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Condominium Association Court of Old Swedes v. Stein-O'Brien

June 8, 2009


The opinion of the court was delivered by: Judge Leavitt

Argued: November 11, 2008



The Association of the Condominium at the Court at Old Swedes (Association) appeals two orders of the Court of Common Pleas of Philadelphia County (trial court) that denied the Association's motion for a new trial and imposed delay damages on the jury's breach of contract verdict rendered in favor of Emily Stein-O'Brien and Charles P. O'Brien.*fn1 The gravamen of the Association's appeal is that it cannot be held contractually liable for lost rental income and for extensive damage to Stein-O'Brien's condominium unit when she waited five years to mitigate her damages. Concluding that the trial court erred in directing a liability verdict against the Association and in other critical rulings, we vacate and remand for a new trial.

Stein-O'Brien owns two adjoining condominium units in the Court at Old Swedes. The instant appeal concerns one of those properties, Unit 29, which Stein-O'Brien rented out to others from 1992 to 2000.

In 2004, a dispute arose between the Association and Stein-O'Brien over the non-payment of her condominium fees. The Philadelphia Municipal Court entered a judgment against Stein-O'Brien, and she appealed. The Association then filed a complaint in the trial court, seeking to recover SteinO'Brien's unpaid condominium fees. She counterclaimed in assumpsit, asserting that the Association had breached its contractual obligation to maintain the condominium common elements, including the roof over Unit 29. The matter proceeded to arbitration, which concluded in an award to the Association of $14,410 and an award to Stein-O'Brien of $20,000. The Association appealed the arbitration, and the matter proceeded to a jury trial.

At trial, Stein-O'Brien asserted that the Association breached its contractual obligation to maintain the roof over Unit 29. The Association did not deny that this roof, which covered the top of a long line of adjoining condominium units, was a "common element" that was the responsibility of the Association. However, the Association contended that Stein-O'Brien had responsibility for maintaining the air-conditioning platform, which was constructed on top of the roof, and that this air-conditioning platform, not the roof, caused the damage to Unit 29. The Association also contended that the interior damage to Unit 29 was caused by problems with Unit 29's patio and deck,*fn2 which were the maintenance responsibility of Stein-O'Brien, not the Association.

In support of her position, Stein-O'Brien testified that water began leaking into Unit 29 in 1999. It began with a leak in the small bedroom on the top floor of the unit under the common element roof and then spread. Stein-O'Brien spoke to the Association's president and other officers about the problem, and they sent someone up to the roof to evaluate the problem, she believed. For example, she stated that in 2004, someone cut a hole in the roof above the small bedroom, but that hole was not fixed.*fn3 Stein-O'Brien stated that she undertook "numerous, numerous repairs" herself and hired a handyman, Keith Carrington, to make repairs, which he did between 2000 and 2005. Reproduced Record at 115a (R.R. ___). However, Carrington's repairs did not arrest the water problem.

In July 2004, Stein-O'Brien sent a letter to the Association complaining about the condition of the roof around the air-conditioning platform. The letter stated that if she did not receive a satisfactory response, she would do repairs herself.*fn4 Stein-O'Brien believed, when she wrote the letter, that the air- conditioning platform was the Association's responsibility to maintain. SteinO'Brien's letter did not suggest that the entire roof needed attention.

In July 2005, Joseph Hannigan, a home remodeler, replaced the roof over Unit 29, and this stopped the leaks coming into Unit 29 from the roof. However, water has continued to leak into a second-floor bedroom under the third floor deck. Stein-O'Brien testified that the deck was the Association's responsibility because it had paid for flood insurance to cover damage to lower unit decks and had, in the past, accepted responsibility for maintaining decks and patios. Stein-O'Brien acknowledged that there was nothing in the written contractthat required the Association to maintain the decks of Unit 29. Nevertheless, she believed the Association minutes would record the Association's agreement to maintain the decks. She did not, however, offer those minutes into evidence.

Stein-O'Brien testified about the expenses she incurred as a result of the various leaks, and she offered several documents to corroborate those expenses. These documents included receipts from Lowe's and Home Depot that, according to Stein-O'Brien, were for materials used to repair Unit 29. Another document was her hand-written list recording a series of $200 cash payments, and their dates, that she made to Keith Carrington. The payments were made from September 2000 to October 2005 and totaled $14,400. Stein-O'Brien was unable to correspond a particular repair to a particular $200 payment, but she stated that they all addressed water problems in Unit 29. With respect to future repairs needed in Unit 29, Stein-O'Brien testified that she had received an estimate from James Lesher for various work to the interior of Unit 29, an estimate from Hannigan for work to the deck and, finally, an estimate from John Neill to re-paint the entire unit.

Stein-O'Brien then testified about her lost rental income. SteinO'Brien explained that in 1998 she entered into a two-year lease for Unit 29 at a rent of $1,500 per month. In May 2000, she released the Unit 29 tenants from their lease because one of them was getting married. She then started using Unit 29 to store her furniture and has not rented the unit since. At different times since May 2000, prospective tenants have approached her about Unit 29, and one such individual offered her $2,500 in monthly rent. However, Stein-O'Brien refused to rent Unit 29 in its "slum conditions," stating that "until I rectified the problem with the water, I was not willing to take the liability on of ruining someone else's possessions with water damage, and so I would not place someone in there." R.R. 141a-142a.*fn5 Stein-O'Brien requested damages for lost rental income in the amount of $174,000. At no point prior to trial did Stein-O'Brien inform the Association that she believed it was responsible for her lost rental income.

Joseph Hannigan testified about the condition of the sloped roof over Unit 29 and the repairs he made to it.*fn6 When Hannigan pulled up the roof shingles he saw numerous places where there had been water damage and observed that prior, unsuccessful repairs had been attempted. Hannigan found the air-conditioning platform to be rotting. When Hannigan removed the shingles placed over the bottom of the platform, he found rotted plywood. Hannigan replaced this rotted plywood as well as plywood in several other spots before he reshingled the entire roof. He also replaced the air-conditioning platform. The total cost of Hannigan's work was $10,110. He gave Stein-O'Brien an estimate of $3,200 to replace the third floor deck, which still needs to be done.

Association president, Dan Grasso, testified that in 1999, he notified the condominium owners in writing that they were responsible for the repair and maintenance of their air-conditioning platforms. In each unit, wires from the air-conditioning unit pass down through the roof to the utility room below. Grasso testified that the air-conditioning platform is not part of the roof; rather, it is a separate structure that is the responsibility of the unit owner. In support, he referenced the Code of Regulations and the Declaration of the Condominium at the Court at Old Swedes, which were admitted as the operative contract writings.

At the close of the evidence, the trial court directed a verdict in favor of Stein-O'Brien on her contract claim for direct and consequential damages, finding that her losses were all caused by the "defective roof;" the court also awarded her attorney's fees. R.R. 193a-194a. On the other hand, the trial court directed a verdict in favor of the Association on Stein-O'Brien's unpaid condominium fees and its attorney's fees. The trial court directed the jury to determine the amount of damages and attorney's fees owed by the Association to Stein-O'Brien, as well as the amount she owed the Association.

The jury awarded the Association $12,000 on its claim for unpaid condominium fees and $0 for its attorney's fees and costs. The jury awarded Stein-O'Brien $32,000 for past damages to Unit 29; $213,000 for consequential damages (lost rental income); $28,000 for future damages; and ...

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