Judge turns away dismissal motion, says condo member averred legitimate breach of contract claim

By Nicholas Malfitano | Feb 22, 2017

PHILADELPHIA – A federal judge decided that one member of a Bucks County condominium association had raised a legitimate claim to breach of contract towards the other member of the association, with respect to the payment of electricity fees.

On Feb. 10, U.S. District Court for the Eastern District of Pennsylvania Judge Michael M. Baylson denied a motion to dismiss from 444 Oxford Valley Road Trust, LLC in a contractual action initiated by Ashford Bucks County, LLC.

Plaintiff and defendant are both members of a two-unit condominium association in Bucks County. The defendant became a member in September 2015 when it purchased an office building unit within the condominium, while the plaintiff owned and operated a hotel unit therein for an unknown but longer, amount of time. The condominium’s bylaws state unit owners are responsible for a pro rata portion of utility payments for the common areas, and for the entire amount of utility payments for their separate units.

The units are not separately metered. For the plaintiff’s ownership of the hotel unit, it paid the electric fees for the entire property and then remitted invoices to each 2-unit owner requesting payment for the owners’ share of the common areas’ fees and for the entirety of the individual unit’s fees. Upon defendant’s purchase of the office unit, problems arose between the two parties regarding the payment of the electric fees.

“Specifically, the defendant raised concerns ‘questioning the rates being charged and whether the percentage assessment for the office unit was accurate.’ Nevertheless, defendant continued to make payments to plaintiff until January 2016, at which point defendant halted all utility payments to plaintiff. As of August 2016, plaintiff had paid $112,926.57 in electric fees on behalf of defendant, and these fees are still accruing,” Baylson stated.

On Oct. 26, 2016, the plaintiff filed suit against the defendant alleging breach of contract and unjust enrichment. The defendant moved for dismissal of the breach of contract claim on Nov. 22, 2016.

“In Count I, plaintiff asserts that defendant breached a contract it had with plaintiff to pay for its proportional share of electric fees for the common areas of the condominium and for the entirety of the electric fees for defendant’s individual unit. Defendant’s only ground for dismissal is that plaintiff has not adequately alleged the existence of a contract between the parties for the payment of electric fees. Because we find that plaintiff has sufficiently pled the existence of such a contract, we deny the motion,” Baylson said.

Baylson explained the plaintiff clarifies in its response that it “alleges the existence of an implied, rather than express, contract.” Where expressed contract terms are communicated orally or in writing, the terms of an implied contract are “inferred from the conduct of the parties in light of the surrounding circumstances, including the course of dealing.”

“Plaintiff’s allegation of the existence of an implied contract primarily rests on the ‘custom and pattern of dealing of the parties;’ namely, the five-month period during which defendant owned the unit and paid plaintiff its share of the electric fees, as calculated by plaintiff. Defendant, on the other hand, contends that the ‘continuous disagreement’ that existed between the parties during that time period regarding ‘the provision of electricity, the amount of electricity used, and the price to be paid,’ belies the existence of an agreement. The cases defendant cites for this point are factually inapposite,” Baylson stated.

Baylson said in believing the plaintiff’s statements as true, the defendant “established a pattern and practice of paying the fees, as calculated by plaintiff, during that five-month time period, and it is immaterial whether defendant complained as it did so.”

“Plaintiff’s claim is further bolstered by its assertion that the condominium’s bylaws require each unit owner to pay the fee responsibilities laid out above. At this stage of the litigation, we accept as true plaintiff’s allegation, notwithstanding plaintiff’s failure to attach the bylaws to the complaint. Thus, plaintiff’s averment that the condominium’s bylaws support the existence of a contract provides further support for the claim. For the above reasons, plaintiff has adequately alleged a breach of contract claim under Count I, and defendant’s motion to dismiss is denied,” Baylson said.

The plaintiff is represented by Daniel S. Bernheim III and Matthew R. Skolnik of Wilentz Goldman & Spitzer, in Philadelphia.

The defendant is represented by Kenneth J. LaFiandra of Vantage Technologies, in New Hope.

U.S. District Court for the Eastern District of Pennsylvania case 2:16-cv-05592

From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nickpennrecord@gmail.com

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