United States District Court, E.D. Pennsylvania
RHOADS INDUSTRIES, INC., et al.
v.
SHORELINE FOUNDATION, INC., et al RHOADS INDUSTRIES, INC., et al.
v.
TRITON MARINE CONSTRUCTION CORP.
MEMORANDUM OPINION: DAMAGES
DAVID
R. STRAWBRIDGE UNITED STATES MAGISTRATE JUDGE.
Plaintiffs
Rhoads Industries, Inc. and Rhoads Marine Industries
(“Rhoads”) have brought these related actions
against Defendants Shoreline Foundation, Inc. and TranSystems
Corp. in case number 15-921 and against Triton Marine
Construction Corp. in case number 17-266. Rhoads claims that
its Dry Dock 2 within the former Navy Yard Complex suffered
significant damage in 2012-2013 and again in 2015 as a result
of improper pile driving by these Defendants. The parties
have now come before the court seeking a ruling on the
question of whether the “special use” or
“special purpose” (hereinafter “special
use”)[1] damage analysis put forward by Rhoads is
appropriate here.
PARTIES'
POSITIONS
Rhoads
posits that the court must consider the question of damages
based upon the “complete cost-of-repair” without
any limitation imposed by a fair market value cap (FMV) as of
the time of the loss. (Doc. 76 at 4.) According to Rhoads
this approach ties into the circumstance that the Dry Dock
here would qualify as a “special use” property
“because of its quasi-public ownership and location,
and because it would be nearly impossible for Rhoads to
replace.” (Id. at 1.) At the same time, they
assert that “[i]f Defendants contest this [position],
it is for the jury to decide.” (Id. at 7.)
The
Defendants reject the notion that this is a “special
use” property, and assert that the Dry Dock is part of
a private commercial enterprise and that it does have an
ascertainable fair market value. (Doc. 77 at 6, 7.) They urge
that the appropriate measure of damages is to follow the
general rule of determining the lower of the cost of repair
or the fair market value of the property at the time of the
loss. (Id. at 7.) They further contend that the
court should find as a matter of law that the “special
use” exception does not apply. (Id.)
DISCUSSION
As do
the parties, we proceed under the premise that the property
is reparable. We also accept that in general, reparable
damages to real property are determined based on the
“lesser of the cost of repair or the market value of
the affected property.” Pa. Dep't of Gen.
Servs. v. U.S. Mineral Prods. Co., 898 A.2d 590, 596
(Pa. 2006) (citing Lobozzo v. Adam Eidemiller, Inc.,
263 A.2d 432, 437 & n. 6 (Pa. 1970). The caselaw has
carved out, however, an exception to this general rule for
“special use” property, for which damages must be
calculated based on the complete “cost of
replacement” without regard to fair market value.
Commonwealth Department of Transportation v.
Estate of Crea, 483 A.2d 996 (Pa. Cmmw. Ct. 1977).
This
exception was applied in Crea where an intoxicated
driver drove into a bridge, causing its collapse. 483 A.2d
996, 998 (Pa. Commw. Ct. 1977). In considering the approach
to damages, the court held that “[w]here concepts of
value in a commercial sense cannot be applied because a
particular structure in the public domain simply
doesn't have any such value, speculatively or otherwise,
the measure of damages must be the reasonable cost of
replacement by a similar structure consistent with current
standards of design.” Id. at 1002 (emphasis
added). In Crea the court determined that the
damaged bridge was a “special use” property given
that it was “in the public domain” and added that
any efforts to assign a market value would be “wholly
speculative.” Id. at 1001.
In
Mineral Products the court extended the exception in
Crea, applying it to a government building where the
market value could be determined. The defendants in
Mineral Products argued that because the market
value of the property could be ascertained it should not be
deemed a “special use” property. The court,
however, responded by explaining that it “has not
categorically and immutably confined special-purpose
valuation and/or the relevance of replacement or reproduction
costs to instances in which market valuation is
impossible.” 898 A.2d at 598 n.6. Rather, the court
stated that other factors could support the characterization.
Id. Ultimately, the court concluded that “in
light of the unique attributes of the T & S Building,
chief among which are its public purposes and location on the
Capitol campus, the structure could fairly be deemed by a
fact finder to represent a special-purpose
property.” Id. (emphasis added). Pointing to
these factors the court left the question of whether the
property was deemed a “special use” property to
the fact finder: “these factors would support a jury
finding that the T & S Building had no value in the
commercial sense and that the proper measure of damages,
therefore, was its replacement cost.” Id. at
597. What is important for us in the Mineral
Products decision is not the particular characteristics
of this building as compared to the bridge in Crea
or the Dry Dock here, but rather that the question was to be
left to the jury. Such must be the case here.
We
accept that some subsequent cases have resolved this issue as
a matter of law, but those were cases where there was little
doubt that the properties involved could not be deemed
“special use.” See Strausser Enterprises,
Inc. v. James D. Morrissey, Inc., 2014 WL 10979806, at
*2 (Pa. Super. Ct. Mar. 10, 2014) (holding parking lot is not
“special use”); Arch Ins. Co. v. Carol &
Dave's Roadhouse, Inc., No. 2:11-CV-801, 2013 WL
607829, at *3 (W.D. Pa. Feb. 19, 2013), aff'd,
567 Fed.Appx. 131 (3d Cir. 2014) (granting defendant's
motion in limine and refusing to extend the exception in
Crea to a firehouse); Herring v. City of
Jeannette, 47 A.3d 202, 205 (Pa. Commw. Ct. 2012)
(explaining that where the “only assertion of
uniqueness” is that “all real estate is
unique” the claim was not enough to establish
“special use” property). We appreciate that the
record is not complete and the parties are likely to produce
expert reports that may be relevant to this question, but we
must conclude that there are factual disputes integral to the
“special use” determination, leaving us to
conclude-at least at this stage-that this determination must
be left to the jury.[2]
CONCLUSION
At this
stage and for the reasons presented we deny Defendant's
request that the property be deemed not “special
use.” We similarly deny Rhoads' request that we
determine on the record before us that the property be deemed
“special use.” These conclusions are without
prejudice to any party to file motions in limine upon the
close of the record.
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