Opinion
No. 2082 C.D. 2011
11-29-2012
Vamsidhar Vurimindi, Appellant v. LandAmerica Financial Group, Inc.; Commonwealth Land Title Insurance Company; Robert Stoughton; Realty One Properties, LP D/B/A Coldwell Banker Realty One; Metropolitan Abstract, Inc.; Dennis Kane; Frank Niesser, Jr., Administrator for the Estate of Sally Lou Niesser; The Estate of Sally Lou Niesser and City of Philadelphia, Department of Licenses and Inspections
BEFORE: HONORABLE BONNIE BRIGANCE LEADBETTER, Judge HONORABLE P. KEVIN BROBSON, Judge HONORABLE ROCHELLE S. FRIEDMAN, Senior Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY JUDGE BROBSON
Appellant Vamsidhar Vurimindi (Vurimindi) appeals from several orders of the Court of Common Pleas of Philadelphia County (trial court), arising in the course of the trial court's resolution of preliminary objections and motions for summary judgment filed in response to Vurimindi's Amended Complaint (Complaint). In his Complaint, as more fully described below, Vurimindi alleged that he suffered compensable damages when, after he purchased a vacant lot (1510 E. Palmer St.) in Philadelphia (Property), he discovered previously undisclosed liens on the Property.
Two of the orders on appeal granted motions for summary judgment in favor of three of the named defendants: (1) Commonwealth Land Title Insurance Company (Commonwealth); (2) Realty One Properties, LP, D/B/A Coldwell Banker Realty One (Realty One Properties), and (3) Realty One Properties' agent, Robert Stoughton (Stoughton). The other two orders of the trial court sustained preliminary objections filed by the following defendants: (1) the City of Philadelphia (City); (2) Metropolitan Abstract Incorporated; and (3) Dennis Kane (who owns and/or works for Metropolitan). Metropolitan performed the title search for the title insurance policy Commonwealth issued for the Property. We affirm the trial court's orders.
As indicated in the above caption, Vurimindi also named LandAmerica Financial Group, Inc. (LandAmerica) as a defendant. LandAmerica was the parent company of defendant Commonwealth, which issued the title insurance policy for the Property. After Vurimindi filed his Complaint, LandAmerica filed for bankruptcy. Initially, the trial court stayed the proceedings while the bankruptcy matter was progressing. Ultimately, Vurimindi sought, and the trial court granted, discontinuance, without prejudice, as to his claims against LandAmerica, and the trial court then proceeded, in due course, to entertain the preliminary objections and motions for summary judgment that the remaining defendants filed, which are the subjects of this appeal. Also, with respect to the sellers of the Property, Frank Niesser, Jr., Administrator of the Estate of Sally Lou Niesser, and The Estate of Sally Niesser (hereafter collectively referred to as Niesser), we note here, and as more fully explained below, that the Niesser defendants are no longer parties in this dispute. The trial court entered a default judgment against them on May 12, 2010, and an order on July 14, 2010, assessing damages based on the default judgment. As will be explained below, these orders also entered judgment and assessed damages against defendant Robert Stoughton, who later successfully moved to open the default judgment against him.
BACKGROUND
A. The Liens
We draw the following history from the pleadings and the trial court's orders. In July 2006, Stoughton, a real estate agent working for Realty One Properties, listed the Property as being for sale. Vurimindi saw the listing and, following negotiations with Stoughton, agreed to pay $38,000 for the Property. On September 14, 2006, Vurimindi signed a "Buyer Authorization," which authorized Stoughton and Realty One Properties to perform the following pre-settlement matters: (1) order a title search and title insurance; (2) prepare a deed and seller's affidavit for delivery to sellers at settlement; and (3) arrange for necessary paperwork for settlement and for settlement itself. On the same date, Vurimindi signed an Agreement for Sale with Niesser.
Stoughton ordered a title search for the Property and, following the title search by Metropolitan, Commonwealth extended a commitment for title insurance to Vurimindi. Vurimindi averred that, on November 14, 2006, Stoughton, Realty One Properties, Metropolitan Abstract, and Kane informed him that all title defects had been resolved and the title to the Property was clear. Vurimindi settled on the Property on November 17, 2006, with Metropolitan Abstract and Kane acting as settlement agents.
The title insurance policy that Commonwealth issued for the Property includes a schedule of "requirements." One of the listed "requirements" is a reference to a lien, filed in May 2005, in the amount of $727.85, which was identified in the schedule as a nuisance lien. (Reproduced Record (R.R.) at 102, Para. 16.) The insurance policy identifies this lien as number 139, and this item (in the amount of $850.00) is reflected as an amount to be paid from Neisser's settlement funds in line 1308 of the settlement statement for the Property. (R.R. at 107.) Vurimindi averred that he incurred $42,332.73 in costs in obtaining title to the Property, which he claimed to include, in addition to the escrowed money for lien number 139, the sale price, other closing costs, and municipal taxes. Stoughton and Realty One Properties received a total of $4,745.00 from the sale of the Property. Commonwealth received a total of $5,260.00 from the sale of the Property.
Because, as noted above, the settlement document identifies this money as coming from Neisser, we are uncertain as to why Vurimindi asserts that he paid for this escrow item.
Vurimindi also averred that, shortly after the closing, he received a telephone call from an unidentified person who claimed to own the Property. Vurimindi then contacted Stoughton. Vurimindi averred that Stoughton told him that the person claiming to be the owner lived adjacent to the Property and was a squatter. Vurimindi informed Stoughton that he would be willing to sell the Property to the neighbor/squatter for a price equal to the amount he paid to acquire the Property, and Stoughton agreed to attempt a negotiation with the neighbor, but those efforts were unsuccessful. Vurimindi averred that he decided to sell the Property and obtained the sales services of a real estate company, which placed a sale sign on the Property. Thereafter, an agent of the listing company, Kyle Moyer, received a phone call from Helen Muzychka, who asserted that the Property belonged to her mother. Mr. Moyer called Vurimindi and informed him that his company could not represent him for the purpose of selling the Property until Vurimindi resolved this claim on the Property. Vurimindi obtained a copy of the title to Muzychka's property and forwarded it to all of the defendants except Niesser and the City. None of the defendants responded to Vurimindi. Vurimindi examined the title descriptions and persuaded Moyer that Muzychka's property was not the Property. Moyer then re-listed the Property and obtained a potential buyer for the Property, Alan Bloch, who agreed to purchase the Property for $86,000.00.
In preparation for his re-sale of the Property, Vurimindi apparently searched the City's records and found four liens against the Property. These liens, which included number 139 (for which settlement money was placed in escrow), appear to reflect charges upon the Property for work performed by the City, which amounted to approximately $38,000. For ease of discussion we will initially identify the liens in the chart below:
| Lien # | ViolationDate | WorkCompletionDate | Bill Date | PurportedLien Date | Amt. |
|---|---|---|---|---|---|
| 7/1/03 | 3/30/04 | 4/12/04 | May 2005 | $767 | |
| 12/16/03 | 5/1/06 | 5/1/06 | $22,085 | ||
| 12/16/04 | 1/22/06 | 7/2/07 | July 2, 2007 | $516 | |
| 12/16/04 | 5/26/06 | 7/2/07 | July 2, 2007 | $14,585 |
This lien was the one identified above as number 139. The work related to this lien is described as "clean and seal up vacant building." (R.R. at 129.) In its brief, Commonwealth identifies May 2005 as the date this lien was filed, referencing the title insurance policy, but we are uncertain regarding the means by which Commonwealth determined this to be the date the lien was filed. Regardless, Commonwealth agreed to indemnify Vurimindi for this lien. (R.R. at 136.)
The work related to this lien is described as "complete demolition of existing structure." (R.R. at 130.) Although the record does not indicate the date upon which this lien was recorded, in correspondence between Vurimindi and Commonwealth's attorney (generated after Vurimindi reached an agreement of sale with Mr. Bloch), Commonwealth agreed to indemnify Vurimindi for this lien in the amount of approximately $22,000.00, as well as for lien no. 139, "for actual loss associated with the nuisance liens." (R.R. at 136.) As will be further discussed below, however, Commonwealth appears to have qualified its statement in that letter, suggesting that it will indemnify Vurimindi only if he establishes the "validity" of the lien and if the City seeks to enforce the lien. (Commonwealth's Br. at 3.) Vurimindi asserts that the City recorded/filed this lien on May 1, 2006, the same date as the "Bill Date." Vurimindi apparently bases that claim on the title search performed on behalf of Vurimindi's then-prospective buyer, Mr. Bloch. Vurimindi, however, provides no other source of documentation in support of his claim that May 1, 2006, was the date upon which the City recorded/filed this lien.
The work related to this lien is described as "sealing of lateral." (R.R. at 131.) This work was apparently necessary for the structural integrity of an adjoining building. According to the proposed title insurance policy prepared by T.A. Title Insurance Company on behalf of Mr. Bloch, who initially agreed to purchase the Property from Vurimindi, the City did not file this lien until July 2, 2007. (R.R. at 127.)
As with the immediately preceding lien, the work related to this lien apparently involved the adjoining building and is described as "stucco party wall." (R.R. at 132.) As with lien number 07080032, and as noted in footnote 6, the City apparently did not file this lien until July 2, 2007.
Vurimindi apparently contacted Commonwealth's local office regarding the liens. By letter dated October 15, 2007, Commonwealth's claims department informed Vurimindi that it would assign the matter to an attorney or claims representative for review. On November 5, 2007, one of Commonwealth's attorneys sent a letter to Vurimindi, indicating that she understood two matters were at issue involving potential claims against the Property: the liens and the neighbor/squatter. The letter did not state affirmatively that Commonwealth would indemnify Vurimindi for the other two liens, but that the attorney was awaiting further information and documents for review. (Id.) As suggested in our footnotes above, however, the same attorney sent a follow-up letter referencing the potential sale to Mr. Bloch, and describing Commonwealth's position regarding indemnification. (R.R. at 135.) In that November 12, 2007 letter, Commonwealth advised Vurimindi that it had sent a letter
to T.A. Title Insurance Co. for the benefit of the purchasers of the [P]roperty. [Commonwealth] is willing to indemnify a purchaser's title company for actual loss associated with the nuisance liens from 2004 (04050139) and 2006 (06120038). If you decide to sell or refinance the property and should the purchaser's title company raise this matter, [Commonwealth] will indemnify the purchaser's title company or will issue a title policy without exception to the foregoing 2004 and 2006 liens . . . However, the other two nuisance liens (07080032 & 07080033) were liened in July of 2007. Item 3(d) of the Exclusions from Coverage states, "effects [sic], liens, encumbrances, adverse claims or other matters attaching or created subsequent to Date of Policy." The date of policy is 11/17/06 and the liens are dated 7/2/07.
Therefore, they are post policy and excluded from coverage.(Id.) Ultimately, the sale of this Property and another nearby property to Mr. Bloch fell through, and Vurimindi filed his Complaint, alleging that he lost revenue as a consequence of the liens.
It appears that the word "effects" may have been inserted in the letter in error, and that the intended word may have been "defects."
Vurimindi alleged damages of approximately $200,000 based upon the lost sale of the Property and his other nearby property to Mr. Bloch. Thus, the amount of damages he claims represents the loss of potential profit from the sale of both properties.
B. Vurimindi v. City
In his Complaint, Vurimindi sought injunctive relief against and damages from the City. The crux of Vurimindi's claim for injunctive relief against the City is that the City had a duty under the Act of May 16, 1923, P.L. 207, as amended, 53 P.S. §§ 7101-7505, commonly known as the Municipal Claims and Tax Liens Act (Tax Liens Act), to disclose by recording and/or docketing the liens in the judgment index of the Court of Common Pleas of Philadelphia County before the settlement date for the Property. Vurimindi asserted that the Tax Liens Act prohibits the City from attaching the liens to the Property because the genesis of the liens occurred before the date of settlement, and, therefore, the liens are not enforceable. Thus, Vurimindi sought to compel the City to remove and or recognize as invalid the post-settlement liens attached to the Property.
Section 1 of the Tax Liens Act defines the term "municipal claim" in pertinent part as
the claim arising out of, or resulting from . . . work performed, or improvement authorized and undertaken, by a municipality, although the amount thereof be not at the time definitively ascertained by the authority authorized to determine the same, and a lien therefor be not filed, but becomes filable within the period and in the manner herein provided.53 P.S. § 7101.
With respect to damages, Vurimindi averred that the City, by virtue of its knowledge that the former residence located on the Property had been abandoned for a period of many years before the City demolished the structure, took effective ownership of the Property. Based upon this assertion, Vurimindi averred that the City had an affirmative duty to provide constructive notice to potential buyers of the Property of the encumbrances placed upon the Property. Further, Vurimindi averred that the City had an affirmative and fiduciary duty to him to maintain current and accurate information regarding the Property, including ordinance violations and bills for remedial work performed on the Property that could (and in this case did) give rise to attached liens on the Property. Vurimindi objected particularly to the lapse in time that occurred between the date of performance of work, which occurred before the settlement on the Property, and the post-settlement date upon which the City actually formally filed the liens on the Property. Vurimindi claimed that because of these actions and/or failures to act, the City was negligent.
The City filed preliminary objections to the Complaint. With regard to Vurimindi's claim for injunctive relief, through which he sought to attack the validity of the liens, the City argued that Vurimindi had an available and adequate administrative remedy that he failed to exhaust. In this regard, the City, citing the Tax Lien Act, asserted that the City's Tax Review Board, which is part of the City's Department of Revenue, has jurisdiction under Section 19-1702(1) of the Philadelphia Code to review petitions challenging tax and demolition charges.
In its other preliminary objection directed to Vurimindi's negligence claim, the City asserted that it is immune from suit on Vurimindi's claims under Section 8542(b) of the Judicial Code, 42 Pa. C.S. § 8542(b), a provision commonly referred to as the Political Subdivision Tort Claims Act. As noted above, the trial court, on October 20, 2010, sustained the City's preliminary objections and dismissed the City as a party.
C. Vurimindi v. Commonwealth, Metropolitan, and Kane
Vurimindi averred that Commonwealth, Metropolitan, and Kane (the title search and title insurance defendants) had an affirmative and fiduciary duty to Vurimindi to conduct an adequate search of public records such that the liens against the Property, and more specifically, the genesis of the liens, would have been discovered before settlement. Specifically, Vurimindi averred that defendants should have discovered the lien identified as number 06120038, in the amount of $22,085.90, because, he claimed, that lien attached before the settlement. Further, Vurimindi contended that these defendants had a duty to discover and disclose the underlying notices of violations and the consequential work that the City performed to resolve the violations. As more fully discussed below, Vurimindi asserted that the notices and work that was performed were events triggering a duty to indemnify under the title insurance policy. On this professional negligence claim, Vurimindi sought actual and punitive damages.
Vurimindi also asserted a breach of contract claim against these defendants. He averred that these defendants "searched and examined the public records, deeds, wills, divorce decrees, court judgments and tax records" and "identified clouds on title." (R.R. at 34; Para. 120.) Vurimindi further alleged that these defendants are "obligated under the Contract to save [Vurimindi] harmless to the extent losses are fairly attributable to [these defendants'] failure to complete a careful and prudent title examination of the Property." (R.R. at 35; Para. 122.) Vurimindi claimed that he is entitled to payment for the cost of having the liens released, because Commonwealth's title insurance policy provides for indemnification for such liens on Vurimindi's title.
In its motion for summary judgment, Commonwealth relied upon the following particular facts relating to the liens: (1) the date of performance of the work giving rise to the liens; (2) the date of billing for the work that gave rise to the liens; and (3) the date of entering the liens into the public record. Commonwealth pointed to the following terms of the title insurance policy:
1. Insurance "against loss or damage . . . sustained or incurred by reason of 1) Title to the estate or interest . . . being vested other than as stated . . . ; 2) any defect in or lien or encumbrance on the title; 3) Marketability of the title; 4) Lack of a right of access to and from the land." (Commonwealth S.J. Mot. Para. 5 (R.R. at 413), quoting from policy (R.R. at 419);Commonwealth acknowledged that its title commitment revealed Lien number 04050139, which was filed in May 2005, but that the commitment did not reveal the existence of the other three municipal liens. Commonwealth asserted that although Vurimindi investigated and discovered the existence of the other three liens, he had no evidence—other than the liens themselves—demonstrating when the liens were actually recorded or docketed. Commonwealth referenced Paragraph 3(c)-(d) of the insurance policy, which provides for the following exclusions from coverage: "Defects, liens, encumbrances, adverse claims or other matters . . . (c) resulting in no loss or damage to the insured claimant . . . (d) attaching or created subsequent to Date of Policy." (R.R. at 151.) Thus, in reliance upon these terms of the policy, Commonwealth asserted that Vurimindi failed to plead facts supporting the existence of liens before the date of the policy—i.e., the date of settlement.
2. Exclusion of coverage for "defects, liens encumbrances, adverse claims or other matters . . . (c) resulting in no loss or damage to the insured claimant; (d) attaching or created subsequent to Date of Policy." (Commonwealth S.J. Mot. Para. 6 (R.R. at 413), quoting from policy (R.R. at 419.);
3. Policy indemnifies policy holder for actual losses resulting from all defects, liens, encumbrances existing before the policy date. (Commonwealth S.J. Mot. Para. 7 (R.R. at 413.)
As indicated above, however, Commonwealth initially agreed to indemnify Vurimindi for lien number 06120038, without raising any qualification regarding whether that lien was valid, but, in response to Vurimindi's Complaint, while admitting it agreed to indemnify Vurimindi, Commonwealth asserted that Vurimindi offered no proof of the enforceability of this lien, as well as the other two liens, or the date of filing/recording of the lien.
Commonwealth, relying upon a provision of Section 1 of the Tax Liens Act, 53 P.S. § 7102, also argued that municipal liens constitute a first lien, subordinate only to liens filed by the Commonwealth of Pennsylvania. Commonwealth argued that, in order to be timely filed and, thus, valid, the City was required, under Section 9 of the Tax Liens Act, 53 P.S. § 7143, to docket or record the liens with the "appropriate court" (1) within six months of the date the work was performed; (2) within six months of the completion of improvements; or (3) within six months after "confirmation by the court," if required under the Tax Liens Act. Commonwealth, relying upon the fact that Vurimindi had no evidence suggesting that the three liens that are the subject of Vurimindi's claims (those for which Commonwealth refused to indemnify Vurimindi) were recorded or docketed by the City within the time requirements of the Tax Liens Act, contended that the liens were not valid.
Because Vurimindi cannot establish (1) the validity of the liens or (2) that the City has sought to enforce the liens, Commonwealth argued that Vurimindi did not demonstrate that he has suffered any loss or damage (a coverage trigger under the title insurance policy) as a consequence of liens that were valid on the effective date of the policy, and, thus, he is not entitled to any claims under the title insurance policy. Commonwealth pointed to Vurimindi's testimony in a deposition where he expressed his belief that the date the City performed the work that gave rise to the liens constitutes the date of recording or attachment of the liens for the purpose of title insurance coverage. Commonwealth also relied upon Vurimindi's testimony that he had no understanding of the legal significance between date of performance of work giving rise to the filing or attachment of liens and the legal requirements for the creation of a lien. Vurimindi testified that he had no idea "what other proofs" he could offer beyond the dates upon which the City performed the work, which formed the basis of the liens. Thus, he offered no suggestion that he intended to establish by evidence the dates upon which the City made efforts to have the liens recorded in the dockets of the court of common pleas. In summary, Commonwealth claimed that "[a]bsent timely filed liens that were of record at the time he purchased the [P]roperty, subject to enforcement, [Vurimindi] cannot meet his burden of proof to establish either a claim for negligence or breach of contract." (Commonwealth S.J. Mot. Para. 25; R.R. at 415.)
Vurimindi responded, reiterating his belief that all of the liens were created before the date of settlement and that material factual issues remained to be resolved regarding the date of the liens. He continued to assert, however, that evidence the City provided notice to the previous owner regarding the violations, which prompted the City to perform the remedial work, constituted the type of action anticipated by the Tax Liens Act for the creation of a valid lien before the date of settlement for the purpose of indemnification under his insurance policy. Vurimindi, however, offered no legal support for the proposition that notice of violation is the equivalent of the creation of a lien for the purpose of a title search and insurance coverage. While Vurimindi made a bald assertion that factual issues existed regarding the date of the creation of the lien, he offered no specifics regarding the proofs he would submit on that question, other than his claim that the notices of violation created the lien. The trial court, as noted above, granted Commonwealth's motion for summary judgment.
In their preliminary objections, Metropolitan and Kane (hereafter, for the purpose of this discrete discussion, Metropolitan) demurred, arguing that Vurimindi had failed to allege facts necessary to demonstrate the existence of and/or breach of a contract between Metropolitan and Vurimindi. Metropolitan also demurred to Vurimindi's professional negligence claim based upon the fact that Vurimindi was seeking only economic damages. On May 7, 2010, the trial court, acting though Judge Gary DiVito, sustained Metropolitan's preliminary objections and dismissed the Complaint as to Metropolitan with prejudice. In its supplemental opinion, the trial court reasoned that it was appropriate to sustain the preliminary objections because: (1) with regard to the breach of contract claim, neither Metropolitan nor Kane had entered a contract with Vurimindi, because Metropolitan served only as the title agent for the underwriter, Commonwealth, and Kane served only as the settlement agent; and (2) with regard to Vurimindi's negligence claim, the economic loss doctrine precluded recovery for the injuries Vurimindi was seeking. In this latter regard, the trial court did not address Vurimindi's arguments that his claim presented a request for relief that fell within an exception to the economic loss doctrine's general rule precluding negligence actions for purely economic losses.
The trial court filed an initial opinion pursuant to Rule 1925(a) of the Pennsylvania Rules of Appellate Procedure. The initial opinion, however, did not address the reasons why the trial court granted the dispositive motions of Commonwealth and Metropolitan. On August 16, 2012, we directed the trial court to file a supplemental opinion. On September 21, 2012, the trial court issued its supplemental opinion.
D. Vurimindi v. Stoughton and Realty One Properties
After Vurimindi purported to serve all of the defendants with his Complaint, he moved for a default judgment against Niesser and Stoughton. After the trial court entered a default judgment against those defendants, Vurimindi, at the trial court's suggestion, filed a motion to assess damages against them. The trial court granted the motion and awarded Vurimindi all of the damages he requested. Later, Stoughton filed a motion to strike the default judgment and a petition to open the default judgment, based upon Stoughton's claim that Vurimindi had failed to serve Stoughton with the Complaint. The trial court denied the motion to strike judgment, but granted the petition to open the default judgment. Vurimindi filed a motion for reconsideration of that order, which the trial court denied.
In his Complaint, Vurimindi attempted to make out common law fraud and intentional misrepresentation claims against Stoughton and Realty One Properties. He averred that these defendants concealed various facts from him regarding their compensation for the sale of the Property and their alleged knowledge of neighbors who hoped to obtain the Property through "squatting" and ultimately a delinquent tax sale. Vurimindi alleged that these defendants knew of, but concealed, knowledge relating to the work the City performed on the Property and the adjoining improvements necessitated by the demolition work, which ultimately resulted in the liens at issue. Vurimindi further averred that these defendants knowingly concealed such information for the purpose of inducing Vurimindi's purchase of the Property, and that, as a result of this alleged conduct, Vurimindi relied to his detriment and sustained pecuniary damages as a result.
Vurimindi also pursued a professional negligence claim against these defendants. He alleged that Stoughton and Realty One Properties breached duties owed to Vurimindi by failing to exercise a reasonable level of professional skill and care expected of real estate professionals, including alleged duties such as providing advice regarding the sale transaction, and the exercise of proper care in assuming certain tasks necessary for the sale, including ordering a title search and title insurance, and other various actions necessary to settlement. Vurimindi alleged that Stoughton and Realty One Properties made false representations regarding the actual broker's fee, the vacant status of the Property, the status of liens against the Property, and the demolition of the residence on the Property.
Realty One Properties and Robert Stoughton filed a motion for summary judgment based upon the trial court's resolution of Commonwealth's motion for summary judgment. In that matter, as noted above, the trial court granted the summary judgment motion based on its conclusion that Vurimindi had not sustained any monetary loss that he could recover through his Complaint. Realty One Properties and Stoughton argued in their summary judgment motion that the law of the case doctrine applied, such that they also were entitled to summary judgment.
The trial court granted Realty One Properties and Stoughton's motion for summary judgment. Vurimindi appealed that order. The trial court, in addressing Vurimindi's challenge to that order, opined that these defendants were incorrect in arguing that the law of the case doctrine applied. Despite the fact that the law of the case doctrine was the basis for these defendants' motion for summary judgment, the trial court reasoned:
In any event, this court determined that summary judgment in favor of [Realty One Properties and
Stoughton] was appropriate in light of the factual and procedural histories heretofore. In this action, [this trial court judge] is not being asked to alter the resolution of a legal question by another judge, and specifically not the judge of a transferee trial court. Rather, the trial court was asked to apply its earlier determination, granting summary judgment in favor of [Commonwealth Land Title Insurance Company], to the claims against [Realty One Properties and Stoughton]. This trial court did so, and in similar fashion determined that no genuine issues of material fact remained that would preclude judgment in [these defendants'] favor.(Trial Court Op. at 8.) Thus, the trial court concluded that these defendants were entitled to summary judgment based upon the trial court's conclusion that Vurimindi did not plead facts that support his claim of damages, because (a) he had sustained no actual losses or damages as a consequence of the liens that were not valid or enforceable and (b) the City did not attempt to enforce the liens. (Id.)
DISCUSSION
A. Order Sustaining City's Preliminary Objections
Vurimindi raises four issues regarding the trial court's order sustaining the City's preliminary objections: (1) whether the City, by not providing constructive notice to Vurimindi of the post-sale lien attachments, violated the Tax Liens Act, and, consequently, violated the due process clause of the Fourteenth Amendment to the United States Constitution; (2) whether the trial court erred in sustaining the City's preliminary objections on a theory of administrative exhaustion where the City did not advise Vurimindi of the availability of an administrative remedy; (3) whether the administrative remedy that was available to Vurimindi to challenge the liens constitutes an adequate remedy; and (4) whether the trial court erred in concluding that the City was immune from Vurimindi's negligence claims based upon the governmental immunity provisions contained in the Judicial Code. We will group our discussion of the issues into the two key categories: (a) failure to exhaust administrative remedies; and (b) governmental immunity.
At the outset of our review of this issue, we note that Vurimindi did not raise a due process claim in his Complaint or in his response to the City's preliminary objections. Therefore, we will review this issue solely on the basis of the statutory requirements of the Tax Liens Act.
This Court's standard of review of a trial court's order sustaining preliminary objections to a complaint is limited to considering whether the trial court erred as a matter of law or committed an abuse of discretion. Muncy Creek Twp. Citizens Comm. v. Shipman, 573 A.2d 662, 663 (Pa. Cmwlth. 1990). In considering whether a trial court properly sustained preliminary objections, this Court accepts as true all well-pled facts and all inferences reasonably deducible therefrom. Cowell v. Dep't of Transp. 883 A.2d 705 (Pa. Cmwlth. 2005).
We begin with Vurimindi's argument that the trial court erred in sustaining the City's preliminary objections to Vurimindi's injunctive claims on the basis of failure to exhaust administrative remedies. Vurimindi argues that the City's failure to attach the liens until seven months after he obtained title to the Property and to provide him notice of the latter two liens until eleven months after he purchased the Property violated the statutory notice requirements contained in the Tax Liens Act. But in response, the City argues that, notwithstanding Vurimindi's claims that the City allegedly failed to comply with the notice provisions of the Tax Lien Act, he had an adequate statutory remedy that he failed to exhaust.
Vurimindi responds that he attempted to appeal the liens to the Tax Review Board, but that the Tax Review Board dismissed his appeal as untimely. Vurimindi asserts that he made a second attempt before the Tax Review Board in which he "notified that [the] City neither mailed a bill nor notice of the right to appeal and hence 60 days time [doesn't] apply to his appeal." (Petitioner's Br. at 35.) Based upon these assertions, Vurimindi claims that the administrative appeal process before the Tax Review Board was inadequate. The City counters that Section 19-706(2) of the Philadelphia Code provides parties aggrieved by a decision of the Tax Review Board with the right to appeal to a court of competent jurisdiction from an adverse decision of the Tax Review Board. City of Philadelphia v. Kenny, 369 A.2d 1343, 1351 (Pa. Cmwlth.), cert. denied, 434 U.S. 923 (1977).
As the City also notes, when a statute provides for an appeal from an administrative order or decision, that right of appeal is also part of the administrative remedy that a party must exhaust in seeking relief. Jackson v. Centennial Sch. Dist., 509 Pa. 101, 108, 501 A.2d 218, 221 (1985). Vurimindi, after receiving the decision from the Tax Review Board that dismissed his appeal as untimely, had the right to file an appeal with the trial court, challenging the Tax Review Board's order, but failed to avail himself of that remedy. Because a court could have addressed an appeal from the Tax Review Board and could have provided Vurimindi with a forum to challenge the validity of the liens and the timeliness of his challenge before the Tax Review Board, we conclude that the City is correct in its assertion that Vurimindi failed to exhaust his administrative remedies. The trial court, therefore, did not err in sustaining the City's preliminary objection to Vurimindi's claim for affirmative injunctive relief based upon Vurimindi's failure to exhaust an available administrative remedy.
As the City notes, Sections 8541 through 8564 of the Judicial Code, 42 Pa. C.S. §§ 8541-8564, provide exceptions to the immunity from suit that our General Assembly has elected to provide to municipalities. Thus, in order for a party to pursue a negligence claim against the City, a putative plaintiff must demonstrate that the actions for which he seeks relief fall within one of the exceptions to immunity. Santori v. Snyder, 645 A.2d 443 (Pa. Cmwlth. 1994).
Instead of arguing that an exception to immunity applies in this case, however, Vurimindi argues only that we should reverse the trial court because it was inappropriate for the trial court to rule on the immunity defense in the context of ruling on preliminary objection. We have held, however, that a governmental unit may raise immunity as a defense in preliminary objections. Jones v. City of Philadelphia, 893 A.2d 837, 843 (Pa. Cmwlth.), appeal denied, 589 Pa. 733, 909 A.2d 306 (2006). Consequently, we reject Vurimindi's argument and will affirm the trial court's order sustaining the City's preliminary objections and dismissing the City as a defendant.
B. Order Granting Commonwealth's
Motion for Summary Judgment
In its supplemental opinion, the trial court explained the basis for its order granting summary judgment in favor of Commonwealth. The trial court first noted that the three liens Commonwealth declined to accept under the title insurance policy were not filed with "the appropriate court" within six months of the date of the work giving rise to the liens was performed. Consequently, the trial court held that those liens were not timely filed under Section 1 of the Tax Liens Act, 53 P.S. § 7102.
Further, the trial court noted that Vurimindi "has no evidence to suggest that the liens in question were filed within six months of the completion of the work, that they have any validity, or that they were even of public record when [Vurimindi] purchased the property." (Supp. Op. at 2-3.) The trial court cited case law establishing that absent an actual loss, a property owner seeking to recover damages under an indemnity title insurance policy has no right to recovery. Hicks v. Saboe, 521 Pa. 380, 384, 555 A.2d 1241, 1243 (1989). The trial court appears to have concluded that, because the City has not sought to enforce the liens, Vurimindi has not (yet) suffered any monetary loss or threat of loss. The trial court relied upon these same elements and conclusions in determining that Vurimindi could not have met his burden with regard to either his breach of contract claim or his negligence claim against Commonwealth and Metropolitan.
On appeal, Vurimindi repeats the same general claims in his brief to this Court. Vurimindi relies upon certain decisions from a California appellate court and a federal court to support his claim that the liens attached before the effective date of the policy, Cale v. Transamerica Title Insurance, 275 Cal. Rptr. 107 (Cal. Ct. App. 1990), and Banes v. New Jersey Title Guarantee & Trust Co., 142 F. 957, 959 (3d Cir. 1906). After reviewing these decisions, we conclude that they do not stand for the proposition that the liens in this case attached, for the purpose of title insurance coverage, at the time the work was performed or billed, rather than at the time of recording. Rather, as indicated by the Tax Liens Act, which controls here, the liens did not attach until the City filed them of record with the prothonotary of the proper court. Vurimindi does not supply any proof of the date of filing. Accordingly, we conclude, for the purpose of our evaluation of the trial court's order granting summary judgment in Commonwealth's favor, that the subject liens did not exist until a date antecedent to the date of settlement and the date the title insurance policy became effective.
When reviewing an appeal of a trial court's order granting summary judgment in favor of a defendant, our standard of review is limited to "a determination of whether the trial court committed an error of law or abused its discretion. Summary judgment is a question of law based upon findings of fact." Wetzel v. City of Altoona, 618 A.2d 1219, 1221 n.5 (Pa. Cmwlth. 1992) (citations omitted). "For courts to enter summary judgment, the record must demonstrate that no genuine issue of material fact exists after an examination of the record in a light most favorable to the non-moving party." Bacon v. City of Chester, 564 A.2d 276, 277 (Pa. Cmwlth. 1989).
Moreover, as indicated above, Vurimindi averred that the City failed to docket the liens before the date of settlement. The Tax Liens Act requires the formal act of recording a lien in the judgment docket of the court of common pleas in order for a lien to be perfected. Thus, it is unreasonable for Vurimindi to take the position that Commonwealth or Metropolitan performed a negligent title search or breached a contractual duty under the insurance policy, when Vurimindi claims that the City failed to record the lien in the judgment docket which is the statutory method for providing public notice of a lien.
Based upon the language of the title insurance policy, Vurimindi's averments are insufficient to establish a breach of contract or professional negligence against Commonwealth, because the liens at issue did not attach until after the effective date of the title insurance policy. In other words, Commonwealth bore only a duty to indemnify Vurimindi for pre-settlement liens, and Vurimindi has not established any facts or suggested that he has evidence that would support factual findings and a conclusion that Commonwealth failed to comply with the duties imposed under the insurance policy. Therefore, we conclude that the trial court did not err in granting Commonwealth's motion for summary judgment.
We note as a general matter that the courts of Pennsylvania regard contracts of title insurance as agreements "to indemnify against loss through defects of title." Sattler v. Philadelphia Title Ins. Co., 162 A.2d 22, 24 (Pa. Super. 1960).
Based upon this conclusion, we need not address Commonwealth's additional argument that the liens are invalid and/or unenforceable under the Tax Liens Act, and therefore, we need not address the question of whether Commonwealth is correct in arguing that the averments are insufficient to establish that Vurimindi sustained a "loss" or "damages" for the purpose of recovering or indemnification under the title insurance policy. We also agree with Commonwealth's argument that we should reject Vurimindi's claim that the trial court erred in granting summary judgment because discovery was not complete. Vurimindi did not raise this issue in his response to Commonwealth's motion for summary judgment, and, consequently, we conclude he has waived this issue. Tinicum Twp. v. Tinicum Twp. Zoning Hearing Bd., 624 A.2d 232, 234 (Pa. Cmwlth. 1993) (holding that failure to raise issue at earliest possible opportunity results in waiver).
C. Order Sustaining Metropolitan's
Preliminary Objections
In challenging the trial court's decision to dismiss his breach of contract claim against Metropolitan, Vurimindi first argues that he pleaded sufficient facts to support a cause of action sounding in contract. Vurimindi relies upon his averments in paragraphs 18 and 32 of the Complaint. Paragraph 18 provides:
On 14th September 2006, [Vurimindi] signed Buyer Authorization. Further, [Vurimindi] authorized [defendant] Robert Stoughton and Realty One Properties and paid $295.00 to Robert Stoughton and Realty One Properties to do the following services. The Buyer Authorization is attached hereto as Exhibit—04 and made a part hereof.(R.R. at 4.) Paragraph 32 of the Complaint provides:
a. Order Title Search and Title Insurance
b. Prepare deed and seller's affidavit for delivery to sellers at settlement
c. Expedite order and delivery for mortgage documents if required.
d. Collect and distribute various exhibits required to complete settlement
e. Arrange for settlement and send written notices to all parties.
On 14th November 2006, Robert Stoughton, Realty One Properties, Metropolitan Abstract, and Dennis Kane informed . . . [Vurimindi] that all identified defects are
cured and title is clear for the [Property]. Further Robert Stoughton informed . . . [Vurimindi] to get ready to proceed further to Settlement transaction on 17th November 2006.(R.R. at 6-7.)
Vurimindi contends that the above-quoted averments support a factual determination that he paid Metropolitan to perform the title search. Vurimindi also references alleged communications between Kane and himself, indicating that Kane informed Vurimindi that he examined and searched the title for the purpose of discovering any and all foreseeable and undisclosed liens against the Property. These latter two factual details, however, are not explicitly included in the averments, but rather simply reflect Vurimindi's inferential reasoning that he paid Metropolitan through Stoughton and Realty One Properties, and his recitation in his brief of his alleged conversation with Dennis Kane.
Relying on the factual averments and the additional allegations not included in the Complaint, Vurimindi asserts that a jury, if given the opportunity, could determine as a matter of fact that a contract existed between Metropolitan and himself for the title search for the Property. Thus, he claims, with alleged pertinent factual issues unresolved, it was error for the trial court to sustain Metropolitan and Kane's preliminary objections.
In order to succeed in a breach of contract claim, a litigant must plead facts that support all the necessary elements of proof, which are: (1) the existence of a contract; (2) a breach of a duty imposed by the contract; and (3) damages. Sullivan v. Chartwell Inv. Partners, 873 A.2d 710, 716 (Pa. Super. 2005). Vurimindi refers to the Superior Court's decision in Ingrassia Construction Company, Inc. v. Walsh, 486 A.2d 478 (Pa. Super. 1984), as support for his claim that the facts he averred in his Complaint support his assertion that a contract exists between Metropolitan and himself. In Ingrassia, the Superior Court addressed the question of whether the conduct and relationship between a contractor and subcontractor resulted in either an implied contract or an oral contract. While Vurimindi is correct in arguing that the Superior Court concluded that factual averments, as fleshed out through evidence, could support a finding by a jury that the parties had created a contract, Vurimindi's own averments indicate that, if any contractual agreement occurred, it was between Metropolitan and Stoughton/Realty One Properties. The facts Vurimindi averred in Paragraph 32, quoted above, are insufficient to demonstrate the creation of a contract between Vurimindi and Metropolitan.
On appeal, Vurimindi offers another breach of contract theory, asserting that Metropolitan breached a contract as a conveyancer. In this regard, Vurimindi points to the pleadings, which indicate that Metropolitan issued a settlement statement that identified a deduction of $767.53 for one of the liens, number 139, but did not pay the City. We note, however, that the money that was deducted for this lien was placed in escrow and charged against Neisser, the seller, as a settlement cost. We cannot agree with Vurimindi's reasoning, faulting Metropolitan for not paying the City. Further, this lien is one for which Commonwealth agreed to indemnify Vurimindi.
Nevertheless, Vurimindi, in asserting this conveyance theory of breach-of-contract, relies upon the Superior Court's decision in Henkels v. Philadelphia Title Insurance Company, 110 A.2d 878 (Pa. Super. 1955). In Henkels, the defendant party was a title insurance company, which agreed to perform a title search for liens and/or encumbrances, and to arrange for final settlement and conveyance of the subject property. The title company issued a settlement certificate that identified pertinent matters, including a notation excluding from insurance coverage a 23½ foot strip section of the property for which title was unclear. Later, after the purchaser took title, he learned that tax liens on the strip existed, and the purchaser ultimately paid the overdue taxes. The purchaser did not plead a breach of contract claim on the title insurance, but rather a breach of contract claim against the title company in its capacity as a conveyancer.
The Superior Court noted that there is a distinction between a settlement certificate and title insurance, and on that basis rejected the title insurer's argument that its exclusion of the strip from the title insurance policy provided notice to the purchaser that the title company was making no representations regarding the clarity of the title for the strip. The Superior Court reasoned:
The contract on which this action is founded not only precedes the contract of insurance but is independent of it. The undertaking to perform the duties of a conveyancer was independent of the contract to insure the title to the property and the negligence which resulted in [Henkel]'s damage lay in the nonperformance of the duties of that employment.Henkels, 110 A.2d at 880.
In response, Metropolitan asserts that the facts in this case make Henkels distinguishable. Metropolitan contends that Henkels stands only for the proposition that when a title insurance company takes on duties and obligations in addition to providing title insurance, it may be liable for damages as a consequence of losses arising from a faulty performance. Metropolitan argues that Henkels involved a contract between a title insurance company that agreed to perform duties beyond insurance, and that, unlike Henkels, Vurimindi has not pleaded any facts indicating that Metropolitan had a contract with him.
As indicated above, we have concluded that the averments in the Complaint do not support any basis upon which a jury could conclude that Metropolitan had a contractual agreement, actual or implied, with Vurimindi. Further, the averments do not support a claim that Metropolitan acted as a conveyancer by undertaking responsibilities beyond those for which Stoughton and/or Commonwealth had engaged its services. Consequently, we reject Vurimindi's breach of contract argument.
Next, we address Vurimindi's claim that the trial court erred in relying upon the economic loss doctrine in sustaining Metropolitan's preliminary objection to Vurimindi's professional negligence claim. Pennsylvania courts have approved a plaintiff's decision to assert claims against professionals under both a contract action and tort action. Gorski v. Smith, 812 A.2d 683, 693-94 (Pa. Super. 2002), appeal denied, 579 Pa. 692, 856 A.2d 834 (2004). Section 299A of the Restatement (Second) of Torts provides for recovery against professionals as follows: "[U]nless [a professional] represents that he has greater or less skill or knowledge, one who undertakes to render services in the practice of a profession or trade is required to exercise the skill and knowledge normally possessed by members of that profession or trade in good standing in similar communities."
Under the economic loss doctrine, a party generally is not entitled to recover under a negligence theory when the only injuries the party alleges are economic losses. Duquesne Light Co. v. Pennsylvania Am. Water Co., 850 A.2d 701, 703 (Pa. Super. 2004). Courts have described economic losses as "damage for inadequate value, costs of repair and replacement of [a] defective product, [or] consequential loss of property, without any claim of personal injury or damage to the property." Am. Stores Props., Inc. v. Spotts, Stevens & McCoy, Inc., 648 F. Supp.2d 707, 713 (E.D. Pa. 2009). In this case, Vurimindi does not allege any personal injury or property damage, which ordinarily would trigger the economic loss doctrine and preclude his negligence claim. Vurimindi, however, seeks to characterize his negligence claim against Metropolitan as one that falls outside the economic loss doctrine.
Vurimindi relies upon a decision of the Superior Court, Ellenbogen v. PNC Bank, 731 A.2d 175 (Pa. Super. 1999), for the proposition that when a negligence claim is grounded on a duty imposed by a contract, the economic loss doctrine does not apply. Vurimindi argues that his tort claim is based upon a duty imposed by a contract, and thus the doctrine does not preclude his professional negligence claim. Vurimindi again argues that a contract, implied or oral, existed between him and Metropolitan, and that the contract imposed duties upon Metropolitan, including the duty to perform a proper title search and to "ensure that all the necessary paper work is in order" for the purpose of the conveyance of the Property to Vurimindi. As we noted above, however, Vurimindi has not pleaded facts that support a conclusion that Metropolitan had a duty imposed by contract between itself and Vurimindi. Consequently, we conclude that the trial court did not err in granting Metropolitan's motion for summary judgment.
Moreover, Pennsylvania courts have recognized exceptions to the economic loss doctrine in only limited circumstances. See Am. Stores Props., Inc. v. Spotts, Stevens & McCoy, Inc., 648 F. Supp. 2d 707 (E.D. Pa. 2009) (referencing Pennsylvania Supreme Court holdings recognizing exception only in actions brought under Section 552 of the Restatement (Second) of Torts for negligent misrepresentation against design professionals upon whose information may be relied).
D. Order Granting Summary Judgment as to
Stoughton and Realty One Properties
In challenging the trial court's order granting summary judgment in favor of Stoughton and Realty One Properties, Vurimindi, as he does with respect to his claims against Commonwealth, relies upon Cale and Banes to argue that the liens at issue in this matter attached before the effective date of the policy. For the reasons explained above, we have already rejected this argument, and there are no averments or offers of evidence that would demonstrate that the City recorded the liens either within the six-month timeframe for the timely recording of liens or that the liens were actually recorded before the transfer of the Property from Neissers to Vurimindi.
Stoughton and Realty One Properties refer the Court to the Superior Court's decision in Chartiers Valley School District v. Virginia Mansions Apartments, 489 A.2d 1381 (Pa. Super. 1985), for the proposition that late-filed municipal liens lose priority to an intervening purchaser. Section 1 of the Act of September 23, 1959, P.L. 955, as amended, 53 P.S. § 7432 ("1959 Act") provides:
As the Superior Court noted in Chartiers, Section 9 of the Tax Liens Act and Section 1 of the Act of September 23, 1959, P.L. 955, as amended, 53 P.S. § 7432, address a municipality's right to revive stale municipal claims, but limits such right as follows:
[S]ections 7143 and 7432 together establish a three-year limitation period for the filing of municipal claims, while allowing a municipality which has failed to file within that time to file later, but with protection for interests which attached while the lien of the municipal claim was lost by reason of the municipality's failure to file timely. Therefore, the public's interest in the municipality's receipt of payment of its claims is preserved, as are the rights of intervening purchasers and lienors.
[T]he lien of any such claims or judgment shall not reattach against any real estate transferred to any
purchaser before such claim is filed or during the time when the lien of any such . . . municipal claim or judgment impair or affect the priority of the lien of any mortgage or other lien which gained priority because of the failure of the . . . [C]ity to file such claim . . . .In a recent decision addressing this language, this Court held:
[T]here is no limitations period for a municipality to file a claim to recover unpaid taxes or fees. A delayed claim (i.e., one filed beyond the statutory three (3) year period), however, does have consequences. If the claim is for taxes or fees owed by the current owner of the property, a delayed claim will cause the lien to reattach to the property, but the lien may lose priority to any intervening mortgages or liens. If the delayed claim is for taxes or fees owed by a former owner of the property and there is an intervening purchaser, the lien cannot reattach to the property—i.e., it is lost.Keller v. Scranton City Treasurer, 29 A.3d 436, 439 (Pa. Cmwlth. 2011) (emphasis in original) (footnotes omitted). Moreover, another sentence in Section 1 of the 1959 Act provides that "[i]n the case of real estate benefitted by the improvement sold before the municipal claim is filed, the date of completion in said certificate shall determine the liability for the payment of the claim as between buyer and seller, unless otherwise agreed upon or as above set forth." Thus, in this case the 1959 Act clearly would place the burden of paying the liens upon the previous owner, because (1) the agreement of sale did not provide otherwise; (2) the liens apparently were not filed before the sale; and (3) as indicated in the lien chart above, the work was completed before the sale occurred.
As we indicated above, Vurimindi specifically pleaded that the City failed to record the liens on the docket. Consequently, Vurimindi's own averments relating to the City, as quoted above, support the trial court's conclusion that Vurimindi failed to plead facts that support his claim that the liens were recorded before the effective date of the title insurance policy. Moreover, under the 1959 Act, the previous owners of the Property are responsible for untimely filed liens where the work was completed six or more months before the City filed the liens, and the City could not seek to recover from Vurimindi for payment of the liens. Based upon the foregoing discussion we conclude that the trial court did not err in granting the motion for summary judgment as to Stoughton and Realty One Properties.
Accordingly, we will affirm the trial court's orders: (1) sustaining the City's preliminary objections; (2) sustaining Metropolitan and Kane's preliminary objections; (3) granting summary judgment in favor of Commonwealth; and (4) granting summary judgment in favor of Stoughton and Realty One Properties.
/s/_________
P. KEVIN BROBSON, Judge
ORDER
AND NOW, this 29th day of November, 2012, the orders of the Court of Common Pleas (1) sustaining the preliminary objections of the City of Philadelphia (City) and dismissing with prejudice the Amended Complaint filed by Vamsidhar Vurimindi (Vurimindi) against the City; (2) sustaining the preliminary objections of Metropolitan Abstract, Inc. (Metropolitan) and Dennis Kane (Kane) and dismissing Vurimindi's Amended Complaint against Metropolitan and Kane; (3) granting the motion for summary judgment filed by Commonwealth Land Title Insurance Company (Commonwealth) and dismissing Vurimindi's Amended Complaint against Commonwealth; and (4) granting the motion for summary judgment filed by Realty One Properties and Robert Stoughton and dismissing Vurimindi's Amended Complaint are AFFIRMED.
/s/_________
P. KEVIN BROBSON, Judge
Chartiers, 489 A.2d at 1390.