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CHARLES SHAID OF PENNSYLVANIA, INC. v. GEORGE HYMA

November 13, 1996

CHARLES SHAID OF PENNSYLVANIA, INC., Plaintiff,
v.
THE GEORGE HYMAN CONSTRUCTION CO., Defendant.



The opinion of the court was delivered by: ROBRENO

MEMORANDUM

 EDUARDO C. ROBRENO, J.

 November 13, 1996

 The case was tried to a jury, which rendered a verdict in Shaid's favor on both its contract and tort claims, awarding Shaid compensatory damages in the amount of $ 898,493 plus interest of $ 296,505 and punitive damages for the commission of the prima facie tort in the amount of $ 2,500,000. Currently before the Court is Hyman's post trial motion for judgment as a matter of law or for a new trial.

 For the reasons stated herein, the Court finds that prima facie tort has not been recognized as a form of action in Pennsylvania. Furthermore, the Court predicts that if presented with a prima facie tort claim, the Pennsylvania Supreme Court would not adopt prima facie tort as the law of Pennsylvania, at least in circumstances involving parties to a contract where the injury claimed consists entirely of economic damages arising out of the performance of the contract and the injured party is made whole under the contract. Therefore, defendant's motion for judgment as a matter of law on plaintiff's prima facie tort claim will be granted and the jury's punitive damage award will be vacated. In all other respects the verdict and the award of compensatory damages will stand. Finally, defendant's motion for a new trial will be denied.

 I.

 In November 1988, Hyman entered into a prime contract with 30th Street Limited, L.P. to act as the general contractor for a project involving the renovation of Philadelphia's 30th Street Station. In turn, Hyman entered into a subcontract with Shaid under which Shaid, as a subcontractor, agreed to perform certain painting and wall covering work on the project as detailed in specification sections 09900 (painting), 09950 (wall covering), and 02513 (paint parking lot stripes), in return for approximately $ 700,000. Shaid began work on the project in January 1989.

 At trial, Shaid claimed that as a result of the actions of Hyman, Shaid was forced to spend about three times as much time and to expend about three times as much money on the project than the original subcontract called for. Shaid contended that Hyman ordered it to perform work outside the scope of their original agreement, including work allegedly provided for under specification 05710 (ornamental metal and steel window restoration), without providing Shaid with additional compensation. Shaid also contended that Hyman deliberately interfered with Shaid's performance of its work, ordered Shaid to reperform work it had already completed adequately and improperly coerced Shaid into signing documents relating to its subcontract with Hyman which were not in Shaid's best interest. %TAccording to Shaid, by the time its work on the 30th Street Station project was complete in the spring of 1992, Hyman had ordered Shaid to perform work which materially altered what the subcontract had originally contemplated and increased the subcontract amount to approximately $ 2,500,000.

 In addition to its contract claim, Shaid sought damages from Hyman under a theory of prima facie tort. The basis for Shaid's prima facie tort claim was that Hyman's Project Coordinator, Jim Singer, had attempted to extort money from Shaid, proposing to Shaid that if Shaid invested in the electrical contracting business owned by Singer's father, Shaid would have an easier time on the 30th Street Station Project. According to Shaid, the implication was that if Shaid did not comply, Singer would retaliate. Shaid argued that Hyman was liable for Singer's actions because although Hyman had notice of Singer's extortion attempts, it failed to take any action to stop them and, instead, benefitted from Singer's wrongful insistence that Shaid perform extra work at its own cost. Shaid sought the same damages under its prima facie tort claim as it did under its breach of contract claim. *fn1"

 The case was submitted to the jury. The jury returned a verdict in Shaid's favor on both its breach of contract and prima facie tort claims, awarding Shaid $ 898,493 in compensatory damages (plus interest of $ 296,505) and $ 2,500,000 in punitive damages. The Court then entered judgment in Shaid's favor in the amount of $ 3,694,998. (See doc. no. 142)

 II.

 At the close of all the evidence, Hyman moved for judgment as a matter of law pursuant to Federal Rule of Civil Procedure 50(b) arguing that prima facie tort is not a valid cause of action under Pennsylvania law. The Court submitted the case to the jury without ruling on Hyman's motion. Hyman now renews its motion for judgment as a matter of law, and, in the alternative, requests a new trial. See Fed. R. Civ. P. 50(b), 59(a). The Court will consider Hyman's challenge to the legal sufficiency of Shaid's prima facie tort claim as a motion to dismiss for failure to state a claim made at trial. See Moodie v. Federal Reserve Bank of New York, 861 F. Supp. 10, 13 (S.D.N.Y. 1994) (quoting Fed. R. Civ. P. 12(h)(2) & citing 5A Wright and Miller, Federal Practice and Procedure § 1392 at 759-60 (1990)) (a motion for failure to state a claim may be made as late as "'at trial on the merits'"), aff'd, 58 F.3d 879 (2d Cir. 1995).

 III.

 A.

 Shaid's claim to tort damages is grounded upon the argument that section 870 of the Restatement (Second) of Torts has been adopted as the law in Pennsylvania. (See Pl.'s Br. Opp'n to Def.'s Mot. for J. as Matter of Law, doc. no. 172 at 3-34) Section 870 of the Restatement (Second) of Torts provides as follows:

 
One who intentionally causes injury to another is subject to liability to the other for that injury, if his conduct is generally culpable and not justifiable under the circumstances. This liability may be imposed although the actor's conduct does not come within a traditional category of tort liability.

 Restatement (Second) of Torts § 870 (1979). According to the Restatement (Second), section 870 is intended "to serve as a guide for determining when liability should be imposed for harm that was intentionally inflicted, even though the conduct does not come within the requirements of one of the well established and named intentional torts." Id. at § 870 cmt. a. The principle of tort liability embodied by section 870 is most widely know as the doctrine of prima facie tort or sometimes simply as intentional tort. *fn2"

 The prima facie tort doctrine carries an honorable pedigree. Its roots can be traced back at least to the late nineteenth century and the seminal pronouncements of Sir Frederick Pollock *fn3" and later Supreme Court Justice Oliver Wendell Holmes. *fn4" See Kenneth J. Vandevelde, A History of Prima Facie Tort: The Origins of a General Theory of Intentional Tort, 19 Hofstra L. Rev. 447 (1990). Under Holmes' general formulation, all liability for intentional harm rested upon the principle that the intentional infliction of injury upon another without justification is actionable. *fn5"

 Holmes' idea of a general theory of intentional tort germinated and, to varying degrees, ultimately found its way into the common law of various states and the Restatement of Torts. *fn6" See James P. Bieg, Prima Facie Tort Comes to New Mexico: A Summary of Prima Facie Tort Law, 21 N.M. L. Rev. 327 (1991).

 According to the Restatement (Second), the prima facie tort doctrine "does not attempt to establish precise and inflexible requirements [for liability]. Instead, it lays down general guidelines and uses words expressing standards that vary with the circumstances to which they are applied. It is stating a general principle rather than setting forth specific rules." Restatement (Second) of Torts § 870 cmt. a. (1979). Thus, the Restatement (Second) formulation permits the prima facie tort doctrine to serve as the basis of liability for all intentional conduct, whether or not actionable under other tort theories. See Vandevelde, 19 Hofstra L. Rev. at 492-94.

 To recover under a theory of prima facie tort as formulated by the Restatement (Second), a plaintiff must establish that the defendant committed an intentional act which was "unjustifiable" and "culpable" and which injured "a legally protected interest of the plaintiff." Restatement (Second) of Torts § 870 cmt. e. (1979). In determining whether conduct is actionable under a prima facie tort theory, the Court must consider "(1) the nature and seriousness of the harm to the injured party, (2) the nature and significance of the interests promoted by the actor's conduct, (3) the character of the means used by the actor and (4) the actor's motive." Id.

 B.

 In the present case, the Court instructed the jury on the law of prima facie tort based on the formulation of the doctrine in the Restatement (Second). *fn7" Because the parties had stipulated that the damages for the tortious conduct alleged were identical to those alleged for the breach of contract, the only damages awarded for commission of the prima facie tort not compensated under the breach of contract claim were punitive damages. *fn8"

 (1)

 Based upon the decisions in Mangold v. Neuman, 371 Pa. 496, 91 A.2d 904 (1952) and Ken J. Pezrow Corp. v. Karabasz, 72 F.3d 123, slip op. (3d Cir. 1995), plaintiff argues that the Pennsylvania Supreme Court and the Third Circuit, respectively, have already acknowledged ...


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