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Clint N. Lewis v. Delp Family Powder Coatings

March 31, 2011

CLINT N. LEWIS, PLAINTIFF,
v.
DELP FAMILY POWDER COATINGS,INC., ET AL.,
DEFENDANTS.



The opinion of the court was delivered by: Magistrate Judge Lisa Pupo Lenihan

ECF Nos. 46 & 49

OPINION

LENIHAN, M.J.

Currently before the Court for disposition are two motions for summary judgment in this diversity case, which arises out of Defendants' alleged lease and use of commercial real property owned by Plaintiff located in Fenelton, Pennsylvania. Defendants have moved for partial summary judgment (ECF No. 46) on three bases: (1) Plaintiff has not and cannot produce sufficient evidence from which a jury could find that Defendants expressly contracted to pay Plaintiff's attorneys' fees, (2) Plaintiff's claims of negligence and promissory estoppel are not entitled to recovery of attorneys' fees, and (3) Plaintiff's negligence claim is barred by the gist of the action doctrine. Plaintiff has also filed a motion for summary judgment (ECF No. 49), arguing that there are no material facts in dispute and that he is entitled to judgment as a matter of law, on the following points: (1) Defendants breached the oral lease agreement and are responsible for unpaid (abated) rent, unauthorized alterations, and property damage; (2) Defendants' negligence in operating and maintaining their powder coating operation caused property damage to Plaintiff's building in the form of damaged roof shingles, sheathing and trusses, concrete slab, and unpermitted disposal of industrial wastewater in violation of Pennsylvania law; and (3) Plaintiff's evidence is undisputed that his property suffered a diminution of value due to the extensive property damage.

For the reasons set forth below, the Court will grant Defendants' Motion for Partial Summary Judgment motion, and will deny Plaintiff's Motion for Summary Judgment.

I. BACKGROUND AND PROCEDURAL HISTORY

At all relevant times, Plaintiff, Clint N. Lewis, owned commercial real estate located at 1605 Route 422 E, Fenelton, Pennsylvania 16034 (the "Subject Property"). (Am. Compl. ¶ 1, ECF No. 20.) At the time this lawsuit was filed, Plaintiff resided in Westfield, Indiana. Defendants Clyde C. Delp and Donna Delp are husband and wife and reside in Butler, Pennsylvania. Defendants Walter A. Delp and Carol Delp are husband and wife and reside in East Kittanning, Pennsylvania. Defendants Clyde C. Delp, Donna Delp, Walter A. Delp, and Carol Delp are collectively referred to as the "Delps" or the "Individual Defendants." Defendant Delp Family Powder Coatings, Inc. ("DFPC") was incorporated on or about April 8, 2002 under Pennsylvania law,*fn1 with its principal place of business in Fenelton, Pennsylvania, and operated a powder coating business on the commercial property owned by Plaintiff. Clyde Delp and Walter Delp are the President and Vice-President of DFPC, respectively. (Clyde Delp Dep. at 207.) Plaintiff seeks damages in excess of $75,000 for the alleged damage to his property and for the diminution in value to the property.*fn2

In or about January of 2002, Plaintiff's father, Nick Lewis, entered into discussions with Clyde Delp and Walter Delp regarding the leasing of the Subject Property to the Defendants for the purpose of operating a family powder coating business, which had yet to be formed. In February of 2002, Clyde Delp tendered $500.00 cash to Nick Lewis as a deposit to hold the building until February 25, 2002. Although Nick Lewis and Clyde and Walter Delp agreed that $3,000.00 per month was a fair price for rent of the Subject Property, in early March of 2002, they negotiated a reduction in the rent for the first six months to $1,500.00 per month.*fn3 On March 7, 2002, Clyde Delp sent Nick Lewis a check for $1,500.00 for the first month's rent written from the personal checking account of Clyde and Donna Delp. On April 5, 2002, Walter Delp paid $1,500.00 for the April rent by personal check from the account of Walter and Carol Delp.Clyde and Walter Delp, initially as the incorporators of DFPC, and subsequently, as its officers, intended that the only parties to the lease would be themselves, as officers of DFPC, and Nick Lewis. (Clyde Delp Dep. at 99.) However, Plaintiff maintains that all of the Individual Defendants, as well as DFPC, were parties to the lease agreement. Clyde and Walter Delp further maintain that they entered into an oral lease with Nick Lewis upon the understanding that a written lease agreement would be entered into after the corporation was formed. However, it appears that a written lease agreement was never negotiated nor executed.

Nonetheless, the Delps continued operating the powder coating business for over four years under the oral lease. On May 4, 2006, Plaintiff's attorney at that time, David A. Crissman, Esquire, sent a letter to Clyde Delp and family and Walter Delp and family, in which he gave the Defendants an ultimatum-either pay the $9,000 allegedly due in abated rent and sign a written lease agreement within thirty days, or the oral lease would be terminated and Defendants would have to vacate the premises.*fn4 (Pl.'s App. in Supp. Resp. Concise Stmt., Ex. 4, ECF No. 57-1.) Defendants disputed that they owed $9,000.00 in abated rent, and continued to occupy the premises and pay rent through September 2006.

After Defendants vacated the Subject Property in September of 2006, Plaintiff and/or Nick Lewis inspected the property and purportedly found damage to the Subject Property, which Plaintiff claims consisted of damage to the roof trusses, roof decking, shingles, walls, footers, concrete pads, septic system, electrical service and wiring, phone lines, storage shelves and damages arising out of Defendants' failure to properly dispose of hazardous materials at the Subject Property. Defendants dispute that their powder coating operation caused the alleged damages, and submit that many of the building components were already damaged when they took possession in March of 2002, and that the electrical and other systems were in working order when they vacated the premises. Plaintiff claims he decided to sell the property "as is" for a diminished value, because the cost of the repairs would have been too high. Although the Subject Property allegedly had a fair market value of $1,100,000 (exclusive of property damage and liability, and based on the appraisal by Plaintiff's real estate expert Kelly), Plaintiff sold the property for substantially less, in "as is" condition, for $590,000.

Plaintiff filed a claim for the property damage with his insurance company, Atlantic States Insurance Company ("Atlantic States"), which denied the claim. After Atlantic States denied his claim Plaintiff sued Atlantic States in this District, at Civil Action No. 2:08-cv-1040.*fn5

Shortly thereafter, Plaintiff filed the instant lawsuit against the Defendants, asserting three claims-breach of contract against the Individual Defendants (Count I); negligence against all Defendants (Count II); and promissory estoppel against the Individual Defendants (Count III). (Am. Compl., ECF No. 20.) In response, Defendants filed three counterclaims-in the first and second counterclaims, DFPC filed a breach of contract claim and quantum merit claim, respectively, against Plaintiff; in the third counterclaim, the Delps brought a wrongful use of civil proceedings claim against Plaintiff. (Ans., ¶¶ 81-93, ECF No. 21.) After the close of discovery, Defendants filed a Motion for Partial Summary Judgment (ECF No. 46), and Plaintiff filed his own Motion for Summary Judgment (ECF No. 49). The motions have been fully briefed and responded to, and thus, are ripe for disposition.

II. STANDARD OF REVIEW

Summary judgment is appropriate if, drawing all inferences in favor of the nonmoving party, "the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law." FED.R.CIV.P. 56(c). Summary judgment may be granted against a party who fails to adduce facts sufficient to establish the existence of any element essential to that party's case, and for which that party will bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

More specifically, the moving party bears the initial burden of identifying evidence which demonstrates the absence of a genuine issue of material fact. Once that burden has been met, the nonmoving party must set forth "specific facts showing that there is a genuine issue for trial" or the factual record will be taken as presented by the moving party and judgment will be entered as a matter of law. Matsushita Elec. Indus. Corp. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (quoting FED.R.CIV.P. 56(e)) (emphasis added by Matsushita Court). An issue is genuine only "if the evidence is such that a reasonable jury could return a verdict for the non-moving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

III. DEFENDANTS' MOTION FOR PARTIAL SUMMARY JUDGMENT

A. Relevant Facts

The facts material to Defendants' motion for partial summary judgment are derived largely from Plaintiff's deposition testimony. Specifically, Defendants point to Plaintiff's testimony that the Delps entered into an oral lease with him for the use of the Subject Property to operate a family powder coating business. (Defs.' Concise Stmt. Material Facts in Supp. Mot. Partial Summ. J. ("Defs.' CSMF in Supp. SJ") at ¶3, ECF No. 47; Pl.'s Responsive Concise Stmt. Material Facts ("Pl.'s Resp. CSMF") at ¶¶ 2-3, ECF No. 57.) Plaintiff further testified that DFPC was not a party to the oral lease. (ECF No. 47, ¶2; ECF No. 57, ¶¶2-3.) Although the parties discussed their intent to enter into a written lease agreement, one was never executed nor negotiated. (ECF No. 47, ¶¶1, 7-8; ECF No. 57, ¶¶1, 7-8.)*fn6 Specifically, Plaintiff testified that the proposed lease agreement attached to his Amended Complaint as Exhibit I, which provided in part for attorneys' fees, was never negotiated between the parties. (ECF No. 47, ¶ 7; ECF No. 57, ¶ 7.) In addition, there is no written agreement between Plaintiff and the Individual Defendants and/or DFPC regarding payment of his attorneys' fees.

In paragraph 29 of his Amended Complaint, Plaintiff testified that he was referring to both the Individual Defendants and DFPC when he alleged that "[p]ursuant to the agreement between the parties, Defendants assumed all obligations, covenants and conditions of the Tenants under the oral lease and were advised that hazardous materials were not permitted on the Subject Property." (ECF No. 47, ¶ 5; ECF No. 57, ¶ 5.) In paragraph 32 of his Amended Complaint, Plaintiff testified that he was referring to both the Individual Defendants and DFPC when he alleged that "[t]he Lease places all responsibility for repairs and maintenance of the Subject Property, including both structural and non-structural elements, solely on Defendants, the Tenants." (ECF No. 47, ¶ 6; ECF No. 57, ¶ 6.)

B. Discussion

Defendants move for summary judgment on two issues-whether Plaintiff is entitled to recover his attorneys' fees from Defendants, and whether Plaintiff's negligence claim is barred by the gist of the action ...


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