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Mikhail v. Tri-State Realty

November 18, 2010


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



Before the Court is Defendant‟s Defendant, Tri-State Realty, Inc.‟s, Motion to Dismiss the Plaintiffs‟ Complaint pursuant to Fed.R.Civ.P. 12(b)(6). Plaintiffs, Irini Mikhail and the Adolescents Preparing 4 Excellence ("APEX") of Pittsburgh, sued Defendant in the Court of Common Pleas of Allegheny County, Pennsylvania, claiming that a fire in the building Plaintiffs rented from Defendant was caused by faulty or defective wiring which Defendant should have known about had it kept the building adherent to building code standards. Plaintiffs‟ Complaint asserts a claim for negligence and breach of contract. See doc. no. 1-5.

Defendant removed the lawsuit to this Court under 28 U.S.C. §1332, claiming complete diversity of the parties and averring that the damages will exceed $75,000. See doc. no. 1, ¶¶ 9-10. Subsequent to removing this case, Defendant filed the instant Motion to Dismiss under F.R.Civ.P. 12(b)(6) solely with respect to Plaintiffs‟ breach of contract claim, arguing that Plaintiffs‟ Complaint fails to alleged any contractual duty owed to them by Defendant. In addition, Defendant requests that Plaintiffs‟ claim for punitive damages be dismissed arguing that Plaintiffs failed to state sufficient grounds upon which punitive damages could be granted.

Plaintiffs, in their response to Defendant‟s Motion to Dismiss, counter that Defendant breached paragraph 8 of the written lease it had with Plaintiff APEX, when Defendant failed to keep the condition of the leased space in good order and this failure led to an electrical fire. Plaintiffs further contend that they were entitled to quiet enjoyment of the property under paragraph 21 of this same written lease agreement, but due to Defendant‟s actions and/or inactions, Defendant breached this portion of the lease.

Plaintiffs also contend that the punitive damages sought should not be dismissed at this stage of the proceedings due to the fact that they have plausibly pled a claim in support of such damages. Specifically, Plaintiffs‟ complaint avers that: (1) Defendant knew it was not legally permitted to lease the second floor space to Plaintiffs and another second floor tenant because it had no Occupancy Permit from the City of Pittsburgh for that space; and (2) when Plaintiffs and the other second-floor tenant reported their electrical service problems to Defendant, Defendant ignored its duty to repair and/or replace the electrical wiring. Plaintiffs contend Defendant recklessly placed innocent individuals -- i.e. young children who frequented the daycare facility/preschool on the first floor of Defendant‟s building, and the youths to which Plaintiffs‟ catered in its second-floor facility -- by intentionally refusing to respond to Plaintiffs‟ complaints about the electrical service.

For the reasons that follow, this Court will grant in part and deny in part Defendant‟s Motion to Dismiss.

I. Background

The following facts are accepted as true for solely for the purposes of this Motion to Dismiss.

Plaintiff Mikhail resides in Pittsburgh, Pennsylvania, is a licensed professional counselor, and is the president of APEX, a non-profit corporation which operates a youth services program. Doc. no. 1-5, ¶¶ 1, 7. Defendant owned the office building where Plaintiff Mikhail rented space to conduct private counseling and where APEX ran its program and operated a Youth Center. Doc. no. 1-5, ¶¶ 5, 10.

Plaintiff APEX entered into a written lease agreement with Defendant on April 1, 2007 ("Leased Premises") for a term of five years. Doc. no. 1-5, ¶¶ 5-6. Plaintiff Mikhail orally agreed with Defendant to rent a back room adjacent to the Leased Premises to conduct private counseling sessions. Doc. no. 1-5, ¶ 8. All of the space rented by Plaintiffs was located on the second floor of the Defendant‟s office building.*fn1 Doc. no. 1-5, ¶ 5. Plaintiffs purchased equipment, furniture, and fixtures in order to conduct their respective businesses. Doc. no. 1-5, ¶ 11.

In 2004, Defendant applied for and received a Certificate of Occupancy from the City of Pittsburgh for the first floor of the office building. Doc. no. 1-5, ¶¶ 13-15. Defendant did not obtain an occupancy permit a Certificate of Occupancy from the City of Pittsburgh for the second floor of the office building where the Plaintiffs were located. Doc. no. 1-5, ¶ 19.

After taking possession of the leased premises Plaintiffs (and another second floor tenant) experienced problems with the electric service to their respective leased space, and reported these problems to Defendant. Doc. no. 1-5, ¶ 20. Plaintiffs contend the electrical wiring contained on the second floor of the office building was not commercial grade in nature, was not up to the current building standards, and was in need of replacement. Doc. no. 1-5, ¶ 21. Plaintiffs contend that Defendant had knowledge of the wiring problems and intentionally, recklessly, and maliciously ignored them. Doc. no. 1-5, ¶ 23.

On July 17, 2008 a fire started on the second floor in the ceiling above the space occupied by Plaintiff APEX. Doc. no. 1-5, ¶ 24. The origin of the fire was an electric arc which was caused by faulty wiring. Doc. no. 1-5, ¶ 25. The second floor of the office building was destroyed by the fire and all of the space occupied by Plaintiffs was rendered unusable due to smoke, fire, and water damage. Doc. no. 1-5, ¶ 28. Plaintiffs were forced to vacate the leased space and all items of personal property were destroyed. Doc. no. 1-5, ¶ 29. Plaintiffs ...

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