Phila. judge tosses condo assoc.'s claims against Westrum in breach of contract case

By Jon Campisi | Aug 9, 2013

A state judge recently threw out three counts in a breach of contract

complaint initiated by a condo association against an area homebuilder.

Philadelphia Common Pleas Court Judge Patricia A. McInerney, in a July 23 order, sustained certain preliminary objections that had been filed by counsel for Westrum Park Place L.P. and the other defendants in the case, agreeing to toss the breach of implied warranty and negligent misrepresentation counts, as well as a count alleging violations of Pennsylvania’s Unfair Trade Practices and Consumer Protection Law, in a lawsuit brought earlier this year by the Villas at Packer Park Condominium Association.

The record shows that on Feb. 28, Philadelphia attorney Walter S. Zimolong filed a commerce action on behalf of the condo association against Westrum, its principal, John Westrum, and various company subsidiaries, as well as John O. Mershon, Westrum’s president, managing member and assistant secretary, over allegations of shoddy workmanship.

The Villas at Packer Park, which is a 92-unit condo development located in South Philadelphia consisting of 23 multi-family buildings, each three stories high and containing four units, allegedly contained construction defects, and the plaintiff, which represents the owners of condos, filed a lawsuit containing counts of breach of contract; breach of express, statutory and implied warranties; negligent misrepresentation; and violations of the consumer protection statute.

The lawsuit also accuses the defendants of violating the state’s Condominium Act for failing to file a certificate from a registered architect or engineer stating that the units were substantially completed.

McInerney first threw out the count of breach of implied warranty of habitability and fitness, writing that the issue had been waived by the condo association through “clear and unambiguous contract language which disclaims such coverage.

The judge next turned toward the count alleging violations of the Unfair Trade Practices and Consumer Protection Law, agreeing with the defendants that the plaintiff lacks standing to assert such a claim since the condo association is not a purchaser of the properties as required by state statute.

“According to the plain and unambiguous terms of the statute, only parties who have made purchases or leased goods and services may sue,” McInerney wrote. “Although the Uniform Condominium Act permits an association to institute litigation in its own name on behalf of itself or two or more unit owners on matters affecting the condominium, the UTPCPL was intended to enhance the protection of consumers against deceptive or unfair trade practices.

“Here, the claim arising under the UTPCPL did not affect the condominium but affected the purchaser of the condominium unit,” the judge continued. “Since the Association is not a purchaser, it is statutorily precluded from bringing a private cause of action under the UTPCPL.”

Lastly, the judge tackled the claim of negligent misrepresentation, in which the plaintiff alleged the developer made misrepresentations that were false through the Offering Statement, Declaration and Agreement.

“The Unit Owners justifiably relied on the representations in the Offering Statement, Declaration, and Agreement to their detriment,” the lawsuit stated.

The plaintiffs claimed they suffered damages as a result of Westrum’s misrepresentations.

In order to state a claim for negligent misrepresentation, the judge noted, a plaintiff must allege a misrepresentation of material fact, made under circumstances in which a defendant would have had to have known of its falsity, and with an intent to induce another to act on it.

The alleged misrepresentation also has to result in injury to a party acting in “justifiable reliance on the misrepresentation,” according to the judicial memorandum.

McInerney ruled that similar to the UTPCPL claim, the condo association lacks standing to sue for negligent misrepresentation.

“The Association was not the purchaser of the units and therefore could not rely upon any representations allegedly made,” McInerney wrote. “Any representations were made to the individual unit owners.”

The judge conceded that under the Condominium Act, an association has standing to assert claims on behalf of two or more unit owners, but she noted that standing under the act is limited to “matters affecting the condominium.”

“The misrepresentations alleged in the complaint do not constitute matters affecting the condominium but concern matters affecting the unit owners,” McInerney wrote.

Because the plaintiff doesn’t have standing to bring a negligent misrepresentation claim, the judge dismissed this count in the suit.

On Aug. 5, lawyers for the condo association filed a motion for reconsideration in which they assert McInerney should have overruled the defendants’ preliminary objections to the breach of implied warranty count because the agreement of sale did not disclaim latent defects to the property.

The attorneys, Walter Zimolong and his co-counsel, Jessica Walker, cited state case law that says in order to exclude warranty coverage for latent defects, “language of a disclaimer must refer to its effect on specifically designed, potential latent defects.”

“Since the Agreement of Sale never refers specifically to its effect on latent defects, Defendants did not adequately disclaim liability,” the plaintiff’s attorneys wrote.

It was unclear when the judge would rule on the motion for reconsideration.

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