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Spiro v. Prudential Relocation

March 1, 2007

MICHELE L. SPIRO AND RANDY WILFONG, PLAINTIFFS
v.
PRUDENTIAL RELOCATION, INC., DEFENDANT



The opinion of the court was delivered by: Yvette Kane, Chief Judge United States District Court Middle District of Pennsylvania

MEMORANDUM

Pending before the Court is Defendant's motion for partial summary judgment on Counts II and III of Plaintiffs' complaint. The motion has been fully briefed and is ripe for disposition. For the reasons that follow, Defendant's motion will be granted in part and denied in part.

I. INTRODUCTION

Plaintiffs Michele Spiro and her husband, Randy Wilfong, began this action by filing a Writ of Summons on April 28, 2005, in the York County Court of Common Pleas. After Defendant filed a Rule to File Complaint, Plaintiffs filed a complaint on April 4, 2006. Defendant timely removed the action to this Court pursuant to 28 U.S.C. § 1441 on the basis of diversity of citizenship.

Plaintiffs allege that at all times relevant to the complaint, Michele Spiro was a civilian employee of the United States Department of Defense ("DOD").*fn1 (Compl. ¶ 4.) At some unspecified time during her employment Michele Spiro agreed to DOD's request that she take a position within DOD that required her to live in Japan between August 2001 and July 2002. (Id. ¶ 5.) Mr. Wilfong accompanied his wife during this period of relocation to Japan. (Id. ¶ 6.)

DOD and Prudential Relocation, Inc. ("Defendant" or "Prudential") are parties to a contract that requires Prudential to provide relocation and property management services to civilian DOD employees who are relocated in connection with their employment under specified circumstances.*fn2 (Id. ¶ 3.) In addition, on or about November 16, 2001, Defendant entered into a separate contract with Michele Spiro dated November 16, 2001 ("Spiro Contract"), to provide property-management services to Plaintiffs' residence during their relocation to Japan.*fn3 (Id. ¶ 8; Doc. No. 13, Decl. of Thomas Goodkind, Ex. B.) Pursuant to the terms of these contracts, Defendant agreed to manage Plaintiffs' residence at 265 Mt. Airy Road, Lewisberry, York County, Pennsylvania ("Property"), during the period of Plaintiffs' relocation. (Compl. ¶ 10.) Prudential then entered into an Agency Property Management Agreement with Capital Area Property Management under which Capital Area, together with Prudential, was to provide various services under the DOD Contract.

Plaintiffs allege that "Defendant selected and/or approved Duane and Brenda Myers as tenant's for the Property. (Id. ¶ 14.) According to Plaintiffs, Duane Myers was an undesirable tenant due to his poor financial history and an undisclosed criminal history. (Id. ¶ 23.) Additionally, Plaintiffs contend that there were four additional adults and an unknown number of minors living at the premises during the period that Defendant was providing relocation services. (Id. ¶ 20.) Plaintiffs allege that at some point the Myers, their sons, and unidentified other individuals began "using the property for illegal purposes," including use as an automobile "chop shop," thereby causing substantial damage to the Property. (Id. ¶¶ 27-28.)

Plaintiffs' complaint presents three counts: breach of contract (Count I); negligence (Count II); and violation of Pennsylvania's Unfair Trade Practices and Consumer Protection Law ("CPL") (Count III). Count I alleges that Defendant breached both the DOD Contract and the Spiro Contract. Count II alleges that Defendant had a duty to Plaintiffs to enforce the terms of the various contracts and that Defendant breached this duty. Count III alleges that Defendant made certain material representations to Plaintiffs regarding the property-management services that Defendant would provide pursuant to the various contracts without any intention of performing the services.

Defendant has moved for partial summary judgment on Counts II and III. Specifically, Defendant argues that Count II, which sounds in tort, is barred by the so-called "gist of the action" rule adopted by Pennsylvania courts because the multiple contracts entered into governing the provision of relocation services are not collateral to Plaintiffs' tort claim and therefore Plaintiff must proceed in contract rather than tort. With respect to Count III, Defendant claims that Plaintiffs lack standing under the CPL because Plaintiffs were not "purchasers" of the services at issue.

II. STANDARD OF REVIEW

Federal Rule of Civil Procedure 56 provides that summary judgment is proper when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-51 (1986). When deciding a motion for summary judgment, the Court views the facts in the light most favorable to the nonmoving party, who is "entitled to every reasonable inference that can be drawn from the record." Merkle v. Upper Dublin Sch. Dist., 211 F.3d 782, 788 (3d Cir. 2000). However, the nonmoving party may not simply sit back and rest on the allegations in the complaint, but must "go beyond the pleadings and by her own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial." Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986) (internal quotations omitted). Summary judgment should be granted where a party "fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden at trial." Id. at 322.

III. DISCUSSION

For purposes of the motion before the Court, the parties generally agree about the material facts bearing upon the legal dispute, and the questions presented in Defendant's motion are primarily legal: (1) whether the "gist of the action rule" precludes Plaintiff from maintaining both negligence and breach of contract claims and (2) whether Plaintiff can maintain a cause of action under the CPL as a "purchaser" within the meaning of the statute where Plaintiff did not purchase the services from Defendant directly, but rather obtained them pursuant to the terms of an employment contract where the relocation services were part of Plaintiff Michele Spiro's benefits of employment with DOD. The Court will address both issues in turn.

A. Plaintiff's Negligence Claim is Barred by the "Gist of the Action" Rule

Defendant first argues that Pennsylvania law precludes a plaintiff from bringing a negligence claim where the complained-of injury arises out of defendant's failure to fulfill its contractual obligations unless "the [tort] wrong ascribed to the defendant [is] the gist of the action with the contract being collateral." Phico Ins. Co. v. Presbyterian Med. Servs. Corp., 663 A.2d 753, 757 (Pa. Super. Ct. 1995). Plaintiff counters by arguing that the Court should follow Raab v. Keystone Insurance Co., 412 A.2d 638 (Pa. Super. Ct. 1979), which Plaintiffs contend holds that a plaintiff alleging improper or negligent performance of a contract may pursue claims in both negligence and contract, whereas a plaintiff alleging nonperformance would be restricted to pursuing a claim for breach of contract. However, the cases cited by Plaintiff to support their contention have been effectively disavowed by subsequent authority. The Court concludes that under prevailing Pennsylvania law, Plaintiffs are restricted to bringing their claims in contract rather than tort.

In Raab v. Keystone Insurance Co., 412 A.2d 638 (Pa. Super. Ct. 1979), the Pennsylvania Superior Court held that whether a plaintiff could maintain a suit in both contract and tort turned upon whether a complaint alleged improper performance of a contract, or total non-performance. In Raab, the author of the Superior Court's opinion -- a single judge not joined by any other member of the three-judge panel -- found that where a plaintiff alleged improper performance of a contract, the plaintiff would be permitted to maintain a suit alleging both breach of contract and negligence, but where a plaintiff alleged total non-performance under a contract, the plaintiff was limited to pursuing a claim for breach of contract. Notwithstanding that the court's decision in Raab was an opinion of a single panelist, subsequent courts treated Raab as precedential and adhered to this distinction. See, e.g., Grode v. Mutual Fire, Marine, & Inland Ins. Co., 623 A.3d 933 (Pa. Commonw. 1993); Fink v. ...


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