PITTSBURGH – A Maryland landlord who co-owns rental properties in Pittsburgh has initiated legal action against his business partners, for their alleged financial mismanagement of their rental business.
Scott Brumbaugh of Upper Marlboro, Md. filed suit in the Allegheny County Court of Common Pleas on Feb. 12 versus Paschal H. Spoltore and Nancy L. Spoltore, both of Pittsburgh.
“In or about 1993, Mr. Brumbaugh and the Spoltores purchased certain residential rental properties located at 380-386 Joncaire Street, Pittsburgh, PA 15213, in the 4th Ward of the City of Pittsburgh (hereinafter, the “Rental Properties”), and entered into a written partnership agreement (the “Partnership Agreement”) to jointly own and operate the Rental Properties (the “Rental Property Business”),” the suit states.
The Partnership Agreement allegedly provided that Brumbaugh and the Spoltores would each own one-third of the Rental Properties and that Mr. Brumbaugh, Mr. Spoltore and Mrs. Spoltore would be one-third equal partners in the profits and losses which went along with operating the Rental Property Business.
“Mr. Brumbaugh provided the down payment necessary to purchase the Rental Properties. The balance of the purchase price of the Rental Properties was financed through a mortgage obtained by the Spoltores, which was secured by the Rental Properties. In or about 1995, Mr. Brumbaugh provided a $50,000 contribution to the Partnership to repair and refurbish the Rental Properties,” the suit states.
The suit adds since 1995 and continuing to the present, Brumbaugh has made further monetary contributions to the Partnership, to fund the operation of the Rental Property Business – and that he and his family have provided labor and other services to the Partnership to contribute to the operation of the Rental Property Business, and to keep the Rental Properties in marketable condition.
According to the lawsuit, Brumbaugh’s occasional distributions paid to him in connection with the Rental Property Business have not been consistent with the Partnership Agreement and its terms, whereas the Spoltores’ regular distributions paid to them in connection with the Rental Property Business have been in excess of the amount due them, per the Partnership Agreement and its terms.
“In addition, the Spoltores have lived, rent free, at the Rental Properties since the mid-1990s in exchange for managing the properties. No distribution or consideration has been provided to Mr. Brumbaugh for his contributions to the Partnership. Furthermore, the Spoltores have continued to live at the Rental Properties rent free despite not managing the properties since August of 2017 with no comparable distribution being made to Mr. Brumbaugh during that time,” the suit states.
Furthermore, the litigation explains the Spoltores “obtained personal lines of credit secured by the Rental Properties without Mr. Brumbaugh’s knowledge or consent," “marketed the Rental Properties for sale without advising Mr. Brumbaugh and without obtaining Mr. Brumbaugh’s consent” and “have used income from the operation of the Rental Property Business to pay for personal expenses without advising Mr. Brumbaugh, without obtaining Mr. Brumbaugh’s consent, and without making comparable distributions to Mr. Brumbaugh.”
For counts of accounting, breach of contract, unjust enrichment, breach of fiduciary duty and common law fraud/fraud in the inducement, the plaintiff is seeking damages in an amount exceeding the applicable jurisdictional limits requiring arbitration, and for any other relief which this Court deems appropriate.
The plaintiff is represented by Nicholas J. Godfrey of Dinsmore & Shohl, in Pittsburgh.
Allegheny County Court of Common Pleas case GD-18-002114
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nickpennrecord@gmail.com