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AMCO Ins. Co. v. Emery & Associates, Inc.

United States District Court, W.D. Pennsylvania

February 20, 2013

AMCO INSURANCE COMPANY, as Subrogee of Star Hotels, Inc., Plaintiff,
v.
EMERY & ASSOCIATES, INC., Premier Hospitality Group-Kittanning, L.P., General Hospitality, Inc., and Kratsa Corporation, Defendant.

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Steven L. Smith, Law Offices of Steven L. Smith, P.C., Swarthmore, PA, for Plaintiff.

Kyle T. McGee, Robert A. Arcovio, Margolis Edelstein, Jeffrey R. Hantz, W. Alan Torrance, Jr., Dickie McCamey & Chilcote, P.C., Pittsburgh, PA, for Defendants.

MEMORANDUM OPINION

DAVID STEWART CERCONE, District Judge.

I. INTRODUCTION

Plaintiff, AMCO Insurance Company (" AMCO" ) filed this action as Subrogee of its insured Star Hotels, Inc. (" Star Hotels" ), against Defendants, Emery & Associates, Inc. (" Emery" ), Premier Hospitality Group-Kittanning, L.P. (" Premier" ), General Hospitality, Inc. (" General" ) and Kratsa Corporation (" Kratsa" ) (collectively " Defendants" ), to recover monies paid as a result of a fire at Star Hotels' Comfort Inn (the " Comfort Inn" or the " hotel" ) located in East Franklin Township, Armstrong County, Pennsylvania. In a four (4) count complaint, AMCO asserts the following claims against the Defendants: (1) Negligence Per Se (Count I); (2) Negligence (Count II); (3) Breach of Contract (Count III); and (4) Breach of Warranty (Count IV). Emery has filed a motion for summary judgment, and Premier, General and Kratsa (hereinafter referred to as the " Kratsa Defendants" ) have also filed a motion for summary judgment. AMCO has responded and the motions are now before the Court.

II. STATEMENT OF THE CASE

In December of 1994, Premier, General and/or Kratsa purchased the property known as 13 Hilltop Plaza, East Franklin Township, Armstrong Count, Pennsylvania, with the purpose of developing, constructing and operating a hotel. Emery Concise Statement of Material Facts (" Emery CSMF" ) ¶ 6; AMCO Concise Statement of Material Facts (" AMCO CSMF" ) ¶ 6. Emery was retained to act as the general contractor for the construction of the Comfort Inn. Emery CSMF ¶ 7; AMCO CSMF ¶ 7. Architectural Alliance prepared a set of plans for the hotel, identifying it as Project # 94105, and such plans were approved by the Commonwealth of Pennsylvania Department of Labor and Industry (" Pa. L & I" ) on or about December 28, 1994. Court's Memorandum Opinion July 2, 2012 (" Memo Op." ) p. 3. The hotel was completed in January, 1996, and an Occupancy Certificate was issued by Pa. L & I on January 12, 1996. Id.; Emery CSMF ¶¶ 9 & 12; AMCO CSMF ¶¶ 9 & 12.

On or about January 4, 2001, the Comfort Inn was purchased from Premier,

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General and/or Kratsa by an entity known as Midmark Star Properties, Inc., which was grouped together with several other hotels owned by the same individuals, and for both convenience and insurance purposes, was referred to collectively as Star Hotels, Inc. Emery CSMF ¶ 15; Patel Depo. pp. 6-8; AMCO CSMF ¶ 15. The property was insured by Star with AMCO. Memo Op. p. 3. On December 13, 2008, a fire occurred at the Comfort Inn causing extensive damage. Complaint ¶ 12. Based on the claims made under Star's insurance policy, AMCO made payments totaling $4,389,883.00. Memo Op. p. 3.

The Pa. L & I approved the architectural drawings for the Comfort Inn as being in compliance with the Pennsylvania Fire and Panic Act. Kratsa CSMF ¶¶ 7 & 8; AMCO CSMF ¶¶ 7 & 8. AMCO, however, alleges that in constructing the hotel, Emery violated the Pennsylvania Fire and Panic Act, certain provisions of the Pennsylvania Code which required draftstopping (vertical firewalls) and an automatic fire sprinkler system, and provisions of the East Franklin Township Building Code. Complaint ¶ 19.

III. LEGAL STANDARD FOR SUMMARY JUDGMENT

Pursuant to Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment shall be granted when there are no genuine issues of material fact in dispute and the movant is entitled to judgment as a matter of law. To support denial of summary judgment, an issue of fact in dispute must be both genuine and material, i.e., one upon which a reasonable fact finder could base a verdict for the non-moving party and one which is essential to establishing the claim. Anderson v. Liberty Lobby, 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). When considering a motion for summary judgment, the court is not permitted to weigh the evidence or to make credibility determinations, but is limited to deciding whether there are any disputed issues and, if there are, whether they are both genuine and material. Id. The court's consideration of the facts must be in the light most favorable to the party opposing summary judgment and all reasonable inferences from the facts must be drawn in favor of that party as well. Whiteland Woods, L.P. v. Township of West Whiteland, 193 F.3d 177, 180 (3d Cir.1999), Tigg Corp. v. Dow Corning Corp., 822 F.2d 358, 361 (3d Cir.1987).

When the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). In the language of the Rule, the nonmoving party must come forward with " specific facts showing that there is a genuine issue for trial." FED. R. CIV. P. 56(e). Further, the nonmoving party cannot rely on unsupported assertions, conclusory allegations, or mere suspicions in attempting to survive a summary judgment motion. Williams v. Borough of W. Chester, 891 F.2d 458, 460 (3d Cir.1989) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). The non-moving party must respond " by pointing to sufficient cognizable evidence to create material issues of fact concerning every element as to which the non-moving party will bear the burden of proof at trial." Simpson v. Kay Jewelers, Div. Of Sterling, Inc., 142 F.3d 639, 643 n. 3 (3d Cir.1998), quoting Fuentes v. Perskie, 32 F.3d 759, 762 n. 1 (3d Cir.1994).

IV. DISCUSSION

A. Negligence Per Se

In their motions for summary judgment, Defendants argue that AMCO's claim

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based upon negligence per se must be dismissed as a matter of law. In its Memorandum Opinion and Order dated July 2, 2012, this Court found that the alleged violations of the Fire and Panic Act and/or local building codes did do not establish negligence per se and dismissed Count I of AMCO's complaint. Therefore, there is no need to address negligence per se in this Opinion.

B. Negligence

In Count II of its complaint, AMCO asserts a common law claim of negligence against all Defendants. AMCO contends that the Defendants were negligent in failing to comply with the Pennsylvania Fire and Panic Act (the " FPA" ), the 1993 BOCA National Building Code, and the plans approved by Pa. L & I. Specifically, AMCO contends Defendants: (1) used oriented strand board (" OSB" ) instead of fire retardant treated (" FRT" ) wood for structural members as required by the 1993 BOCA Code and the FPA; (2) failed to provide an automatic sprinkler system or fire detectors in the attic; (3) exceeded maximum spacing for draftstops; and (4) failed to build in accordance with the approved plans.

1. The Kratsa Defendants

The Kratsa Defendants argue that AMCO's negligence claim must be dismissed as a matter of law because the tort based claims are extinguished by the existence of a contract for the sale of the hotel between AMCO's subrogor and the Kratsa Defendants which defines the duties, if any, owed between the parties.

Pennsylvania courts use two methods to determine whether tort claims that accompany contract claims should be allowed as freestanding causes of action or rejected as illegitimate attempts to procure additional damages for a breach of contract: the " gist of the action" test and the " economic loss doctrine" test. Bohler-Uddeholm America, Inc. v. Ellwood Group, Inc., 247 F.3d 79, 103 (3rd Cir.2001), cert. denied, Ell ...


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