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Community Preschool & Nursery of East Liberty, LLC v. Tri-State Realty

May 18, 2010

COMMUNITY PRESCHOOL & NURSERY OF EAST LIBERTY, LLC PLAINTIFF,
v.
TRI-STATE REALTY, INC., DEFENDANT.



The opinion of the court was delivered by: Arthur J. Schwab United States District Judge

ELECTRONICALLY FILED

MEMORANDUM OPINION RE: DEFENDANT'S MOTION FOR SUMMARY JUDGMENT (DOC. NO. 54)

I. Introduction and Background

A. Introduction

At issue in this case is what caused the fire at a building owned by defendant, the first floor of which was leased to plaintiff to use as a child-care facility, and the allocation of risks set forth in their Lease Agreement. Because the record is inconclusive as to the cause of the fire and is conclusive that defendant did not breach the Lease Agreement when it terminated the lease following the fire, pursuant to the terms of said agreement, the Court will grant summary judgment for defendant on plaintiff's negligence and breach of contract claims under Pennsylvania common law.

B. Procedural History

Plaintiff Community Preschool & Nursery of East Liberty ("Community Preschool") is a limited liability company that provides a preschool service for young children in Pittsburgh, Pennsylvania. Defendant Tri-State Reality, Inc. ("Tri-State") is a real estate company with its principle place of business in Highland Heights, Ohio.

Asserting diversity jurisdiction pursuant to 28 U.S.C.§ 1332, Community Preschool filed a complaint on July 28, 2009, under Pennsylvania common law alleging that defendant was at fault for a fire at plaintiff's place of business and for damages it incurred as a result thereof, seeking punitive and compensatory damages. Community Preschool's initial complaint raised four causes of action*fn1 namely negligence, negligence per se, intentional trespass and breach of contract. Essentially, the complaint asserted that after Community Preschool had made substantial improvements to the first floor of the building, including new electrical wiring, and occupied the leased premises on a seven year lease, Tri-State rented the second floor of the building to tenants, even though Tri-State had not procured an occupancy permit for the second floor.

Moreover, plaintiff claims that the second floor tenants experienced problems with the electrical service in the second floor, which contained electrical wiring of unknown origin that was not of commercial quality and "was not up to current building code standards and/or was in need of complete replacement," and that Tri-State leased the second floor when it knew or should have known that the electrical wiring throughout the second floor was "not commercial in nature, was sheathed cable or Romex, and/or [was] not up to current building code standards and was in need of complete replacement." Complaint, (Doc. No. 1) at ¶¶ 24-26.

On July 17, 2008, at approximately 8:30 pm, a fire started on the second floor in the ceiling above the space leased and occupied by The Adolescence Preparing 4 Excellence ("APEX") of Pittsburgh, and a City of Pittsburgh fire investigation report attached to the Complaint indicates that the origin of the fire was "an electrical arc caused by faulty wiring in the ceiling" of the APEX office. Complaint, (Doc. No. 1) at ¶¶ 28 and 29. Plaintiff avers that the second floor was destroyed by fire, that the first floor leased premises "was rendered unsuitable for use as a daycare center due to extensive smoke and water damage," and that plaintiff was forced to vacate the premises and discontinue the operation of its business at that location. Complaint, (Doc. No. 1) at ¶¶ 32 and 33.

Plaintiff further claims that Tri-State knew or should have known that "occupancy of the second floor of the Building was in violation of the Building Code of the City of Pittsburgh on the basis that the Certificate of Occupancy strictly prohibited occupancy on the second floor of the Building and clearly indicated that the second floor was to remain vacant," that it knew or should have known occupancy of the second floor "created an unreasonable risk of fire as a result of the dangerous condition of the electric wiring throughout the entire second floor," and that Tri-State was "charged with a high degree of care with regard to occupancy on the second floor of the Building, knowing that the first floor of the Building was occupied by up to 60 pre-school children (ages 2 1/2 and older) and 40 infants" each day of the work week. Complaint, (Doc. No. 1) at ¶¶ 35-37.

Tri-State filed a Partial Motion to Dismiss plaintiff's claims for negligence per se and for trespass at Counts II and III with prejudice. Plaintiff agreed that negligence per se is not a separate cause of action In Pennsylvania, and the Court dismissed Count II. Although plaintiff disputed Tri-State's argument that it failed to state a claim for trespass, the Court agreed with defendant and dismissed Count III with prejudice. Memorandum Order, October 6, 2009, (Doc. No. 20) at 5-7.

On October 10, 2009, plaintiff filed an amended complaint, defendant answered, and discovery took place. On April 28, 2010, defendant filed a motion for summary judgment arguing that plaintiff cannot establish essential elements of its negligence cause of action or that defendant breached the Lease Agreement.

C. Statement of Facts

Community Preschool and Tri-State entered into their Lease Agreement on December 31, 2003. The Lease Agreement stipulated that Community Preschool would lease the bottom floor of a two-story commercial office building located in Pittsburgh, Pennsylvania. The term of the Lease Agreement was seven years with a renewal option of another seven years. Community Preschool intended to use the property to operate a child-care facility.

Two crucial provisions of the lease are the express warranty of quiet enjoyment and the fire and casualty provision. The quiet enjoyment provision states:

By paying the rent and observing all agreements, terms and conditions herein, Tenant shall peaceably and quietly have, hold and enjoy the Premises during the term of this lease and any extension or renewal, subject to the provisions hereof. Lease Agreement, (Doc. No. 24-1) at ¶ 16.

The fire and casualty provision states:

In the event the Premises or the building containing the Premises are partially damaged by fire or other casualty so as to render the Premises unsuitable for use for which the same are leased, rent will be abated until Landlord shall have restored the same to substantially their former condition.Provided, however, that if landlord elects not to repair such damage, or if such repairs shall not have been completed within 270 days, either party may terminate this lease and rent will be apportioned as of the date of termination.

Lease Agreement, (Doc. No. 24-1) at ¶ 21.

On June 30, 2004, after the Lease Agreement was signed but before Community Preschool occupied the first floor of the building, Tri-State received a Certificate of Occupancy from the City of Pittsburgh Bureau of Building Inspection for the first floor of the two story building. The same Certificate of Occupancy also stated "2nd floor to remain vacant." Certificate of Occupancy, Plaintiff's Concise Statement of Material Facts, (Doc. No. 63) at ¶ 27 and Appendix 4.

On April 1, 2007, Tri-State leased out part of the second floor of the building to APEX for a five-year period. On October 5, 2007, Tri-State leased out another part of the second floor to a Pennsylvania State Representative for a two-year period. Tri-State did not receive a Certificate of Occupancy from the City of Pittsburgh for use of the second floor and Tri-State did not get the electrical system inspected before allowing these occupants to use the premises.

On April 23, 2007, an APEX employee complained to Tri-State about electrical outlets not working. Tri-State responded to this complaint by stating "I do not believe there are any problems with the meter because our electrician organized and updated all of the wiring and meters in the building when the preschool moved in." Plaintiff's Supplemental Opposition Papers, (Doc. No. 66) at ¶ 5. On July 17, 2008, the fire that started in the second floor overtook the two story building and damaged Community Preschool's property and rendered it unusable to run its business.

City of Pittsburgh Fire Department investigative reports at the time of the incident and subsequent expert opinions were consistent in locating the start of the fire in the electrical wiring above the office space of an APEX employee, on the second floor. The various experts agreed the fire started in that area with an electrical malfunction, but no one ventured an opinion about the actual cause of the malfunction. Defendant's expert witnesses, Eugene W. Bartel, Ph.D., P.E., C.F.I. & B.C.F.E. and Aaron T. Bartel, Eng. & E.I.T. of Bartel & Associates, reviewed the reports of Detectives Michael Burns and Bryan Marrone, photographs that were taken at the scene of the fire, the Amended Complaint, and other reports and investigations, and asserted that regardless of whether anyone was on the second floor, the faulty wiring would have been in use for heating, ventilation, and air conditioning of whole the building. Investigation Report by Bartel & Associates, (Doc. No. 59) at 10.

On April 27, 2009, Tri-State sent a letter to Community Preschool asserting Tri-State's intention to terminate the lease pursuant to the fire and casualty provision of the Lease Agreement. On July 28, 2009, ...


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