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Sereda v. Center City Acquisitions, LLC

Superior Court of Pennsylvania

November 8, 2019


          Appeal from the Judgment Entered February 13, 2019 In the Court of Common Pleas of Philadelphia County Civil Division at No(s): 160603888



          MURRAY, J.

         Center City Acquisitions, LLC (the LLC) and Noah Ostroff (collectively, Appellants) appeal from the judgment entered, following a bench trial, against them jointly and severally and in favor of John and Devon Sereda.[1] In this breach of warranty matter, Appellants aver that the trial court erred in: (1) piercing the corporate veil to find Ostroff personally liable; (2) finding that the Seredas properly informed Appellants under the warranty about water damage; and (3) awarding damages under the Pennsylvania Unfair Trade Practices and Consumer Protection Law[2] (UTPCPL). Upon review, we affirm.

         "Ostroff is the president, acting officer, and sole shareholder of the LLC." Trial Court Opinion, 3/12/19, at 6. In June of 2012, the Seredas prepared to buy a newly-constructed home, at 1219 N. 3rd Street in Philadelphia, from Appellants, for the purchase price of $386, 600. On June 27, 2012, the Seredas completed a pre-settlement walk-through inspection of the property with their realtor, Ryan Kanofsky.[3] N.T. Trial, 10/3/18, at 61-62, 138, 146. They identified 40 to 50 gaps between hardwood floor planks on all three floors and marked them with blue tape. Id. at 61-62, 111, 139, 147. Some of the gaps were large enough that quarters and nickels could be placed in them. Id. at 72. The Seredas prepared a "punch list," or a list of "cosmetic issues" for Appellants to resolve, which included the gaps in the hardwood-floors. Id. at 30.

         The parties closed on the property on July 2, 2012, and the "punch list" was incorporated into the sale agreement. N.T. Trial, 10/3/18, at 30. The sale agreement also included a "Builder's Warranty," to be in effect for one year from the date of settlement. It provided:

         6. Claims Procedure

If a defect appears which is covered by this Warranty, [the Seredas] must submit a written notice to [Appellant] describing the nature of the problem. . . .

         7. Repairs

Upon receipt of [the Seredas'] notice of a defect, if the defect is covered by this Warranty as determined by the Warranty, [Appellants] will repair or replace said defect at no charge to [the Seredas.] Said repair work will only be done by [Appellants] or its subcontractors[. Appellants have] the sole option and absolute right to choose between repair or replacement of any defective or damaged item [p]rovided that doing so the repair is to a reasonably acceptable workmanlike condition [sic].

         Builder's Warranty, 7/2/12, at 2; Ex. B to Seredas' Complaint.

         On August 1, 2012, John Sereda sent an email to Ostroff, again notifying Ostroff of the gaps in the hardwood floors and other issues. N.T. Trial, 10/3/18, at 62. According to John Sereda, Ostroff responded that the gaps were due to "acclimation of the floors" and that the Seredas should observe the floors ``[o]ver time . . . and see if it's expansion and contraction." Id. at 66. However, the floors did not improve and John Sereda "continued to notify [Ostroff] of the gapping." Id. One year later, on August 7, 2013 - "after two months of [John Sereda] trying to get [Ostroff] out to [see] the property" - Ostroff visited the home and observed the gaps. Id. Ostroff then directed "Ray," the contractor who installed the floors, to replace three or four hardwood planks in the second-floor bedroom.[4] Id. at 70-71, 78-79. Thereafter, however, Ray acknowledged that gaps still existed. Id. at 71, 78. Meanwhile, the Seredas were advised by other flooring contractors - and the Seredas told Ostroff - that sanding and replacement of some planks would not resolve the gaps, and instead, the entire floor had to be replaced with new hardwood. Id. at 71, 78, 82-83.

         In October of 2013, Ostroff sent the Seredas an email, offering to either have the gaps filled and the floors restained, or give them a $2, 500 credit. N.T. Trial, 10/3/18, at 70, 73-74. The parties continued to communicate by email for several months about the floors as well as other construction issues. On March 28, 2014, John Sereda emailed Ostroff, requesting information about repairs from the pre-settlement punch list, and stating he would file a lawsuit if Ostroff did not provide the information. Id. at 81-81. Ostroff replied that same day:

"We have your best interests in mind. John, do not threaten me ever again. I will respond when I have a plan for you. I am waiting for Ron [a contractor] to get back to me.
If I get any more threats from you, I will turn this over to my attorney and have him deal with this, and nothing will get accomplished, and it will cost you a lot of money, time, and aggravation.
I have also sent you four emails on a credit for the floors which you have failed to respond to. My offer will not remain forever. I will be looking for a response on this issue ASAP. I would like to be done with you and this house ASAP. Thank you."

Id. at 82.

         At trial, John Sereda acknowledged that he and his wife had not responded to Ostroff's previous four emails offering a credit. N.T. Trial, 10/3/18, at 82. However, after Ostroff's March 28, 2018 missive, John Sereda rejected Ostroff's offer. Id. John Sereda reiterated that the Seredas "have been told by several flooring installer/contractors, including two of [Ostroff's] own hired flooring installers, that the floors need to be replaced throughout the home," and that "[a] $2, 500 credit is not even close to what that will cost." Id. at 84. He also testified: "We bought things new, and we wanted the floors to be the way they were supposed to be, so . . . that's why we rejected" Ostroff's offer to fill the gaps or give them $2, 500. Id. at 121.

         On cross-examination, John Sereda disagreed that Ostroff had offered "a complete repair of the floor at the builder's expense." N.T. Trial, 10/3/18, at 121. In response to Appellants' counsel's continued questioning, John Sereda explained: "Repairs, no. I guess you have to define 'repair.' For me, at that point, . . . a repair would be a full-scale repair, meaning replacing all the hardwood floors based on the prior context [sic]." Id. at 121-122. Immediately following this statement, the trial court observed:

The two of you are disagreeing over an undefined word. One of you may think "repair" means one thing. The other has a different definition of "repair."
I think it's pretty clear that the offer to fill in the gaps, refinish the floor, if you call that a repair, was an unacceptable repair. The repair that was being sought was pulling up the floors and putting down new floors.

Id. at 122. Finally, the Seredas presented an expert report, which opined that the cost to replace the hardwood floors would be $37, 789. Id. at 167.

         Meanwhile, unrelated to flooring, in the spring of 2013, the Seredas observed "cracking" and "separation" in the bay window frames in their two second-floor bedrooms. N.T. Trial, 10/3/18, at 50 (testimony of John Sereda), 149 (testimony of Devon Sereda). On April 20, 2013, the Seredas emailed Ostroff a second "punch list" of 31 items to be repaired, including the hardwood floors and the bedroom-windows. Id. at 32-33. With respect to the windows, Devon Sereda testified that initially there was no water infiltration, but the "cracking and separation" grew and, by the fall of 2013, rain water began coming through the cracks. Id. at 149. In March of 2014, a contractor, Ron Rooney, at Ostroff's direction, "tried to fix various parts of the house," including applying caulk around the bedroom windows. Id. at 90. After "a couple days," however, the caulk "expanded or deteriorated." Id. at 100. On April 30, 2014, John Sereda emailed Ostroff that the cracks reappeared in both bedroom windows. Id. at 95. In another email dated May 3, 2014, John Sereda notified Ostroff that Rooney told John Sereda that Rooney should have used - but did not use - silicone caulk; Rooney further told John Sereda that if "the root of the issue [was something] other than cracking [at] the entry point of the water[, ] it was likely out of [Rooney's] expertise." Id. at 96. Both John and Devon Sereda testified that Ostroff made no other offer or attempt to repair the windows. Id. at 102, 152.

         At the time of trial in October 2018, water continued to leak through the windows, necessitating bowls and towels "to collect the pools of water when it drips." Id. at 98-99, 149-150. The Seredas had contractors examine the windows, and one advised that the cause of the cracking could not fully be determined unless "the facade is removed around the window," which would cost more than $20, 000 - an amount that the Seredas could not afford. Id. at 151. Devon Sereda testified that whenever they anticipate a rainstorm or go on vacation, they must move all of their electronic equipment away from the window, and the windows have caused "a lot of stress and aggravation." Id. at 152. The Seredas offered an expert report that estimated the cost to replace the windows as $22, 000. Id. at 38, 166. The Seredas did not seek damages for any wood rot or mold in the wall, and requested only that the windows be repaired. Id. at 151-152, 166.

         With respect to the trial court's decision to pierce the corporate veil to find Ostroff severally and jointly liable, both John and Devon Sereda testified that the only person they interacted with at the LLC was Ostroff. N.T. Trial, 10/3/18, at 90, 157-158. Devon Sereda stated that their "dealings were always with [Ostroff]" and that they "never dealt with anybody else but" Ostroff. N.T. Trial, 10/3/18, at 156. Devon Sereda stated:

My understanding was that [Ostroff] was our seller. He's the guy that purchased the lot, and he's the one that we communicated with throughout the process. I never saw anyone else. All our meetings regarding the building specs, all of our ...

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