MIRIAM MILLAN-HEFFNER, et al., Plaintiffs, v. GEMCRAFT HOMES GROUP, INC., et al., Defendants.
CIVIL ACTION NO. 23-CV-01252
UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF PENNSYLVANIA
January 13, 2025
(MEHALCHICK, J.)
Presently before the Court is a motion for leave to file a third amended complaint filed by Plaintiffs Gary Heffner (“Mr. Heffner“) and Miriam Millan-Heffner (“Ms. Millan-Heffner“) (collectively, “Plaintiffs“) on August 12, 2024. (Doc. 59). On July 5, 2023, Plaintiffs filed two identical complaints against Defendants Gemcraft Homes Group, Inc. (“Gemcraft“), Matthew Cloward (“Cloward“), Jim Hart (“Hart“), Rommie McCullen (“McCullen“) and Terri Rigano (“Rigano“) (collectively, “Defendants“) in the Court of Common Pleas of Philadelphia County. (Doc. 43, ¶ 1). On July 14, 2023, both cases were removed to the United States District Court for the Eastern District of Pennsylvania, and on July 24, 2023, both cases were transferred to the Middle District of Pennsylvania. (Doc. 43, ¶¶ 3, 6). On August 24, 2023, the Court granted Plaintiffs’ Uncontested Motion to Consolidate Cases and the cases were consolidated into the instant action. (Doc. 43, ¶¶ 13-14). The operative second amended complaint (“Second Amended Complaint“) was filed on October 18, 2023. (Doc. 42). On July 15, 2024, this Court granted in part as to Count III and denied in part as to Counts I and II Defendants Gemcraft, Cloward, Hart, and McCullen‘s motion to dismiss. (Doc. 52; Doc. 53). In its Order, the Court granted Plaintiffs leave to file a third amended complaint by July 29, 2024, which it subsequently extended until August 12, 2024.
I. BACKGROUND AND PROCEDURAL HISTORY
The following background and factual summary are derived from Plaintiffs’ second amended complaint and proposed third amended complaint. (Doc. 42; Doc. 60-1). The Court previously laid out the allegations and factual background in detail in its July, 15, 2024 Memorandum addressing the motion to dismiss, so it will not repeat that background here. (Doc. 52, at 2-5). However, it will address the additional detail and allegations in Plaintiffs’ proposed third amended complaint. (Doc. 60-1). To summarize, Plaintiffs allege that they experienced racial discrimination by Defendants throughout the process of buying and building their home. (Doc. 42, ¶ 11). Plaintiffs allege that the discriminatory conduct began at a pre-construction meeting, which continued over the course of the next several months. (Doc. 42, ¶¶ 17, 26-27).
Overall, Plaintiffs suggest that due to Ms. Millan-Heffner‘s Puerto-Rican identity, Defendants repeatedly treated her with less respect than other white clients, including her husband, refused to complete work on the house, and repeatedly made discriminatory
On October 18, 2023, Plaintiffs filed the operative Second Amended Complaint asserting the following Counts: Count I – Violation of the Fair Housing Act (“FHA“), Count II – Race-Based Discrimination pursuant to
II. LEGAL STANDARDS
A. MOTION FOR LEAVE TO AMEND
Decisions regarding motions to amend are committed to the Court‘s broad discretion and will not be disturbed absent an abuse of that discretion. That discretion is guided by an
B. MOTION TO DISMISS STANDARD
To assess the sufficiency of a claim under a
After recognizing the required elements that make up the legal claim, a court should “begin by identifying pleadings that, because they are no more than conclusions, are not
A court must then determine whether the well-pleaded factual allegations give rise to a plausible claim for relief. “A claim has facial plausibility when the [party asserting a claim] pleads factual content that allows the court to draw the reasonable inference that the [opposing party] is liable for the misconduct alleged.” Palakovic v. Wetzel, 854 F.3d 209, 219-20 (3d Cir. 2017) (quoting Iqbal, 556 U.S. at 678) (internal quotation marks omitted); see also Sheridan v. NGK Metals Corp., 609 F.3d 239, 262 n.27 (3d Cir. 2010). The court must accept as true all allegations in the asserted complaint, and any reasonable inferences that can be drawn therefrom are to be constructed in the light most favorable to the plaintiff. Jordan v. Fox, Rothschild, O‘Brien & Frankel, 20 F.3d 1250, 1261 (3d Cir. 1994). This “presumption of truth attaches only to those allegations for which there is sufficient factual matter to render them plausible on their face.” Schuchardt v. President of the U.S., 839 F.3d 336, 347 (3d Cir. 2016) (internal quotation and citation omitted). The plausibility determination is context-specific and does not impose a heightened pleading requirement. Schuchardt, 839 F.3d at 347.
Defendants argue that the breach of contract claim, as amended, “continues to be futile” and that Plaintiffs’ additional claims are also futile. (Doc. 62, at 8, 15). Plaintiffs respond that it only asserts Count IV, its quasi-contract claim, as an alternative to Count III, its breach of contract claim, if the Court finds Plaintiffs have still not alleged a breach of contract claim. (Doc. 64, at 1-2). Plaintiffs also contend that its supplemented allegations sufficiently state a breach of contract claim, as well as third-party beneficiary claims and a UTPCPL claim. (Doc. 64, at 1-2). Plaintiffs note that Defendants have not identified any additional discovery necessary to defend against the new claims but raise no objection to extended discovery should Defendants wish to conduct it. (Doc. 64, at 2).2
A. AMENDED BREACH OF CONTRACT ALLEGATIONS
The parties dispute whether Plaintiffs have stated a breach of contract claim in their proposed third amended complaint. (Doc. 60; Doc. 62; Doc. 64). According to Defendants,
To reiterate, To establish a cause of action for breach of contract under Pennsylvania law, a plaintiff must allege “the existence of a contract to which the plaintiff and defendant(s) were parties, the essential terms of that contract, a breach of the duty imposed by the contract and damages as a result.” Knopick v. Connelly, 2009 WL 5214975, at *4 (M.D. Pa. 2009) (quoting Cottman Transmission Sys. v. Melody, 851 F. Supp. 660, 672 (E.D. Pa. 1994)); see also Cosby v. American Media, Inc., 197 F. Supp. 3d 735, 739 (E.D. Pa. 2016) (citing Pennsy Supply, Inc. v. Am. Ash Recycling Corp. of Pa., 895 A.2d 595, 600 (Pa. Super. Ct. 2006)).
This Court previously dismissed Plaintiffs’ breach of contract claim without prejudice because Plaintiffs did not provide any detail as to the specific terms of the agreement between Plaintiffs and Defendants, including the material terms of the sale or building contract. (Doc. 52, at 13-15). Here, Plaintiffs have attached the sale and building contract, as well as the emails between individual Defendants and Plaintiffs where Defendants made assurances and written promises to Plaintiffs to make repairs to their home. (Doc. 60-2). Plaintiffs next properly allege that Defendants failed to make such repairs and abide by the terms set forth in those attached agreements. (Doc. 60-1, ¶¶ 45, 55-57, 61-68). Specifically, Plaintiffs allege that “Defendant McCullen never scheduled any additional repairs” after promising to complete repairs required by the sale and building contract via email on July 22, 2022. (Doc. 60-1, ¶¶ 64-65). Plaintiffs have further included the averments that “Defendants repeatedly made promises in writing to remediate various items, including but not limited to the roof
B. NEW THIRD PARTY BENEFICIARY CLAIM
Defendants next submit that Plaintiffs’ third-party beneficiary claims against Defendants are futile because the contract and/or warranty, express or implied under which Plaintiffs sue are the building/sale agreement and warranty to which Plaintiffs and Defendants are parties. (Doc. 62, at 10). Further, according to Defendants, the agreement that Plaintiffs sue under “expressly excludes all other express warranties and implied warranties
The Pennsylvania Supreme Court has adopted the Restatement (Second) of Contracts § 302 which allows for third-party intended beneficiaries to sue for breach of contract “even though the actual parties to the contract did not express an intent to benefit the third party.” Sovereign Bank v. BJ‘s Wholesale Club, Inc., 533 F.3d 162, 168 (3d Cir. 2008). Under this approach, a two-part test must be satisfied: (1) the recognition of the beneficiary‘s right must be “appropriate to effectuate the intention of the parties,” and (2) the performance must “satisfy an obligation of the promisee to pay money to the beneficiary” or “the circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance.” Williams Controls, Inc. v. Parente, Randolph, Orlando, Carey & Assocs., 39 F. Supp. 2d 517, 535 (M.D. Pa. 1999) (citing Scarpitti v. Weborg, 609 A.2d 147, 150 (1992)).
It is not clear from Plaintiffs’ proposed third amended complaint, nor from their briefings related to this motion, what specific “warranty services” contract to which they allege they are merely third-party beneficiaries. In fact, Plaintiffs seem to be parties to each contract relevant to this dispute, including those for home warranty services. (Doc. 60-2). Additionally, this Court agrees with Defendants that the building/sale contract expressly excludes all other warranties other than the Express Warranty noted in the contract. (Doc. 60-2, at 38). See Tyus v. Resta, 476 A.2d 427, 432 (Pa. Super. Ct. 1984) (finding that warranties may be waived in home sale contracts “by clear and unambiguous language in a written contract between the builder-vendor and the home purchaser” as long as such language “is both understandable and sufficiently particular to provide the new home purchaser adequate
C. NEW UTPCPL CLAIM
Defendants ask this Court to deny Plaintiffs’ motion for leave to amend to add their UTPCPL claim on the grounds that the UTPCPL claim is futile. (Doc. 62, at 11-13). According to Defendants, Plaintiffs’ UTPCPL claim fails because they have not alleged justifiable reliance, their personal injuries are not cognizable under the UTPCPL, and their monetary losses that “are no different from the losses alleged in Plaintiffs’ breach of contract claim.” (Doc. 62, at 13). Thus, Defendants contend that Plaintiffs have not pled a loss distinct from their breach of contract/warranty claim. (Doc. 62, at 12). Plaintiffs again do not meaningfully respond to the futility argument but assert that Defendants would not be prejudiced by the additional claim. (Doc. 64, at 1-2).
The UTPCPL acts as Pennsylvania‘s Consumer Protection Law, seeking to prevent “[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce....” Bennett v. A.T. Masterpiece Homes at Broadsprings, LLC, 40 A.3d 145, 151 (Pa. Super. Ct. 2012) (quoting
In the home sale and building context, the Third Circuit has held that the economic loss doctrine, which bars “plaintiffs from recovering in tort economic losses to which their entitlement flows only from a contract,” Werwinski v. Ford Motor Co., 286 F.3d 661 (3d Cir. 2002), does not prohibit UTPCPL claims. Earl v. NVR, Inc., 990 F.3d 310, 314 (3d Cir. 2021) (“Thus, we hold that the economic loss doctrine no longer may serve as a bar to UTPCPL claims.“). The gist of the action doctrine also does not bar the claim. Earl, 990 F.3d at 314-15. The gist of the action doctrine provides:
“That ‘an alleged tort claim against a party to a contract, based on the party‘s actions undertaken in the course of carrying out a contractual agreement, is barred when the gist or gravamen of the cause of action stated in the complaint, although sounding in tort, is, in actuality, a claim against the party for breach of its contractual obligations.’”
Earl, 990 F.3d at 314-15 (quoting Dixon v. Nw. Mut., 146 A.3d 780, 788 (Pa. Super. Ct. 2016).
A plaintiff can successfully state a UTPCPL claim that is not barred by the gist of the action doctrine when “the contract is collateral to any allegedly deceptive conduct,” including
In their proposed third amended complaint, Plaintiffs state that “[t]he UTPCPL prohibits ‘[r]epresenting that goods or services have . . . characteristics... uses, [and] benefits...that they do not have,’ ‘[r]epresenting that goods or services have “status...that they do not have,’ and/or ‘[e]ngaging in...fraudulent or deceptive conduct which creates a likelihood of confusion or of misunderstanding.’” (Doc. 60-1, ¶ 102) (quoting
IV. CONCLUSION
For the foregoing reasons, Plaintiffs’ motion for leave to file a third amended complaint is GRANTED in part. (Doc. 59). Plaintiffs have shown that their proposed third amended complaint is not futile for Count III, their breach of contract claim, and Count VI, their UTPCPL claim. (Doc. 60-1). Plaintiffs will not be permitted to add Counts IV and V because this Court finds that those claims are futile.
An appropriate Order follows.
BY THE COURT:
Dated: January 13, 2025
s/ Karoline Mehalchick
KAROLINE MEHALCHICK
United States District Judge