Pennsylvania has adopted the Home Improvement Consumer Protection Act, PA SB 100, which is effective and enforceable on July 1, 2009.  The Act provides for the regulation of home improvement contracts and for the registration of contractors; prohibits certain acts and provides penalties for violations of the Act.

 

The Act applies to any person who owns and operates a home improvement business or who agrees to perform any home improvement. It also applies to subcontractors and independent contractors. “Home improvement” is defined by the Act as work performed on a private residence or in connection with land or a portion of land adjacent to a private residence. Examples of home improvements include but are not limited to the repair, replacement, remodeling, and demolition of a home, as well as work performed on driveways, swimming pools, garages, roofs, landscaping, fences, patios, and house painting. The Act does not apply to the construction of a new home. The Act applies to all contracts of $500 or greater.

 

Contractors must register with Pennsylvania’s Bureau of Consumer Protection in the Office of the Attorney General. An application must be filed with the Bureau and a fee of $50 must be paid. The registration must be renewed on a biennial basis. A registration number will be issued to each contractor and the registration number must appear on all advertisements, business cards, contracts, estimates, and proposals.

 

Written contracts of $500 or greater must be in writing. Among the requirements of the contract are the start and end date of the project, the contract price, and a detailed description of the work and materials. Change orders are required and must be in writing and signed by all parties. 

 

Failing to follow these requirements results in a violation of the Act, which will result in a void and unenforceable contract. In addition, a violation of this Act also results in a violation of the Unfair Trade Practices and Consumer Protection Law. A violation of the Consumer Protection Law results in treble damages.

 

 

The Pennsylvania Superior Court finds invalid a commercial lessor's attempt to terminate a lease without notice. Remanded for further proceedings.

 

Background:  In a lease between landlord [MD Mall] and tenant [Kmart], the tenant had the right to assign the lease, and the landlord had a one-time option to terminate the lease, if it received written notice that the tenant intended to discontinue the operation of its store. In 2004, Sears agreed with Kmart to purchase Kmart's lease with MD, contingent upon MD’s prior consent to the temporary closing of the store for remodeling. Kmart and Sears forwarded a letter to MD requesting approval of same. 

 

MD interpreted this letter as “notice” that the tenant intended to discontinue its operations, and MD therefore terminated the lease with Kmart. Kmart brought suit, arguing that its request to MD for a temporary closing was not a “notice,” as required under the lease, but was instead a condition precedent to its agreement with Sears. In other words, Sears would only purchase the lease from Kmart if MD agreed in advance to allow Sears to close the store for remodeling. Without this prior approval from MD, there could be no agreement between Sears and Kmart, and if there was no agreement, than the tenant would not cease operations for remodeling. 

Holding:  The Superior Court agreed with Kmart, and held that Kmart did not "elect to discontinue the operation of its store" within the meaning of the lease, and the termination of the lease was improper.

 

 

2008 Pa. Super. 270

Decided: November 18, 2008

The Pennsylvania Superior Court holds that an insurance policy does not provide indemnity for restitution ordered in a criminal proceeding, even where the restitution for funeral expenses would have been covered if awarded in a civil proceeding.

Background:  McKernan was convicted of reckless endangerment and simple assault, which resulted in the death of her boyfriend. Restitution for the funeral expenses was ordered in the criminal proceeding. McKernan was also sued in a civil action for wrongful death and survival counts. Brethren sought declaratory judgment and was ordered to provide coverage for the civil action. McKernan filed a counterclaim seeking reimbursement for the funeral expenses. Brethren filed a motion for summary judgment, which was granted.

 

Holding:  On appeal, the Pennsylvania Superior Court observed that a sentencing court is statutorily mandated to order restitution to a victim pursuant to a criminal conviction. The restitution is to help rehabilitate a convict by impressing, in some degree, the scope of the damage inflicted by his criminal conduct. Insurance against the restitution would defeat this purpose, and would increase the likelihood of criminal conduct by transferring the responsibility of a restitution order to an insurer. The Court holds that a convict, in the context of the criminal litigation, cannot utilize insurance to cover a restitution order, even though here, the funeral expenses would have been covered had they been included in the civil action. The court notes that its decision should not be interpreted as affecting potential insurance coverage available in civil actions based upon conduct which creates civil as well as criminal responsibility.

 

 

2008 Pa. Super. 240

Decided: October 10, 2008

The Pennsylvania Superior Court upholds “regularly used, non-owned vehicle” and “use for hire” exclusions as not contravening the MVFRL. 

 

Background:  Easley sustained injuries while struck when operating a taxi owned by Yellow Cab. He was not carrying a passenger at the time. Easley leased taxi cabs on a 24 hour basis, and had no choice over which taxi he received. Easley received the policy limits from the adverse driver, and filed an UIM claim with his own insurer, which denied coverage contending that the “regularly used, non-owned vehicle” and “use for hire” exclusions applied. In the subsequent declaratory judgment action, the trial court granted Nationwide’s motion and denied Easley’s cross-motion.

 

Holding:  On appeal, Easley contended that the exclusions are invalid because they provide a more restrictive definition of an underinsured motorist vehicle than the broad coverage required by the MVFRL. The Pennsylvania Superior Court holds that the exclusions do not violate public policy. The “use for hire” exclusion is valid whether or not the vehicle was carrying a passenger at the moment of the accident.  Nor does the fact that Easley did not operate the same taxi each day he paid a lease fee invalidate the "regularly used, non-owned vehicle" exclusion. The exclusions advance the purpose of the MVFRL in containing costs.

 

 

 

904 A.2d 54 (Commonwealth Court)

Decided: August 3, 2008

 

Holding:  Commonwealth Court finds that City of Philadelphia is primarily liable for injuries resulting from its negligence as to the condition of its sidewalks, where such sidewalks adjoin the its real property.

Background:  This case arises out of a slip and fall accident on a sidewalk adjacent to a police station. The City of Philadelphia owned both the station and the sidewalk. Reid alleged that the City was negligent for failing to remove ice and snow on the sidewalk, which condition caused the accident. The trial court found the City liable under the real property exception to governmental immunity, 42 Pa.C.S.A. § 8542(b)(3). On appeal to the Commonwealth Court, the City argued that the real property exception did not apply because “sidewalks” were specifically excluded under the real property exception. The Commonwealth Court affirmed the decision of the lower court.

 

Discussion:  The lower court, relying upon the Commonwealth Court’s decision in Sherman v. City of Philadelphia, 745 A.2d 95 (2000) and the Supreme Court’s analysis in Walker v. Eleby, 577 Pa. 104, 842 A.2d 389 (2004), concluded that the condition of the sidewalk triggered the real property exception to governmental immunity. Based upon Sherman, the trial court concluded that “despite the clear language of the real property immunity, and particularly that section’s exclusion of liability with regard to sidewalks, a municipality can be primarily liable for injuries resulting from the municipality’s negligence as to the condition of its sidewalks” where such sidewalks adjoin the municipality’s real property. This holding was affirmed by the Commonwealth Court.

 

 

2008 Pa. Lexis 1904 (Pa. Supreme Court)

Decided: October 23, 2008

 

Holding:   A guest passenger does not fall within the definition of an “insured” under Section 1702 of the MVFRL and therefore, the waiver of stacking of UM/UIM benefits was not applicable, and “Other Insurance” clause was not enforceable, as it conflicted with the public policy of the MVFRL.

 

Background: The claimant was a guest passenger involved in a two vehicle accident. She recovered 25K from the liability coverage of the third party tortfeasor and 50K of UIM benefits from Nationwide, the carrier which insured the vehicle which she occupied. The claimant had 35 UIM coverage on a single vehicle insured with Donegal. The claimant signed a waiver of stacking, although she had only one vehicle insured with Donegal. Donegal denied coverage, claiming that the waiver of stacking prevented the claimant from collecting UIM benefits under both the Nationwide and Donegal policies. Donegal also relied upon the “other insurance” clause of its policy to deny benefits. Donegal’s “other insurance” clause provided that UIM benefits were limited to an amount by which Donegal’s UIM coverage exceeded the UIM coverage of the vehicle occupied. Since the claimant received 50K UIM from this latter vehicle’s coverage, Donegal argued that it did not owe the 35K UIM under its policy.

 

Discussion: The Supreme Court held that only an “insured” may waive stacking under Section 1738. Since section 1702 does not include a guest passenger within the meaning of “insured” , then the waiver of stacking signed by the claimant was not applicable. The claimant was therefore, not limited to a recovery of UIM benefits under just one (Nationwide’s) policy.   The Court also rejected the Donegal policy’s “Other Insurance” clause, as not enforceable because it conflicted with the public policy of the MVFRL to provide “excess” rather than “gap” underinsured motorist coverage

 

 

Cooper v. Frankford Hospital,

2008 PA Super 248

Decided: October 20, 2008

 

Holding: Unsupported assertion that evidence sought in pre-complaint discovery would substantially aid in preparation of a complaint is insufficient for a finding of “probable cause” to allow for the discovery.

 

Background: Estate of decedent anesthesiologist brought a wrongful death suit against the employer hospital. The estate alleged that the hospital suspected and confirmed that the decedent anesthesiologist, was giving himself doses of narcotic/anesthetic. The decedent was confronted by the hospital and directed to submit to a urinalysis test. Shortly thereafter he killed himself. The estate sought pre-complaint discovery from the hospital. The trial court (Philadelphia County) denied that request. The estate subsequently filed its wrongful death complaint, asserting that the hospital owed the decedent a duty to protect him from committing suicide. The hospital filed preliminary objections, based upon the general rule that suicide is not a basis for a wrongful death lawsuit, as there is generally no duty to prevent someone from committing suicide. The trial court agreed and dismissed the wrongful death action. The estate appealed. The Superior Court affirmed.

 

Discussion: The estate contended that if the trial court had granted its request for pre-complaint discovery, then it would have the information necessary to plead the existence of a duty that hospital owed to the decedent. However, the Superior Court explained that the estate failed to provide any facts supporting a reasonable belief that the evidence sought would support a cognizable cause of action.

 

 

544 F.3d 182 (3^rd Circuit)

Decided: Sept. 18, 2008

 

Background: Plaintiffs’ decedent was shot and killed after he assisted the police chief and prosecutors in obtaining the confession of the accused who allegedly sexually assaulted the decedent’s children. Plaintiffs alleged that defendants deprived the decedent of his right to substantive due process, based on the theory of a state-created danger, for initially involving the decedent in the matter and later for failing to advise decedent of the accused’s dangerous propensities. On appeal, the Court of Appeals reversed the district court and held that the defense of qualified immunity was applicable as to all defendants and events at issue.

 

Discussion: There are four essential elements of a meritorious “state-created danger” claim: (1) the harm ultimately caused was foreseeable and fairly direct; (2) a state actor acted with a degree of culpability that shocks the conscience; (3) a relationship between the state and the plaintiff existed such that the plaintiff was a foreseeable victim of the defendant's acts, or a member of a discrete class of persons subjected to the potential harm brought about by the state's actions, as opposed to a member of the public in general; and (4) a state actor affirmatively used his authority in a way that created a danger to the citizen or that rendered the citizen more vulnerable to danger than had the state not acted at all. 

 

Although the Court agreed with the district court that the first and third elements of the state-created danger doctrine were met, it concluded that the district court erred in holding the second and fourth elements were satisfied. The Court found that the defendants did not act with conscience-shocking culpability in planning and effecting the accused's arrest and confession at the decedent's house. The Court further determined that the failure to warn plaintiffs in 2002 about the accused's menacing behavior toward the police chief could not be deemed an affirmative use of authority sufficient to predicate liability because a failure to warn about the likelihood of a private act of violence could not itself predicate liability. Accordingly, the police chief and prosecutors were entitled to qualified immunity.

 

Any questions regarding this case may be directed to David L. Schwalm @ 717-255-7643 or dschwalm@tthlaw.com.

2008 Pa. LEXIS 2047

Decided: November 19, 2008

Holding: Supreme Court maintains the status quo on exhaustion and consent to settle issues in underinsured motorist litigation. 

Background: Plaintiff Schneider was injured in an accident while in the course of his employment as a police officer. At the time, the tortfeasor had liability coverage of $15,000 and the cruiser Plaintiff was occupying had applicable UIM coverage with Granite State in the amount of $1 million. The tortfeasor’s carrier paid its coverage limit and the UIM claim presented to Granite State was resolved for $750,000. 

 

At the time the settlement was reached with Granite State, Schneider did not seek or obtain the consent of Nationwide, his personal vehicle insurer. Nonetheless, Schneider next presented a claim to Nationwide which had an applicable UIM limit of $200,000. Nationwide rejected the claim because it had not given consent to settle and because the insured failed to exhaust the primary UIM limit when he settled with Granite State. The insured countered by offering a full credit including both the tortfeasor’s $15,000 and Granite State’s $1 million and argued that Nationwide did not prove under Lehman that it was prejudiced by the plaintiff’s failure to obtain consent to settle with Granite State. After the trial court ruled in favor of Nationwide and the Superior Court reversed, the Pennsylvania Supreme Court accepted allowance of appeal on both the consent to settle and exhaustion issues.

 

Holding: The thrust of the Supreme Court decision was to maintain the status quo on both exhaustion and consent to settle in UIM cases. The Court officially adopted the longstanding “credit for limits” approach taken by the Superior Court pursuant to which the claimant is permitted to settle for less than the underlying limits in exchange for giving the UIM carrier a full credit for all applicable underlying limits in UIM proceedings. As for consent to settle, the Court declined to finally determine whether a showing of prejudice was necessary as Nationwide abandoned the position it held in the Superior Court. As a consequence, the Court held that the Lehman rule, which requires a showing of prejudice to a UIM carrier from whom consent to settle had not been secured, remained the law of the Commonwealth until such time as a meritorious challenge to this rule is presented.