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GEORGE K. MOY AND CAROL ROSEN MOY v. SCHREIBER DEED SECURITY CO. (01/15/88)

SUPERIOR COURT OF PENNSYLVANIA


filed: January 15, 1988.

GEORGE K. MOY AND CAROL ROSEN MOY, HIS WIFE ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, APPELLANTS,
v.
SCHREIBER DEED SECURITY CO., A PENNSYLVANIA CORPORATION, AND MARVIN SCHREIBER, AN INDIVIDUAL, APPELLEES

Appeal from the Judgment of the Court of Common Pleas of Allegheny County, Civil at No. GD 87-01767.

COUNSEL

Barbara Cymerman, Pittsburgh, for appellants.

James A. Buddie, Pittsburgh, for Schreiber, appellee.

Wieand, Montemuro and Popovich, JJ.

Author: Montemuro

[ 370 Pa. Super. Page 98]

This appeal concerns a class action which was originally filed on February 3, 1987, by the appellants, George K. Moy and Carol Rosen Moy. Appellants named as defendants the Schreiber Deed Security Co. (S.D.S.C.), a Pennsylvania corporation, and Marvin Schreiber, president of S.D.S.C. In their complaint, appellants averred that S.D.S.C. had charged them the following fees in conjunction with a residential house closing:

1101. Settlement or closing fee to Chreiber [sic] Deed Security Company . . . $50.00

1108. Title insurance to Chreiber [sic] Deed Security Company . . . $633.00

[ 370 Pa. Super. Page 991112]

. Disbursement Char Chreiber [sic] Deed Security Company . . . $10.00

R.R. at 5a. Appellants averred that the ten ($10.00) dollar disbursement fee had not been included in the estimate of their closing costs. R.R. at 6a. Appellants further averred that S.D.S.C. had violated a provision of the Title Insurance Companies Act, 40 Pa.S.A. § 910-1(5), by charging a settlement fee and a disbursement fee in addition to a flat fee for title insurance.*fn1 Appellants also asserted a cause of action under The Pennsylvania Unfair Trade Practices and Consumer Protection Law, 73 Pa.S.A. § 201-1 to 201-9.2, on the grounds that S.D.S.C.'s policy of charging purchasers of title insurance a settlement fee and a disbursement fee was violative of the Title Insurance Companies Act and the Unfair Insurance Practices Act*fn2 and was, therefore, an unfair and deceptive trade practice.*fn3 R.R. at 12a.

Appellants' complaint contained the following averment:

[ 370 Pa. Super. Page 1004]

. Marvin Schreiber acted on his own behalf and as President or other corporate officer of Schreiber Deed Security Co.

Trial Court Op. at 1. Appellee, Marvin Schreiber, filed preliminary objections seeking a dismissal of the complaint as to him. Thereafter, on April 7, 1987, the appellants exercised their right to file an amended complaint pursuant to Pa.R.C.P. 1028(c).*fn4 The only change contained in the amended complaint was in paragraph four (cited above) of the complaint:

4. At all times material hereto, Defendant Marvin Schreiber acted on his own behalf and as President or other corporate officer of Schreiber Deed Security Co., in actively participating in the wrongful injury producing conduct, by setting policies and/or charges and/or fees complained of by plaintiffs as hereinafter set forth.

Trial Court Op. at 2. On April 15, 1987, appellee filed preliminary objections to appellant's amended complaint for failure to comply with Pa.R.C.P. 1019(a) and for failure to state a cause of action. The trial court entered an order on May 8, 1987 sustaining the preliminary objections without leave to amend.

The issue which we must determine in the instant case is whether the trial court erred in determining that appellants have failed to state a cause of action against the appellee, a corporate officer, in his personal capacity.*fn5 Initially, we note the language of our supreme court in Gekas v. Shapp, 469 Pa. 1, 5-6, 364 A.2d 691, 693 (1976):

[ 370 Pa. Super. Page 101]

A demurrer admits every well-pleaded material fact set forth in the pleadings to which it is addressed as well as all inferences reasonably deductible therefrom, but not conclusions of law. Buchanan vs. Brentwood Federal Savings and Loan Association, 457 Pa. 135, 320 A.2d 117 (1974); Borden v. Baldwin, 444 Pa. 577, 281 A.2d 892 (1971); Papieves v. Lawrence, 437 Pa. 373, 263 A.2d 118 (1970). In order to sustain the demurrer, it is essential that plaintiff's complaint indicate on its face that his claim cannot be sustained, and the law will not permit recovery. Hoffman v. Misericordia Hospital of Philadelphia, 439 Pa. 501, 267 A.2d 867 (1970); Papieves v. Lawrence, supra; Schott v. Westinghouse Electric Corp., 436 Pa. 279, 259 A.2d 443 (1969). If there is any doubt, this should be resolved in favor of overruling the demurrer . . . .

In Wicks v. Milzoco Builders, Inc., 503 Pa. 614, 470 A.2d 86 (1983), the Pennsylvania Supreme Court held that a cause of action had been stated against three corporate officers on the theory that they personally participated in alleged tortious acts committed by two corporations.*fn6 In Wicks, the appellants had purchased a home in a development known as Monroe Acres. Appellants sought to recover damages for personal injuries and property damage they claimed resulted from serious water drainage problems in Monroe Acres. Appellants alleged in their complaint that the corporate officers had been negligent in failing to foresee the potential drainage problems at Monroe Acres and in failing to provide adequate drainage ditches. The Supreme Court in Wicks discussed the participation theory of corporate officer liability as follows:

The general, if not universal, rule is that an officer of a corporation who takes part in the commission of a tort by the corporation is personally liable therefor; but that an officer of a corporation who takes no part in the commission

[ 370 Pa. Super. Page 102]

    of the tort committed by the corporation is not personally liable to third persons for such a tort, nor for the acts of other agents, officers or employees of the corporation in committing it, unless he specifically directed the particular act to be done or participated, or cooperated therein . . . Liability under this theory attaches only where the corporate officer is an actor who participates in the wrongful acts. Therefore, corporate officers may be held liable for misfeasance . . . Nevertheless, corporate officers and directors may not be liable for mere nonfeasance.

Wicks, supra, 503 Pa. at 621-622, 470 A.2d at 90 (citations omitted). In Wicks, the court determined that the complaint was sufficient to withstand a demurrer, because it averred in general terms that the corporate officers knew that the terrain of Monroe Acres would lead to drainage problems and that they had allowed the home construction and sale to proceed despite this knowledge. "Under Pa.R.C.P. 1019(a) the plaintiff need only plead ultimate facts; evidentiary facts need not be set forth in the complaint . . . This complaint, while bare of evidentiary facts, when read as a whole, does state ultimate facts on which the appellants depend to show Miller, Cook and Zollers' liability, in the most general terms." Id. (citations omitted) (emphasis added).

We find that the instant case is indistinguishable from Wicks and therefore, we reverse the trial court's order sustaining appellee's preliminary objections. Based upon our reading of the trial court's opinion in this case, it appears that the trial court believed that appellants had failed to state a cause of action because appellants had not pleaded more specific facts concerning the participation of the appellee in the injury-producing conduct. Trial Court Op. at 3-4. We do not agree. The injury-producing conduct in this case consisted of a company policy of charging a settlement fee and a disbursement fee when selling a policy of title insurance. Although appellants did not include facts concerning the time, place, or manner in which

[ 370 Pa. Super. Page 103]

    the appellee allegedly established this company policy, the appellants did allege the ultimate fact that appellee set this fee policy himself. As a result, appellants should not have been put out of court.*fn7 In reaching our conclusion in this case, we are cognizant of the strict standard that has been established for sustaining a demurrer.

The law of Pennsylvania has long recognized that a corporate officer who participates in wrongful, injury-producing conduct can be personally liable. Chester-Cambridge Bank & Trust Co. v. Rhodes, 346 Pa. 427, 31 A.2d 128 (1943); Amabile v. Auto Kleen Car Wash, 249 Pa. Super. 240, 376 A.2d 247 (1977). See also Shonberger v. Oswell, 365 Pa. Super. 481, 530 A.2d 112 (1987); Bank of Landisburg v. Burruss, 362 Pa. Super. 317, 524 A.2d 896 (1987). In Donsco, Inc. v. Casper Corp., 587 F.2d 602 (3d Cir. 1978), the court recognized that a corporate president could be held individually liable under the participation theory for acts of unfair competition which he personally committed. If there is positive proof that the appellee in the case at bar has personally engaged in conduct which constitutes an unfair and deceptive trade practice, it is possible that he may properly be held liable for his actions under the Unfair Trade Practices and Consumer Protection Law. See Kaites v. Dept. of Environmental Resources, 108 Pa. Commw. 267, 529 A.2d 1148 (1987) (Public interest requires specific evidence of acts of intentional neglect or misconduct before imposing individual liability on corporate officer for abating a public nuisance under The Clean Streams Law or the Coal Refuse Disposal Control Act.)*fn8

[ 370 Pa. Super. Page 104]

Accordingly, we reverse the order of the trial court and remand for further proceedings. Panel jurisdiction is relinquished, jurisdiction of the court is retained.

Disposition

Accordingly, we reverse the order of the trial court and remand for further proceedings. Panel jurisdiction is relinquished, jurisdiction of the court is retained.


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