TT&H is available to advise and assist insurers in the handling of COVID-19 claims.
As COVID-19 continues to impact our daily lives, TT&H is aware that insurers are beginning to receive claims relating to the disease, whether for business interruption, liability coverage, workers’ compensation or otherwise. As always, insurers confronted with such claims can count on TT&H for reliable guidance and advice. In recent weeks, TT&H has assembled a multi-state team of coverage, general liability, workers’ compensation and employers’ liability attorneys who are prepared to assist with claims relating to COVID-19. Whether in Pennsylvania, Maryland, New Jersey, Virginia, Ohio, West Virginia or the District of Columbia, TT&H is here to help. For more information, please contact Kevin McNamara at (717) 237-7132 or email@example.com.
TT&H LAWYERS IN COURT
TT&H Attorneys Scott McCarroll and Julia Morrison win summary judgment in Dauphin County death case.
Attorneys Scott McCarroll and Julia Morrison of TT&H’s Harrisburg office won summary judgment in connection with a death action filed in Dauphin County. The matter involved an accidental fire that claimed the lives of two foster children and injured another. Plaintiffs alleged that the Defendant, a company that vets foster parents and their homes, negligently investigated the children’s foster mother. In granting the Motion for summary judgment, the Court found that the accidental fire was not a foreseeable consequence of any alleged shortcomings in the vetting process completed by Defendant. Accordingly, Defendant did not have any duty to prevent the harm. The Court also declined to find that the alleged shortcomings in the investigation were the proximate cause of the fire and the harm.
Questions about this case can be directed to Scott McCarroll, at (717) 237-7131 or firstname.lastname@example.org, or to Julia Morrison, at (717) 441-7056 or email@example.com.
SIGNIFICANT CASE SUMMARIES
FEDERAL CASE SUMMARIES
A.B. v. Marriott Int’l, Inc.
United States Court for the Eastern District of Pennsylvania
2020 U.S. Dist. LEXIS 70644
Decided: April 22, 2020
The District Court for the Eastern District of Pennsylvania interprets the Federal Sex Trafficking Act as imposing civil liability should a jury find that a business benefited from participating in a venture it knew or should have known engaged in sex trafficking.
In 2009, eighteen year old A.B. met a sex trafficker online who convinced her to travel from her home in Florida to New York under the guise of a romantic relationship. After arriving in New York, A.B. alleges that her trafficker forced her into commercial sex trafficking for approximately three to four weeks when another trafficker “bought” her. From 2009 through 2011, the second trafficker forced A.B. to engage in commercial sex acts for days at a time at Marriott International (“Marriott”) hotels located in the Philadelphia, PA area. In her Complaint, A.B. alleges that Marriott through hotel video surveillance and complaints regarding “suspicious activity” had actual or constructive notice of drug dealing, prostitution, “and/or general safety concerns at its hotels.” A.B. further alleges that if Marriott had paid attention to these activities, including the “red flags” surrounding A.B.’s trafficking, it would have been impossible for Marriott to have not been aware of A.B.’s victimization. A.B. brought her suit under both the federal law and Pennsylvania’s human trafficking statute which requires actual knowledge of the trafficking.
Marriot filed a Motion to dismiss arguing that as franchisor, who did not own the hotels at issue, that the sex trafficking statutes could not, as a matter of law, apply as it did not have direct knowledge of the trafficking.
The District Court found that A.B. did not plead the requisite facts necessary for the Court to infer that Marriott knew of the sex trafficking; however, A.B. did plead the necessary facts, under an actual agency theory, that Marriott knowingly benefitted from participating in a venue which it “should have known engaged in [A.B.’s] trafficking.” The Court reasoned that this is was all that was required under the federal statute. The Court went on to find that A.B. did not timely plead her Pennsylvania claim, nor did she plead facts which allowed the Court to infer Marriott’s “knowledge” under the Pennsylvania’s human trafficking statute, as required. A.B.’s claim under the Pennsylvania statute was dismissed with leave to amend. The Court directed the parties to proceed with discovery on Marriott’s potential liability, under the federal statute, concerning whether it should have known of the sex trafficking at its hotels.
Questions about this case can be directed to John Lucy, at (717) 441-7067 or firstname.lastname@example.org
Charoff v. MarMaxx Operating Corp.
United States District Court for the Eastern District of Pennsylvania
2020 U.S. Dist. LEXIS 60788
Decided: April 7, 2020
Even when Plaintiff’s fall was in a blind spot, TJ Maxx’s failure to preserve surveillance video of the entire store was enough to defeat its Motion for summary judgment.
Plaintiff claimed she slipped and fell on liquid on the floor, 12 feet from the cashiers at a TJ Maxx store. Six days later, Plaintiff sent a letter to Zurich, the store’s insurer, requesting the preservation of any video recording taken on the day of her fall. Zurich narrowly interpreted the request to only include the specific area where Plaintiff fell. Since there was no surveillance of that precise area, none of the store’s video surveillance evidence for that day was preserved. Although Plaintiff agreed that there was no video surveillance of that area of the store, Plaintiff argued that her preservation request to Zurich was much broader, encompassing surveillance evidence of the entire store. Plaintiff asserted that the store had spoliated key video surveillance evidence for the store, and she should be entitled to an adverse inference that had the store preserved that evidence it would have shown that the store had actual and/or constructive notice of how the spill occurred and how long it had been there.
The Court found that Plaintiff’s preservation request to Zurich was broader than Zurich’s narrower interpretation of the same request. Accordingly, the store’s failure to preserve the video surveillance of the rest of the store was enough to raise an adverse inference to support Plaintiff’s narrative that the store had both actual and constructive notice of the spill that caused her fall. Interestingly, the Court also found that the wording of the store’s accident report, and what it did not say, created a disputed issue of material fact as to whether or not Plaintiff’s fall was witnessed by a store employee. The accident report – the only contemporaneous documentation of record – did not say that there were no witnesses to the fall; instead, it said the witnesses’ names and addresses are “unknown.” The Court held that this choice of words (coupled with Plaintiff’s testimony that a store employee saw her fall), raised a reasonable inference that the author of the accident report believed someone actually had witnessed the incident. Moreover, the Court held that Plaintiff’s self-serving testimony created a disputed issue of material fact when it rebutted the store employees’ self-serving and conclusory testimony.
Questions about this case can be directed to Joe Holko, at (610) 332-7005 or email@example.com
PENNSYLVANIA CASE SUMMARIES
Jackson v. USAA
Pennsylvania Superior Court
No. 1259 EDA 2019 (non-precedential)
Decided April 30, 2020
Trial Court’s award of attorney’s fees pursuant to 75 Pa.C.S.A. § 1798(b), relating to first-party Personal Injury Protection (“PIP”) benefits, was not an abuse of discretion.
Plaintiff Debra Jackson filed a Complaint seeking payment of first party PIP benefits for injuries sustained in a motor vehicle accident. Plaintiff was a pedestrian who neither owned nor resided with anyone who owned a motor vehicle. Plaintiff also sought interest, attorney’s fees, and treble damages from USAA who provided motor vehicle coverage to the driver who struck Ms. Jackson. The parties stipulated that USAA did not pay the PIP claim until after suit was initiated. By the date of trial, the parties stipulated that the PIP claim of $5,994.65 had been fully paid.
USAA argued at the trial court level that the plain language of 75 Pa.C.S.A. § 1798(a) precludes an award of attorney’s fees for representing a claimant in connection with a claim for first party benefits on a contingency fee basis, and the Trial Court erred in awarding fees. The Trial Court found the insurer unreasonably refused to pay benefits referenced in 75 Pa.C.S.A. § 1798(a), and awarded Plaintiff $34,850 in attorney’s fees pursuant to 75 Pa.C.S.A. § 1798(b) where attorney’s fees are permissible when the insurer is found to have acted with no reasonable foundation in refusing to pay benefits.
The Superior Court affirmed that ruling of the Trial Court. The Superior Court found that there was no contingent fee agreement and even if there was such an agreement, a court could still award attorney’s fees in this case pursuant to 75 Pa.C.S.A. §1798(b). As the Defendant was unreasonable in refusing to pay an enumerated benefit in 75 Pa.C.S.A. § 1798(a), the Trial Court had discretion to award Plaintiff the payment of her attorney’s fees.
The Court heavily relied upon the statutory interpretation of Section 1798(b), stating that the relevant consideration for the Trial Court is whether the award of fees would promote the purposes of the specific statute involved. The Court saw no abuse of discretion by the Trial Court in its award of attorney’s fees and denied the Defendant’s appeal.
Questions about this case can be directed to Christopher Gallagher, at (215) 564-2928 or firstname.lastname@example.org
. Incoming Associate, Matthew Gerarde, assisted with this submission.
Ungurian v. Beyzman
Pennsylvania Superior Court
2020 Pa. Super. 105
Decided: April 28, 2020
Court affirms Trial Court order compelling Defendant Hospital to produce documents, finding that they were not privileged under either the Patient Safety Quality Improvement Act or the Peer Review Production Act.
Plaintiff Susan Ungurian brought a medical malpractice action against multiple parties, alleging that Defendants caused total and permanent incapacity of her son. In the course of discovery, Plaintiff propounded Requests for Production of Documents and Interrogatories on all Defendants. Defendant Hospital served its responses on Plaintiff along with a privilege log relating to five documents it was withholding from production pursuant to the Peer Review Production Act (“PRPA”) and the Patient Safety Quality Improvement Act (“PSQIA”). Specifically, it was withholding an event report completed by a CRNA, a “Serious Safety Event Rating” meeting summary, the meeting minutes from the Patient Safety Committee, a root cause analysis report, and the hospital’s Quality Improvement Staff Peer Review. Plaintiff filed a Motion to strike the Hospital’s objections and compel responses, arguing that the Hospital failed to establish that the PSQIA and PRPA privileges were applicable to the documents withheld.
The Trial Court compelled the Defendant Hospital to produce all five documents, finding that they were not protected by either the PRPA or the PSQIA. On appeal, the Court reviewed the PSQIA and found that patient safety work product excludes information that is collected or maintained separately from a patient safety evaluation system. The Court further found that the PSQIA requires that, in order to be considered patient safety work product, the Hospital had to allege that it prepared the documents for reporting to a patient safety organization (“PSO”) and actually reported them to a PSO. The Court then reviewed the PRPA, and found that hospital incident reports and event reports are business records of the hospital and do not fall under the safeguards of the PRPA. The Court also noted that the PRPA does not protect documents available from other sources or documents that have been shared outside of the peer review committee.
The Court found that the Hospital failed to allege sufficient facts to support its contention that the Event Report and the Root Cause Analysis were protected under the PSQIA. The Court further found that the Event Report was in the nature of an incident report and, therefore, was not protected by the PRPA. Additionally, the Court found that the root cause analysis did not fall under the protections of the PRPA because the Hospital did not identify members of the Root Cause Analysis Committee as “professional healthcare providers.” With respect to the Quality Improvement Peer Review, the Court held that in order for the PRPA to apply, the Hospital had to prove that a professional healthcare provider conducted it, and the Hospital failed to do so. The Court found that the Serious Safety Event Rating and Patient Safety Committee Meeting Minutes were likewise not protected by the PRPA, as the Hospital did not meet its burden in proving that the privilege applied. Finally, the Court found that the credentialing review files did not qualify for protection under the PRPA. As such, the Court affirmed the Trial Court’s Order compelling production of these documents.
Questions about this case can be directed to Jillian Denicola, at (570) 825-5653 or email@example.com
Kelley v. Harr
Pennsylvania Superior Court
No. 1332 WDA 2019
Decided: April 22, 2020
Late filing excused where breakdown in court operations caused delay.
Plaintiffs commenced a civil action in Magisterial District Court and prevailed. Defendant appealed to the Court of Common Pleas but failed to file proof of service. The Trial Court struck the appeal upon Plaintiff’s Praecipe. Defendant’s Motion to reinstate the appeal was denied. Defendant filed a Notice of Appeal to the Superior Court which was received by the Common Pleas Prothonotary, but not time-stamped or docketed until after the appeal deadline due to a filing fee issue. The Superior Court quashed the appeal without prejudice to appeal nunc pro tunc in the Trial Court. In his appeal nunc pro tunc, Defendant argued that the delay in filing his original Notice of Appeal was due to a breakdown in the Court’s operations. After an evidentiary hearing, the Trial Court denied the appeal nunc pro tunc because Defendant failed to introduce any evidence of a breakdown in the Court’s operations.
On appeal to the Superior Court, Defendant argued that the Prothonotary’s failure to docket his notice of appeal on the date it was received was an administrative breakdown for which he is entitled to relief. Allowance of an appeal nunc pro tunc is discretionary with the Trial Court and is reviewed under an abuse of discretion standard. A Prothonotary has the duty to time-stamp a Notice of Appeal immediately upon its receipt and the failure to do so constitutes a breakdown of the Court’s operations. An appeal filed within the allowed time period does not depend on the payment of the filing fee to be considered valid. The record demonstrated that the Prothonotary put the Notice of Appeal aside, without first time-stamping it, when she determined that it was accompanied by the incorrect fee. The Superior Court held that this was a breakdown of the Court’s operations entitling the Defendant to an appeal nunc pro tunc.
The Court held that the Trial Court abused its discretion in denying Defendant’s request for relief. Defendant’s Notice of Appeal should have been accepted as valid regardless of whether it had the proper filing fee. This breakdown of the Court’s operation entitled the Defendant to nunc pro tunc relief. Once entitled to such relief, the movant only need demonstrate that he pursued the remedy within a reasonable period of time. The Court ruled that a 10-day period between the first appeal being quashed and the filing of the Motion to appeal nunc pro tunc was reasonable. The case was reversed and remanded back to the Trial Court.
Questions about this case can be directed to James Swartz, III, at (610) 332-7028 or firstname.lastname@example.org.
Walker v. Giant Foods
Pennsylvania Superior Court
No. 1218 MDA 2019
Decided: April 22, 20220
Plaintiff waived all appellate issues when she failed to timely file her concise statement of errors complained of on appeal.
Plaintiff was allegedly injured when she slipped and fell at a Giant Foods on October 17, 2016. Plaintiff commenced the underlying action against Giant Foods via writ of summons on October 22, 2018. After being served with a Rule to file complaint, Plaintiff finally filed her Complaint on December 31, 2018. Giant Foods filed its Answer and New Matter on January 22, 2019, with the required notice to plead within twenty days, and asserted the statute of limitations as an affirmative defense, among others. Plaintiff did not respond to Giant Foods’ New Matter until June 7, 2019, over a month after Giant Foods filed a Motion for judgment on the pleadings. The Trial Court entered an Order on June 21, 2019, granting Giant Foods’ Motion for judgment on the pleadings. Plaintiff, on the last day of the appeal period, filed a notice of appeal on July 22, 2019. The Trial Court then directed Plaintiff to file a Concise statement of errors complained of on appeal, pursuant to Pa.R.A.P. 1925(b). Plaintiff failed to file a Concise statement and failed to request any extension to do so.
The Superior Court noted that strict adherence to Rule 1925(b), which instructs an appellant to file of record in the trial court and serve on the judge a Concise statement of the errors complained of on appeal, is required. Given that the Plaintiff failed to file and serve any statement of errors complained of, the Superior Court deemed Plaintiff’s appellate issues waived. The Superior Court noted that waiver was proper even though the Trial Court filed its own statement of the reasons for its decisions pursuant to Pa.R.A.P. 1925(a). In a footnote, the Superior Court noted that it would have affirmed Giant Foods’ Motion for judgment on the pleadings as Plaintiff did not commence the underlying action by October 17, 2018, the last day of the statute of limitations. The Superior Court also noted in the footnote that the averments of fact in Giant Foods’ New Matter were admitted when Plaintiff filed her response to the same nearly six months after the twenty-day response period afforded by the Rules of Civil Procedure.
Questions about this case can be directed to Brook Dirlam, at (412) 926-1438 or email@example.com
Kimble v. Laser Spine Institute
Pennsylvania Superior Court
2020 Pa. Super. Unpub. Lexis 1216
Decided: April 9, 2020
After the Trial Court awarded $10,000,000 for loss of society and comfort to Plaintiff in a wrongful death action, the Superior Court found that said award was excessive and remanded for a new trial.
Plaintiff Robert Kimble and Plaintiff’s Decedent Sharon Kimble were divorced in 2012, only to remarry shortly thereafter. Having suffered from chronic back pain for several years, which went unabated despite the use of several prescription narcotics, Mrs. Kimble agreed to undergo surgery on her spine at Laser Spine Institute in Wayne, Pennsylvania on January 24, 2014. Mrs. Kimble was administered anesthetics by Dr. Glenn Rubenstein at 7:20 a.m. on that date and discharged following surgery at 10:40 a.m. Following her discharge, Mr. and Mrs. Kimble checked into a nearby hotel, where they planned to stay while she recuperated from surgery. At 4:49 p.m. that day, Mr. Kimble called the hotel’s front desk, to request emergency assistance because Ms. Kimble was not breathing. Emergency personnel arrived to find that Ms. Kimble was unresponsive, with no vital signs. She was then transported to a nearby hospital, where she was pronounced dead.
An autopsy revealed that Mrs. Kimble had suffered a pulmonary edema, due to a “synergistic” effect of multiple opioids and central nervous system depressants that were administered to her by Dr. Rubenstein and Laser Spine Institute. Mr. Kimble brought suit against Laser Spine Institute and Dr. Rubenstein in the Court of Common Pleas of Chester County, alleging damages in wrongful death and survivorship. The Chester County jury ultimately determined that Dr. Rubenstein and Laser Spine Institute were responsible for the death of Mrs. Kimble, finding that they were 65% and 35% at fault, respectively. Subsequently, $10,000,000 was awarded to the estate of Mrs. Kimble on the survivorship claim, while another $10,000,000 was awarded directly to Mr. Kimble on his wrongful death claim. Dr. Kimble and Laser Spine Institute requested that the Trial Court grant a new trial on the issue of the damages awarded to Mr. Kimble, but were refused. They then appealed to the Superior Court, arguing that Mr. Kimble’s $10,000,000 award was excessive.
In considering the above stated argument, the Court noted that “[t]he grant or refusal of a new trial because of the excessiveness of the verdict is within the discretion of the trial court. [The Superior Court] will not find a verdict excessive unless it is so grossly excessive as to shock our sense of justice.” While the Trial Court found that the wrongful death award did not “shock the conscience” on the basis of its opinion that the worth of a marital relationship is best left to the “wisdom of a jury,” the Superior Court disagreed. In so doing, the Court noted that Mr. Kimble did not present evidence that he sustained any economic losses as a result of Mrs. Kimble’s death. Accordingly, Mr. Kimble’s wrongful death claim was entitled to damages only for “loss of society and comfort,” in support of which he testified only that he had experienced grief and moved in with his mother because he did not like living alone. The Court concluded by noting that the $10,000,000 award for loss of society and comfort “lacked consistency with other wrongful death verdicts in Pennsylvania” and remanded to the trial court for a new trial on that issue alone.
Questions about this case can be directed to Sam Dunlop, at (412) 926-1432 or firstname.lastname@example.org
Rolon v. Davies
Pennsylvania Superior Court
No. 2020 Pa. Super. 106
Decided: April 8, 2020
Plaintiff’s expert opinion was sufficient to satisfy the reasonable certainty standard without using the exact wording of “reasonable degree of medical certainty.”
In the instant medical malpractice case involving a failure to diagnose a blood clot, Plaintiff was required to produce an expert to testify, to a reasonable degree of medical certainty, that the defendant physician deviated from acceptable standards, and that the deviation was the proximate cause of the plaintiff’s harm.
Here, Plaintiff’s expert doctor testified that Defendant “had to rule out” a pelvic clot as Plaintiff Decedent’s symptoms were entirely consistent with deep vein thrombosis, and Defendant’s diagnosis did not support or explain Decedent’s symptoms. Plaintiff’s expert doctor further testified there were safety measures that could have been taken to prevent the embolism, and had Defendant adhered to the standard of care, Decedent’s survival was more likely than not. Plaintiff’s expert failed to use the terminology, “reasonable degree of medical certainty” when stating his conclusions.
Although Plaintiff’s expert did not use the phrasing, “reasonable degree of medical certainty,” his testimony stated with certainty that Defendant breached the standard of care by failing to diagnose DVT and treat Decedent accordingly, and offered a thorough explanation as to how he arrive at that conclusion. Thus, regardless of the terminology used, the substance of the testimony was rendered with a reasonably certain and sufficient to meet the standard.
Questions about this case can be directed to Jolee Bovender, at (717) 255-7626 or email@example.com
MARYLAND CASE SUMMARY
Martinez v. Ross
Maryland Court of Special Appeals
No. 2374, Sept. Term 2018
Decided: April 29, 2020
Maryland Recreational Use Statute does not limit a property owner’s liability to social guests.
Maryland’s Recreational Use Statute was enacted to encourage property owners to make their property available to the public for recreational and educational purposes. To encourage these owners to welcome members of the public, the statute limits the property owner’s liability towards any person who enters the property for a recreational or educational purpose. The model statute’s language, adopted by Maryland, included what has been recognized as a “drafting problem,” immunizing a property owner’s liability to its own social guests.
Daniel Ross, owner of Penn Shop Farms LLC stored excavating equipment at his property. He also had an interest in dirt bikes and created an ATV course on his property. Ross invited 90 of his friends and acquaintances for a “Cookout, Bikes, and Music” event at the property. That day, Ross’ friend Martinez arrived to assist with the event. Ross provided Martinez with an ATV to ride. While riding the ATV, Martinez was thrown from the vehicle and suffered a spinal injury that rendered him a quadriplegic. Martinez filed a negligence action against Ross and his companies. Defendants filed a Motion for summary judgment, arguing for immunity under the Recreational Use Statute. The Trial Court granted his Motion, holding Ross made the property available to the public when he invited a large group over for the event.
As a matter of first impression, the Court of Special Appeals held that the statute applies when the property owner invites onto the property members of the general public, not social guests. The Court of Special Appeals agreed to follow other jurisdictions holding that the statute does not override the common-law duty of care. In this matter, entry was limited to Ross’ friends and family, not members of the general public. Therefore, Ross and his companies were not granted immunity under the Recreational Use Statute and summary judgment was not appropriate in this matter.
Questions about this case can be directed to Lauren Upton, at (443) 641-0572 or firstname.lastname@example.org.
DC CASE SUMMARY
Tillery v. District of Columbia
District of Columbia Court of Appeals
Decided: May 21, 2020
D.C. Court of Appeals reverses summary judgment in favor of D.C. government where jury could have found officer grossly negligent in running stop sign without lights and sirens activated.
On November 7, 2014, Plaintiff/appellant, James Tillery (“Tillery”), was injured when D.C. Metropolitan Police Officer Robert Hamrick (“Hamrick”) ran a stop-sign at a four-way intersection and T-boned Tillery’s vehicle. Hamrick was driving in a residential neighborhood when he received a dispatch call of a property crime in progress in a block that he had recently passed. Hamrick then activated his patrol car’s lights and sirens, made a U-turn, and drove toward an intersection marked with a four-way stop sign. Hamrick claimed that he slowed in the middle of the block and stopped about two car lengths before the stop sign to check that no vehicles were approaching, then deactivated his sirens so as to not “alarm the criminal,” and accelerated toward the intersection. Hamrick saw Tillery’s vehicle approaching the intersection from a cross street and observed that Tillery was closer to the intersection, but assumed Tillery would yield to the police cruiser, as he claimed that his emergency lights were on.
A construction worker who witnessed the accident testified that the emergency lights were not on as Hamrick drove toward the intersection. Tillery did not yield and entered the intersection after coming to a complete stop. Hamrick ran the stop sign and T-boned Tillery’s vehicle. The data recorder from Hamrick’s vehicle indicated that Hamrick was traveling 48 miles per hour immediately prior to impact and that he was accelerating for four of the five seconds prior to impact. The speed limit in the area was 25 miles per hour. On these facts, the Trial Court entered summary judgment for the District of Columbia, finding that the facts did not support a finding of gross negligence, which is required to overcome governmental immunity where an officer is operating an emergency vehicle on an emergency run. Tillery appealed.
The D.C. Court of Appeals reversed the Trial Court’s decision and remanded the case for further proceedings. In reversing the decision, the Court of Appeals found that although nothing in the record suggested bad faith on Hamrick’s part, a jury could have reasonably found that Hamrick’s actions demonstrated a conscious indifference to the rights of others. In addition to Hamrick’s violation of D.C. traffic regulations requiring him to stop at a stop sign and to drive within the speed limit, the Court of Appeals identified several aggravating factors that could have led a jury to find that Hamrick had been grossly negligent. Key among these factors were that Hamrick drove nearly double the speed limit, accelerated as he approached the intersection, failed to use his sirens or emergency lights, failed to consider the obstructed view of the intersection, and saw Tillery prior to entering the intersection but still sped through the intersection. The Court further indicated that a jury could have found that there was no genuine urgency requiring such a response. The Court of Appeals reversed summary judgment and remanded the case to the Trial Court.
Questions about this case can be directed to Peter Biberstein, at (202) 945-9506 or email@example.com
VA CASE SUMMARY
James G. Davis Constr. Corp. v. FTJ, Inc.
Virginia Supreme Court
2020 Va. LEXIS 66
Decided: May 14, 2020
A general contractor was liable for construction materials provided by a supplier to a subcontractor under the doctrine of unjust enrichment.
James G. Davis Construction Corporation (Davis) was the general contractor for a residential condominium project. Davis contracted with H&2 Drywall Contractors (H&2) to complete the drywall. H&2, in turn agreed to purchase the materials from FTJ, Inc. (FTJ) and completed a Credit Application and Agreement, in which it agreed to pay for materials that were delivered. FTJ began shipping materials, and almost immediately experienced a delay in payment. FTJ reached out to Davis directly, who paid for a number of invoices using a joint checking account with H&2. Davis acknowledged that it was unusual for it to be involved with a subcontractor’s invoices.
As the project continued, Davis learned that H&2 was experiencing financial difficulties, ultimately concluding that H&2 would not be able to pay its suppliers. FTJ was not aware of these issues and continued to deliver materials for which it was not paid. Davis assured FTJ that, while it was having difficulties with H&2, there were ample funds to pay FTJ. Twice, Davis told FTJ that payments for the past due invoices were being processed, before finally admitting that it had fired H&2 and there was not enough money left to pay FTJ. FTJ filed a Complaint against Davis that included a count for unjust enrichment. Following a bench trial, the Trial Court ruled in favor of FTJ on the unjust enrichment claims. Davis appealed, arguing that because it had paid more than the original contract price to complete the project it was not, as a matter of law, unjustly enriched.
The doctrine of unjust enrichment effects a contract implied in law, requiring one who accepts and receives services from another to make reasonable compensation for those services. Davis used, and did not pay for, FTJ’s materials; therefore, FTJ was not barred from recovery just because Davis ultimately paid more than originally contracted for to complete the project. The fact that H&2’s breach cost Davis more than anticipated does not undo Davis’ wrong. However, the Supreme Court emphasized the limited scope of its decision as, in general, a subcontractor’s supplier will not be permitted to obtain judgment against a general contractor. However, here, Davis knew of H&2’s financial difficulties and interacted directly with FTJ for the purposes of leading FTJ to believe that payment would be forthcoming. Thus, FTJ was permitted to recover from Davis under a theory of unjust enrichment.
Questions about this case can be directed to Lacey Conn, at (571) 464-0433 or firstname.lastname@example.org