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July 3, 1991


The opinion of the court was delivered by: McCLURE, District Judge.



Plaintiffs Tudor Development Group, Inc. ("Tudor"), Sidney Cohen, Dorothy Cohen and Marc Cohen, collectively trading as Green Hill Associates ("GH Associates"), initially filed this action against United States Fidelity & Guaranty Corporation (USF & G).*fn1 USF & G was the performance bond surety for certain phases of a real estate development (the "Green Hill Project"), being constructed for GH Associates by Susquehanna Construction Company ("Susquehanna"). GH Associates settled its claims against USF & G on November 20, 1989 and the settlement proceeds of $594,000.00 were paid into court.*fn2

In this action, four parties associated with the Green Hill Project*fn3 asserted claims against the escrowed funds: GH Associates, Green Hill Project Investors, Inc. ("GHP Investors")*fn4, Dauphin Deposit Bank and Trust Company ("Dauphin Deposit"), and York Excavating Company, Inc. ("York").*fn5 Summary judgment was entered against Dauphin Deposit on January 7, 1991. York, GH Associates and GHP Investors remain parties to the action.

York's claim stems from work which it performed as a sub-contractor on the Green Hill Project. It contracted with Eastern Consolidated Utilities, Inc., ("ECU"),*fn6 the contractor responsible for constructing roads, parking areas, and doing other paving and "site work."*fn7 York alleges that it was never paid for work which it performed on a time and materials basis between August, 1987 and November, 1987 and claims that it is owed a balance of $70,962.50.

GHP Investors and GH Associates have filed motions for judgment on the pleadings against York (Record Document Nos. 103 and 106). After considering the arguments raised by the parties, we find that judgment on the pleadings against York is appropriate and will enter an order to that effect.


A.  Motion for judgment on the pleadings standard

Judgment on the pleadings is appropriate only if there is no issue of material fact and if the pleadings demonstrate that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 12(c). "The trial court is required `to view the facts presented in the pleadings and inferences to be drawn therefrom in the light most favorable to the non-moving party.'" Hayes v. Community General Osteopathic Hospital, 730 F. Supp. 1333, 1334 n. 1 (M.D.Pa. 1990), (Caldwell, J.), citing Society Hill Civic Ass'n v. Harris, 632 F.2d 1045, 1058 (3d Cir. 1980). This requires the court to accept plaintiff's allegations in the complaint, even if they conflict with the defendant's answer. Hayes, supra, 730 F. Supp. at 1334 n. 1.

B. Laches

GHP Investors and GH Associates (hereafter collectively "movants") contend that York's claim is barred by laches. York asserts a subrogation claim against the escrowed funds. A right of subrogation is one based on considerations of equity and good conscience. Even if it is contractually based, it is, nevertheless, regarded as based upon and governed by equitable principles. Allstate Insurance Co. v. Clarke, 364 Pa. Super. 196, 527 A.2d 1021, 1023-1024 (1987).

Laches is an equitable doctrine which provides that if a plaintiff in equity has failed to exercise due diligence in prosecuting his claim, to the detriment of the other party, the claim is barred. Siegel v. Engstrom, 427 Pa. 381, 385, 235 A.2d 365, 367 (1967) and Hankin v. Mintz, 276 Pa. Super. 538, 542, 419 A.2d 588, 590 (1980). In determining whether a party exercised due diligence, the focus is on what the party reasonably should have known "`by the use of the means of information within his reach, with the vigilance the law requires'", not on what he or she actually knew. Sprague v. Casey, 520 Pa. 38, 46, 550 A.2d 184, 188 (1988), quoting Taylor v. Coggins, 244 Pa. 228, 231, 90 A. 633, 634 (1914). "What the law requires of . . . [a claimant] is to discover those facts which were discoverable through the exercise of reasonable diligence." Sprague, supra, 550 A.2d at 188. "[L]aches entails an inquiry into whether the party is deserving of the court's relief." Waddell v. Small Tube Products, Inc., 799 F.2d 69, 76 (3d Cir. 1986).

The Pennsylvania courts have held that a claim is barred by laches if the following conditions exist:

  The party asserting laches must show, first, a
  delay arising from the other party's failure to
  exercise due diligence, and second, prejudice
  from the delay. . . . It is not enough to show
  delay arising from failure to exercise due
  diligence; for `laches will not be imputed where
  no injury has resulted to the other party by
  reason of the delay.'. . . . (Citations
  omitted.). . . . Laches requires not only a
  passage of time, but also a resultant prejudice
  to the party asserting the doctrine. . . .
  (Citations omitted.). . . . [and] is based on
  `some change in the condition or relations of the
  parties which occurs during the period the
  complainant unreasonably failed to act.'. . . .
  (Citations omitted.). . . . `[T]he burden of
  proof with respect to the doctrine [of laches] is
  upon the party asserting the defense; in order to

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