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filed: February 16, 1988.


Appeal from the Order entered October 6, 1986 in the Court of Common Pleas of Monroe County, Civil Division, at No. 988 Civil 1986.


Mark P. Pazuhanich, Stroudsburg, for appellant.

John R. Carroll, Philadelphia, for appellees.

Brosky, Wieand and Beck, JJ. Wieand, J., files concurring and dissenting opinion.

Author: Beck

[ 371 Pa. Super. Page 455]

This is an appeal from the trial court's grant of preliminary objections. Appellant plaintiff is an incorporated association of property owners (the "Association") at a residential townhouse development known as The Village at Camelback (the "Village"). Appellees defendants, all of whom were allegedly involved in the development, marketing and/or management of the Village, are an individual named Frank P. Carr, III, a sole proprietorship owned and operated by Mr. Carr under the name of Frank P. Carr, III Realty ("Carr Realty"), Camelback Associates, Inc. ("Camelback"), Frank Enterprises, Inc. ("Frank Enterprises"), Chateau Associates, Ltd. (a limited partnership) ("Chateau"), Side II, Inc. ("Side II"), and Side II Associates, Inc. (a limited partnership) ("Side II Associates"). The complaint alleges that Mr. Carr was either a controlling stockholder, officer and director of the corporate defendants or a controlling general partner or in control of the general partner of the limited partnership defendants.

On June 11, 1986, the Association filed a twelve-count complaint against the defendants. The complaint contains numerous allegations of wrongdoing by the various parties, including, inter alia, improper operation of the Association itself during the period when the Association was controlled by certain of the defendants, improper design and construction of the Village, failure to file tax returns and keep proper accounting records for the Village, failure properly to budget certain reserves for the use of the Village, failure to establish an appropriate level of dues and assessments for the Village, use by various defendants of property of the Village for their own business purposes, failure to turn over funds to which the Association was entitled, and failure to turn over to the Association title to certain facilities and lands of the Village. The specific theories of relief that the complaint pleads are as follows:

Counts One and Two. These counts are against Carr and Camelback and set forth contract claims for breach of

[ 371 Pa. Super. Page 456]

    the development plan of the Village and of various express and implied warranties.

Count Three. This count, against all defendants, is for unjust enrichment based upon defendants' alleged unauthorized use of the sports complex at the Village in the development of defendants' own business activities.

Count Four. This count is against Frank Enterprises alone and alleges a breach of the management contract of the Village.

Count Five and Six. These counts, against Carr, Camelback and Frank Enterprises, allege negligence and misrepresentation in the developing, marketing and operation of the Village as well as of the Association.

Count Seven. This count alleges conversion of Association funds by Carr, Camelback and Frank Enterprises.

Count Eight. This count alleges promoter liability of Carr and Camelback.

Count Nine. This count alleges a breach of fiduciary duty by Carr and Camelback as members of the Board of Directors of the Association.

Count Ten. This count, against Carr and Camelback, alleges violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961-68 (1982 & Supp. III 1985).

Count Eleven. This count, against all defendants, seeks equitable relief in the form of the turnover of the Village's sports complex to the Association for its exclusive use.

Count Twelve. This count seeks to impose individual liability on Carr on a theory of piercing the corporate veil.

All defendants filed a variety of preliminary objections to the Complaint. On October 6, 1986, the trial court entered an order that:

1. Granted the demurrer of Carr to all counts of the complaint;

2. Granted the demurrer of all defendants to Counts III and XI of the complaint;

[ 371 Pa. Super. Page 4573]

. Dismissed Count X of the complaint for lack of jurisdiction; and

4. Denied the remaining preliminary objections.

Appellant timely appealed this order insofar as it granted certain of the preliminary objections and dismissed Count X. On December 5, 1986, appellees filed a Motion to Quash the appeal, alleging that it had improvidently been taken from a non-final order. On March 20, 1987, by per curiam order, we quashed the portion of the appeal that was taken from the trial court's grant of the demurrers to Counts III and XI. Thus, we now review only those portions of the trial court's order relating to the dismissal of Carr, the individual defendant, from the case and relating to the dismissal of Count X based upon lack of jurisdiction of a state court over a civil RICO claim.


As we have indicated above, although Counts III and XI of appellant's complaint were dismissed, the appeal from the dismissal of those counts has been quashed. Therefore, our consideration of the dismissal of the individual defendant Carr from all counts of the Complaint will not include any consideration of his dismissal from those two counts. The remaining counts in which Carr was included as an individual are Counts I and II (breach of contract and of express and implied warranties), Counts V and VI (negligence and misrepresentation), Count VII (conversion), Count VIII (promoter's liability), Count IX (breach of fiduciary duty), Count X (RICO),*fn1 and Count XII (piercing corporate veil).

[ 371 Pa. Super. Page 458]

Preliminarily we note that preliminary objections in the nature of a demurrer must be sustained only where it appears with certainty that upon the facts pleaded in the complaint "the law will not permit recovery by the plaintiff." Harley Davidson Motor Co., Inc. v. Hartman, 296 Pa. Super. 37, 41, 442 A.2d 284, 285-86 (1982) (quoting Schott v. Westinghouse Electric Corp., 436 Pa. 279, 282, 259 A.2d 443, 445 (1969)). We must also "bear in mind that preliminary objections to a complaint in the nature of a demurrer admit every well pleaded material fact, plus all reasonable inferences therefrom." International Union of Operating Engineers, Local No. 66 v. Linesville Const. Co., 457 Pa. 220, 322 A.2d 353 (1974).

The trial court dismissed Carr from all counts for two central reasons. First, the court reiterated the long standing principle that one of the central reasons for conducting business in corporate form is the avoidance of personal liability by those holding equity in the corporation and the limitation of the risk of those persons to the value of their equity. The trial court further stated that because of this goal, our Business Corporations Law permits liability for corporate debt to be assessed against shareholders, officers and directors in only the most limited of circumstances. Trial Court Opinion at p. 12. (citing Pa.Stat.Ann. tit. 15 §§ 1609, 3136 (Purdon 1967)).

Lastly, the trial court concluded that it should be particularly loath to pierce the corporate veil where the complaint is, in the trial court's view, premised on numerous written documents, all attached as exhibits to the complaint, which set forth the rights and liabilities of the parties and which do not at any point indicate a personal undertaking by Carr as shareholder, officer or director. Although the trial court acknowledged that the complaint alleges that Carr himself made representations outside of the documents, the court saw these as clearly having been made by Carr as agent for

[ 371 Pa. Super. Page 459]

    the corporate entities and not as binding on Carr individually. Thus, the trial court held:

We hold that where the relationship between parties to litigation is premised on written documents clearly giving notice of a party's corporate status, an action for breach of those agreements cannot impose individual liability on an officer, director, or shareholder of such corporate party.

Trial Court Opinion at 14.

We have carefully reviewed the limited record developed thus far in this case and agree with the trial court that the action is to some degree premised on numerous documents setting forth the development plan for the Village at Camelback. We also agree that nowhere in these documents does there appear any representation, warranty or undertaking by Carr individually. However, this factual conclusion does not lead us to the legal conclusion that Carr cannot be found individually liable under any of the theories pleaded in the complaint. Rather than taking the more sweeping approach of the trial court in analyzing Carr's potential liability, we will analyze each theory pleaded in the complaint against Carr separately, in that the legal principles applicable to assessing Carr's potential liability differ depending on the legal theory of relief underlying each count.

We note at the outset that the manner in which this 44 page complaint is drafted makes an organized analysis exceedingly difficult. Appellant chose to make 81 factual allegations in an introductory section of its complaint and to follow this with 12 separate counts incorporating by reference all of the foregoing paragraphs, seemingly without regard to which of the prior factual allegations are relevant to each particular count. Moreover, the last count does not in fact plead a separate cause of action or theory of relief at all, but rather seeks generally to pierce the corporate veil of the various corporate defendants to assess liability against Carr ...

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