Beaumont Condominium Assoc. v. Brown, J.
2177 EDA 2016
| Pa. Super. Ct. | Nov 3, 2017Background
- JMB was construction manager for a 13‑story condominium project; Carson contracted as subcontractor to design/build the post‑tension concrete superstructure, including U‑shaped "hairpins" at tendon sweeps.
- Pennoni was retained to inspect reinforcing/post‑tension work; Pennoni inspected the 10th floor and reported hairpins were placed before the pour.
- In January 2013 a post‑tension cable on the 10th floor blew out, damaging a unit and compromising structural integrity; experts at trial found hairpins missing at the blowout sweep and concluded their absence caused the failure.
- The Association and the Bergamo Trust incurred repair and loss costs (~$180,000 combined); JMB settled with the Association ($140,000) and the Trust ($36,000) and then sued Carson for breach of contract, negligence, and indemnification; the Association and Trust sued JMB under PUCA theories including implied warranty of habitability.
- Trial court found hairpins missing, Carson negligent and primarily liable (60%), Pennoni negligent (40%), but concluded JMB had not proven recoverable contract damages or entitlement under indemnification because JMB had not suffered direct property damage and its settlements weren’t covered by an enforceable implied‑warranty claim by the Association/Trust.
- Superior Court affirmed: JMB could not recover cost‑of‑repair contract damages (it was not the injured purchaser/owner who sustained diminution), JMB’s settlement was not indemnifiable because underlying implied‑warranty claims against JMB were invalid or time‑barred, and economic losses alone did not support negligence recovery by JMB.
Issues
| Issue | Plaintiff's Argument (JMB) | Defendant's Argument (Carson) | Held |
|---|---|---|---|
| Measure of contract damages for defective subcontract work | JMB: entitled to benefit‑of‑bargain cost‑of‑repair damages under Restatement §348 (cost to remedy) | Carson: JMB suffered no diminution/value loss; Association/Trust were injured parties who suffered property loss and repaired it | Held: JMB not entitled to cost‑of‑repair damages — it was not the injured owner; no remedial cost borne by JMB for the defective construction |
| Reasonableness/indemnifiability of JMB’s settlements with Association and Trust | JMB: settlements were reasonable and trigger Carson’s contractual indemnity for damages JMB paid defending/settling underlying claims | Carson: indemnity requires valid underlying claims against JMB and reasonable settlement; Association/Trust lacked valid implied‑warranty claims against JMB | Held: Indemnification denied — underlying warranty/claims against JMB were invalid or time‑barred, so Carson not liable for JMB’s settlements |
| Whether Association had a breach of implied warranty of habitability claim against JMB | JMB: Association could assert implied warranty claims on behalf of unit owners under PUCA or as an injured party | Carson: Association chose to sue in its own name under PUCA and did not sue as representative of unit owners; warranty traditionally protects first purchasers/users | Held: Association’s chosen posture precluded extending implied warranty to it in its own right; no valid implied‑warranty claim by Association against JMB |
| Whether Bergamo Trust was a first purchaser entitled to implied warranty | JMB: Trust was first purchaser/user of Unit 10 and thus had a warranty claim, making JMB liable to indemnify | Carson: Trust’s purchase contract waived implied warranty and statute of limitations ran; Trust’s claim invalid | Held: Trust’s agreement waived warranty and was time‑barred; Trust had no enforceable implied‑warranty claim against JMB |
Key Cases Cited
- Turner Constr. v. American States Ins. Co., 579 A.2d 915 (Pa. Super. 1990) (explains general contractor/subcontractor relationships and allocation of claims)
- Douglass v. Liccardi Constr. Co., 562 A.2d 913 (Pa. Super. 1988) (permitting cost‑of‑repair damages under Restatement §348 for injured purchaser)
- Burlington Coat Factory of Pa., LLC v. Grace Constr. Mgmt. Co., LLC, 126 A.3d 1010 (Pa. Super. 2015) (elements for contractual indemnification and reasonableness of settlements)
- Ruzzi v. Butler Petroleum Co., 588 A.2d 1 (Pa. 1991) (indemnity for another's negligence must be clearly and unequivocally expressed)
- Bernotas v. SuperFresh Food Mkts., Inc., 863 A.2d 478 (Pa. 2004) (indemnification provisions strictly construed)
- McClure v. Deerland Corp., 585 A.2d 19 (Pa. Super. 1991) (recovery of indemnity for voluntary settlement requires legal liability and reasonableness)
- Adams v. Copper Beach Townhome Communities, L.P., 816 A.2d 301 (Pa. Super. 2003) (economic loss doctrine bars negligence claims that seek only economic damages without physical injury)
- Conway v. Cutler Group, Inc., 99 A.3d 67 (Pa. 2014) (scope of implied warranty of habitability and first‑user/purchaser concept)