty

provisions to instances where, as here, no party has ever withheld payment

for any work performed. See Majority Opinion at 26-27.

The majority’s rationale runs counter to the general doctrine of

expressio unius est exclusio alterius, or “the inclusion of a specific matter in a

statute implies the exclusion of other matters.” Mimi Investors, LLC v.

Tufano, 297 A.3d 1272, 1286 n.21 (Pa. 2023) (quoting Thompson v.

Thompson, 223 A.3d 1272, 1277 (Pa. 2020). Stated differently, CASPA

requires payment for work, services, and materials provided on eligible

construction projects and affords penalty interest, fees, and costs to a

contractor or subcontractor if those payments are withheld. Insofar as CASPA

does not implicate disputes over the amount of damages owed for a parties’

breach of contract, the statutory framework does not sustain the majority’s

strained construction in favor of Tedesco’s claim for attorneys’ fees and

interest in this case.

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Even if CASPA could be interpreted as not requiring performance, the

statute’s penalty provisions are clearly triggered by an owner’s failure to

satisfy a request for payment. See e.g., 73 P.S. § 505(d) Interest (“[I]f any

progress or final payment to a contractor is not paid within seven days of the

due date . . ., the owner shall pay the contractor, beginning on the eighth day,

interest at the rate of 1% per month . . . on the balance that is at the time

due and owing); 73 P.S. § 512(a) and (b) (concerning additional twelve

percent penalty interest, attorneys’ fees and litigation costs where “it is

determined that an owner, contractor or subcontractor has failed to comply

with the payment terms of this act[.]”). In the majority’s view, FWH’s failure

to pay was founded on Tedesco’s submission of Payment Application No. 2. It

determined thusly,

On April 24, 2019, Tedesco provided FWH Application for Payment #2 for Final Payment, which detailed the lost overhead and profits that Tedesco sought in the wake of FWH’s anticipatory repudiation and material breach. Upon Tedesco’s application for final payment, according to Article 5.2 of the contract, FWH “shall pay the remainder of the Contract Price[.]

Majority Opinion at 28-29. Hence, according to the majority, CASPA applied

in this case because FWH failed to satisfy Payment Application No. 2., which

demanded payment for its lost overhead and profit margin in the amount of

$383,776.17. See Payment Application No. 2; Amended Complaint,

11/11/19, at 5; Exhibit 4.

However, contrary to the majority’s suggestion, the instant litigation

does not stem from FWH’s failure to satisfy Payment Application No. 2.

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Indeed, the certified record demonstrates that Tedesco submitted Payment

Application No. 2 to FWH after filing the instant breach of contract action,

wherein it sought breach of contract damages representing its lost overhead

and profit in the identical amount of $383,776.17. See Complaint 4/23/19 at

6 (“WHEREFORE, Tedesco Excavating & Paving, Inc., demands judgment in

its favor and against FWH Development, LLC in the amount of $383,776.17”).

The fact that the lawsuit was filed prior to the submission of Payment

Application No. 2 was subsequently confirmed by Jonathan Tedesco’s trial

testimony indicating that the pay application was, in fact, backdated and

submitted to FWH after it had already initiated this litigation. N.T. Trial

Volume Three, 5/11/22, at 364. Thus, it is no surprise that Tedesco’s

complaint for breach of contract neither referred to Payment Application No.

2 nor included it among the other documents attached as exhibits.

Having received the complaint alleging breach of contract and seeking

damages for lost overhead and profit margin, FWH demurred to the identical

allegations in Payment Application No. 2. Instead, it filed preliminary

objections to the complaint on two grounds that are relevant to this appeal.

First, FWH disputed Tedesco’s entitlement to lost profit damages under Article

15.4.4 of the General Conditions of the contract, which specifically precluded

Tedesco from recovering anticipated lost profits and overhead in the situation

that FWH asserted. See General Conditions of Contract Article 15.4.4

(“CONTRACTOR shall not be paid on account of loss of anticipated profits or

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revenue or other economic loss arising out of or resulting from such

termination”). See e.g., Preliminary Objection to Complaint, 6/4/19, at 7 ¶39

(“The damages [Tedesco] claims in its Complaint, namely, its alleged lost

profits on work not performed, are not recoverable under the Contract.”).

Second, noting the obvious omission of a reference to a pay application

or invoice, FWH highlighted that Tedesco failed to plead the facts to support

a claim for a violation of CASPA. Id. at 9 ¶48 (“[Tedesco] has not pleaded

damages resulting from FWH’s failure to pay upon any particular progress

payment application or invoice, but rather has pleaded damages relating to

lost profits on work not performed due to FWH’s exercise of its contractual

right to suspend the Project”). Prior to the date scheduled to hear argument

on FWH’s preliminary objections, Tedesco filed an amended complaint that,

for the first time, referenced Payment Application No. 2 in relation to its

request for the breach of contract damages in the amount of $383,776.17 and

attached the payment application listing the identical figure as an exhibit. See

Amended Complaint, 11/11/19, at 5; Exhibit 4.

While the trial court ultimately rejected FWH’s position concerning the

contractual preclusion of Tedesco’s’ entitlement to lost profit and overhead,

the foregoing procedural history highlights the principal flaw in the majority’s

current position. As demonstrated by Tedesco’s original complaint, this lawsuit

did not concern the non-payment of Payment Application No. 2, but rather, it

involved the determination of the appropriate amount of damages due to

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Tedesco for FWH’s breach of contract. From my perspective, utilizing CASPA

to penalize an owner for refusing to pay a legitimately-disputed demand for

unliquidated damages chills the ability of an owner or any other “party with

whom the contractor . . . has contracted,” to litigate a legitimate contract

dispute. See 73 P.S. § 504. How can it be explained that a party is afforded

the right to raise a legitimate defense to a civil complaint seeking unliquidated

damages for a breach of contract and still be subject to CASPA’s penalty

provisions for the non-payment of the identical contested damages simply

because the contractor submitted a pay application after the fact? Plainly, it

cannot, and the majority’s contrary interpretation runs counter to the central,

unambiguous premise that performance in accordance with the contract

entitles the contractor to payment and that the failure to pay the uncontested

sum is the ill to be remedied. Nothing, in the plain language of the statute

provides, much less suggests, that a party to a lawsuit will be penalized for

its legitimate dispute as to the amount of damages. In validating Tedesco’s

reliance upon Payment Application No. 2 as the basis for applying CASPA in

this case, the majority is effectively denying owners the ability to contest

unliquidated damages because if they refuse to pay the disputed amount they

will risk being sanctioned with augmented interest, penalty interest, counsel

fees, and litigation costs pursuant to the provisions outlined in CASPA.

Thus, for both of the foregoing reasons, I respectfully dissent from my

colleagues’ decision to extend CASPA’s application to cases where, as here,

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there is no outstanding payment due for performance rendered. CASPA

simply does not apply to a dispute over unliquidated damages. Thus, I would

vacate the judgment entered on the molded verdict and direct the trial court

to enter judgment on the $401,046.00 verdict awarded by the jury.

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