SUNLIGHT ELECTRICAL CONTRACTING CO., INC.
JOHN J. TURCHI, JR., et al.
Stewart Dalzell, J.
On May 30, 2008, Sunlight Electrical Contracting Co., Inc. ("Sunlight"), brought this case in the Court of Common Pleas of Philadelphia County, Pennsylvania. Notice of Removal, Ex. B. Sunlight, a construction subcontractor, sought $1, 034, 581.80 for alleged non-payment of fees for construction services it provided to the defendants.
The defendants removed to this Court, asserting federal question jurisdiction on the basis of 28 U.S.C. § 1331 because plaintiff's claims included a claim for civil RICO under 18 U.S.C. § 1964(c) . Notice of Removal at 1. Sunlight invokes this Court's supplemental jurisdiction over its state law claims pursuant to 28 U.S.C. § 1367.
In January of 2009 defendants 23S23 and CHC LP filed a third-party complaint against Hunter Roberts Construction Group, Inc. alleging that to the extent 23S23 and CHC LP are liable to Sunlight for nonpayment related to Sunlight's work on one of the construction projects, located in Philadelphia at 23 South 23rd Street, such liability arose out of the errors of Hunter Roberts, the construction manager for that project. Third Party Comp. ¶¶ 33-39. 23S23 and CHC LP thus sought indemnification from Hunter Roberts on those claims. Id. at ¶¶ 63-64.
Discovery in the case closed in September of 2011, and the parties filed a flurry of motions, including Sunlight's motion to amend its complaint. On April 24, 2012, we granted Sunlight's motion to amend in part. Sunlight promptly filed an amended complaint in which it reduced the scope of the action. While Sunlight, in its original complaint, sought damages based on alleged nonpayment for work it performed at 23 South 23rd Street, 400-414 Walnut Street, 1930-34 Chestnut Street, and 1700 Walnut Street, its amended complaint seeks damages only for nonpayment on the 23 South 23rd Street project.
The complaint as amended seeks damages from John Turchi, Jr., Turchi, Inc., Carriage House Condominiums, L.P. ("CHC LP"), Carriage House Condominiums, G.P., Inc. ("CHC GP"), and 23S23 Construction, Inc. ("23S23"). Sunlight asserts claims for breach of contract and violations of the Pennsylvania Contractor and Subcontractor Payment Act ("CASPA"), 73 Pa. Cons. Stat. Ann. §§ 501, et seq. against 23S23 (Count I), Am. Comp. ¶¶ 47-54; a claim for breach of contract/implied contract and CASPA violations against Turchi, Inc., CHC LP, and CHC GP for nonpayment of invoices (Count II), Am. Comp. ¶¶ 55-67; the same claims against CHC LP, CHCH GP, Turchi, Inc., and 23S23 for nonpayment of invoices and nonpayment of costs incurred after the end of the contractual period (Count III), Am. Comp. ¶¶ 68-76; claims of unjust enrichment against Turchi, Inc., CHC LP, and CHC GP for nonpayment of costs incurred when Sunlight customized two units at 23 South 23rd Street (Count IV), Am. Comp. ¶¶ 77-83; and claims against John Turchi, Jr. for violations of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961-1968 ("RICO") (Count VI), Am. Comp. ¶¶ 116-144. Sunlight also brings a claim of "Piercing the Corporate Veil; Alter Ego; Fraud" against John Turchi, Jr. (Count V), Am. Comp. ¶¶ 84-115, and asserts an alter ego theory against Turchi, Inc. in Counts II and III.
Before us now are two motions for summary judgment. Defendants John Turchi, Jr., Turchi, Inc., CHC LP, and CHC GP("defendants") move for partial summary judgment on Sunlight's amended complaint seeking judgment in their favor on the veil piercing claims at Counts II, III, and V, and on Sunlight's civil RICO claim at Count VI. Third-party defendant Hunter Roberts Construction Group, LLC ("Hunter Roberts") moves for summary judgment on the third-party complaint. We first consider the defendants' motion for summary judgment on the RICO claim because this claim constitutes the sole basis for our original jurisdiction.
I. Defendants' Motion for Summary
Judgment on Sunlight's RICO Claim
Under Fed.R.Civ.P. 56(a), "[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." A party opposing a motion for summary judgment "must set forth specific facts showing that there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986) (quoting Fed.R.Civ.P. 56(e)).We will thus begin by reviewing the facts with regard to the RICO claim in Sunlight's amended complaint.
A. Factual Background
We rehearse the facts in detail so that we may apply the scrutiny needed to determine whether the facts reveal the requisite deceit to support Sunlight's civil RICO claim, or, instead, whether they merely suggest a breach of contract.
Sunlight Electrical Contracting Co., Inc. is an electrical design and construction subcontractor. Am. Comp. ¶ 15. On February 25, 2004, Turchi incorporated 23S23, Inc., CHC LP, and CHC GP in Delaware. Am. Comp. ¶¶ 130-31; Ans. ¶ 86 (admitting that the entities were formed in Delaware on that date). CHC GP is the general partner of CHC LP. Ans. to Am. Comp. ¶ 8.
When Sunlight and the defendants began working together on the 23 South 23rd Street project, Sunlight had already worked on four projects for Turchi. In 1999 Sunlight began working on a Turchi development at 1700 Walnut Street. Def. Mem. at 18. In 2000, Sunlight worked on a project at 1600 Sansom Street. Michael DiSandro Dep., PI. Br. in Opp. Ex. 56 at 51:18-22. In 2001, Sunlight began work on a project at 400 Walnut Street. PI. Br. in Opp. at 36. In 2002, Sunlight began work on a project at 1930-34 Chestnut Street. Id. All of those projects were in Philadelphia.
For the project at 400 Walnut Street, Sunlight claims that in August of 2001 Turchi put forward "Walnut Construction" as the "owner" and caused Walnut Construction to enter a contract with Sunlight for Sunlight to perform electrical work at 400 Walnut Street. PI. Br. in Opp. at 34. Sunlight avers that the owner was in fact 400 Walnut Associates, L.P. Am. Comp. ¶¶ 113-114. Walnut Construction did not have any assets of its own.Turchi Dep. in In re: 23S23 Construction, Inc., No. 09-12652, Bankr. E.D. Pa., at 103:10-13, PI. Br. in Opp, Ex. 58. Pursuant to that contract, Sunlight was to receive $827, 000, Am. Comp. ¶ 113, and Sunlight claims that it is still owed $203, 151.68 from that amount. PI. Initial Disclosures, PI. Br. in Opp., Ex. 57.
Sunlight avers that it entered into contracts with Affordable Fire Protection, Inc. and Walnut Construction to perform work on 1930-34 Chestnut Street, Am. Comp.¶¶ 117, 121, and it claims it is owed $261, 585.58 for that work. Dec. 17, 2007 Letter, PI. Br. in Opp., Ex. 57.
Sunlight also claims that Turchi failed to pay it in full for its work at 1700 Walnut Street, for which Sunlight avers that it is owed $152, 333.32. PI. Br. in Opp., Ex. 57.
Six of the other subcontractors for those projects are currently suing defendants for nonpayment. PI. Br. in Opp. at 33; Subcontractors' Complaints, PI. Br. Ex. 6-N-6-S, Ex. 60.
Sunlight received full payment for its work on the 16th Street and Sansom Street projects. See DiSandro Dep., PI. Br. in Opp. Ex. 56 at 48:18-23.
With regard to Turchi's statements about payment on the earlier projects, Sunlight claims that Turchi "never told Sunlight ... he did not intend to pay them in full; to the contrary, Turchi always expressed his intention to pay them." PI. Br. in Opp. at 35. In support of this proposition, Sunlight points to the deposition of Michael DiSandro, Sunlight's President. See Affidavit of Michael DiSandro, PI. Br. in Opp., Ex. 9, ¶ 1. In DiSandro's deposition he testified that, "[Turchi] kept saying to me, I'm going to get you paid. I'm going to get you paid.' But, you know, it was never said [sic] definitely answered." DiSandro Dep., PI. Br. in Opp. Ex. 56 at 44:6-9. DiSandro said he spoke with Turchi more than ten times regarding the payment for 1700 Walnut Street, id. at 45:6-8, and DiSandro described Turchi's statements as follows: "He said, 'Don't worry about it. I'm going to pay you.' But, you know, specifically, he always said -- he always blamed somebody else, he didn't have any money, he was short, overrun on a job, he had to refinance, all different -- different aspects." Id. at 46:17-23, see also id. at 48:25-49:9 (describing similar representations).
Furthermore, with regard to Turchi's representations about payment for the 1700 Walnut Street project, DiSandro testified that Turchi told him "that he was trying to refinance on 1700 and he needed money to be able to take care of the old bills. And eventually, he did do that. Later on he send me check [sic], like, two, three years later for that particular job."
Id . at 49:23-50:5.
With regard to 400 Walnut Street, DiSandro testified, "On 4th and Walnut in particular, he said he was going to try to sell the penthouse. As soon as he make the sale on it, he was going to pay me for it. But this stuff never come about." Id. at 78:20-24. At the end of 2003, Sunlight still believed Turchi owed it money for 400 Walnut and 1700 Walnut, see id. at 80:17-18.
DiSandro testified that he told Turchi that he was hesitant to work on the 23 South 23rd Street project because of Turchi's failure to make full payment on projects he had worked on in the past. DiSandro Aff., PI. Br. in Opp. Ex. 9, ¶ 2 . DiSandro said that after he expressed this concern Turchi paid Sunlight $100, 000 toward the balance due on 1700 Walnut Street, id. at ¶ 3.
On October 27, 2004, Sunlight provided a written proposal to Turchi, Inc. offering to work on the electrical design and construction for the renovation of 23 South 23rd Street for $1, 782, 400. Turchi, Inc. accepted the proposal on November 5, 2004. See November 5, 2004 Letter, PI. Br. in Opp. Ex. 59. On February 2, 2005, Sunlight entered into a written contract with 23S23 in which Sunlight agreed to perform electrical services for a guaranteed maximum price of $1, 782, 400. Design/Build Subcontract Agreement, Am. Comp. Ex. A ¶ 2(d) . According to the ...