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Frompovicz v. PTS Realty Holding, LLC

United States District Court, E.D. Pennsylvania

June 21, 2018

STANLEY F. FROMPOVICZ, JR., Plaintiff,
v.
PTS REALTY HOLDINGS, LLC, Defendant.

          MEMORANDUM OPINION

          WENDY BEETLESTONE, J.

         Plaintiff Stanley F. Frompovicz, Jr. develops spring-water land and supply sites. He asserts various tortious, contractual, and quasi-contractual claims against Defendant PTS Realty Holdings, LLC for an alleged misrepresentation it made upon execution of a contract. Specifically, Plaintiff alleges that, as he built a spring water bottling facility for Defendant, it failed to hire a professional engineer as required under their contract. Without an engineer's oversight, Plaintiff avers that he incurred excessive costs when building the facility. After Plaintiff and Defendant arbitrated their dispute related to this contract, an arbitration award was issued in Defendant's favor.

         Defendant has moved for summary judgment on all of Plaintiff's claims, contending that the arbitration resolved, or could have resolved, the issues in Plaintiff's Complaint. For the reasons that follow, Defendant's motion shall be granted, and Plaintiff's Complaint will be dismissed with prejudice on res judicata grounds. Plaintiff shall furthermore be ordered to show cause why sanctions should not issue for filing this duplicative lawsuit.

         I. FACTUAL BACKGROUND [1]

         The crux of this dispute centers on a contract that governed the construction of a facility in Brandonville, Pennsylvania. Plaintiff owned land that he intended to sell to Defendant after completing construction of the spring water bottling facility (the “Brandonville Plant”). However, besides developing spring water sites, Plaintiff purportedly had no experience in constructing any facilities. Defendant, by contrast, was allegedly a business familiar with the minutiae of realty and property development. The gravamen of Plaintiff's Complaint is that Defendant fraudulently induced the inexperienced Plaintiff to enter into the Brandonville Plant contract (the “Brandonville Contract”) whereby Plaintiff performed construction work without sufficient oversight.

         Signed in June 2011, the Brandonville Contract provided for the arbitration of any “Claim, ” which was specifically defined to include “other disputes and matters in question between [Plaintiff] and [Defendant] arising out of or relating to the Contract.” The Contract furthermore designated Charles Yourshaw of Yourshaw Engineering, Inc. as “Engineer” for the construction project. Plaintiff contends that Defendant was contractually required to enlist Yourshaw to design, monitor, and oversee the Brandonville Plant construction. Defendant did not do so, but, according to Plaintiff, assured him that a professional engineer would oversee the construction. Because no professional engineer was actually employed to monitor the construction process, Plaintiff avers that he incurred significant costs due to his inexperience.

         Eventually, the parties had a dispute about defects relating to Plaintiff's construction work for the Brandonville Plant. Defendant accordingly compelled arbitration, though Plaintiff attempted to stay the arbitration in state court. Plaintiff's petition to stay the arbitration was denied.

         The arbitration hearings took place on May 20, 2016 and September 20, 2016. Defendant sought compensatory damages for the various construction defects. Plaintiff, on the other hand, submitted no claims for the arbitrator's review. The arbitrator found, among other things, that Plaintiff violated the Brandonville Contract by “performing defective installation of facility water pipes, drain pipes, plumbing and heating. . . .” Consequently, the arbitrator concluded that Plaintiff was liable for over $1 million. Defendant then sought judicial confirmation of the arbitration award in state court. To date, the arbitration award has not yet been confirmed.

         Despite failing to assert any claims during the arbitration, Plaintiff now presses eight claims: fraudulent inducement (Count I); promissory estoppel (Count II); fraud (Count III); negligent misrepresentation (Count IV); fraudulent concealment (Count V); unjust enrichment (Count VI); intentional infliction of emotional distress (Count VII); and breach of the covenant of good faith and fair dealing (Count VIII). Each Count is predicated on Defendant's alleged promise to enlist the services of a professional engineer and its failure to do so.

         Defendant, in response, initially moved to dismiss all claims under Rule 12(b)(6) on, inter alia, res judicata grounds. However, because Defendant sought to introduce facts from the arbitration award itself, its motion to dismiss was converted into one for summary judgment. See Rycoline Products, Inc. v. C & W Unlimited, 109 F.3d 883, 886 (3d Cir. 1997). The parties then submitted supplemental briefing and additional materials relevant only to the res judicata defense.

         II. LEGAL STANDARD

         “[S]ummary judgment is appropriate where there is ‘no genuine dispute of material fact' and the moving party is ‘entitled to judgment as a matter of law.'” Alabama v. North Carolina, 560 U.S. 330, 344 (2010) (quoting Fed.R.Civ.P. 56(c)). “The substantive law identifies which facts are material.” Doe v. Abington Friends Sch., 480 F.3d 252, 256 (3d Cir. 2007). “A genuine issue is present when a reasonable trier of fact, viewing all of the record evidence, could rationally find in favor of the non-moving party in light of his burden of proof.” Id. at 256 (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-26 (1986)); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-52 (1986).

         III. DISCUSSION

         a. Res Judicata as Applied to ...


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