Opinion
No. 2265 C.D. 2007.
Submitted: January 16, 2009.
Filed: July 2, 2009.
BEFORE: SMITH-RIBNER, Judge; JUBELIRER, Judge; KELLEY, Senior Judge.
OPINION NOT REPORTED
Andrew Eisenstein and Matthew Canno appeal from an order of the Court of Common Pleas of Philadelphia County (trial court), which upon consideration of post-trial motions, granted a new trial limited to damages only and denied all other post-trial motions. We affirm.
The Coronado is a 37-unit residential building located at 2101 Chestnut Street in Philadelphia, Pennsylvania. The Coronado Condominium Association, Inc. (Association) is a non-profit Pennsylvania corporation, consisting of all owners of the units at The Coronado. In December 2004, the Association filed a Complaint against Iron Stone Coronado, L.P.; Iron Stone Coronado, G.P.; Iron Stone Management, LLC; Andrew Eisenstein, President of Iron Stone Coronado, G.P.; Matthew Canno, an officer of Iron Stone Coronado, G.P.; and Joel Wachs, Vice President, Treasurer and Secretary of Iron Stone Coronado, G.P. (collectively, Defendants).
Iron Stone Coronado, L.P. is a Pennsylvania limited partnership, controlled by Iron Stone Coronado, G.P., a Pennsylvania corporation. Iron Stone Management, LLC is the agent of Iron Stone Coronado, L.P.
In June 2005, Defendants joined Jay Silber, a unit owner, who replaced Wachs on the Executive board after Wachs' resignation in February 2004.
The Complaint, which was amended in November 2005, sought damages against Defendants for several claims including breach of contract and breach of fiduciary duty. According to the Complaint, Defendants were required but failed to properly maintain, repair and replace the common elements pursuant to Section 2.3 of the Coronado Condominium Declaration (Declaration) and Section 3307(a) of the Pennsylvania Uniform Condominium Act (Act), 68 Pa. C.S. § 3307(a), and were required but failed to adopt budgets and collect assessments providing funds to pay the Association's common expenses and establish adequate reserves for future repairs pursuant to Section 9.1 of the Declaration and Section 5.2.1 of the Association's Bylaws (Bylaws). The Association claimed that instead of taking action to repair known common element defects or properly maintain common areas, Defendants spent Association funds on cosmetic repairs and improvements to enhance the marketability of the units owned by Defendants Iron Stone Coronado, L.P., and Eisenstein. The Association further claimed that Defendants' conduct constituted a breach of fiduciary duty owed to the Association, pursuant to Section 3303(a) of the Act, 68 Pa. C.S. § 3303(a).
A jury trial was held before the trial court. At the start of the trial, the Association withdrew all claims, except breach of contract claims against Iron Stone Management, LLC, Eisenstein, Canno and Wachs, and breach of fidicuiary duty claims against Eisenstein, Canno and Wachs. The following facts were established. The Association operates in accordance with the Act, Declaration, and Bylaws. In January 2003, Iron Stone Coronado, L.P., purchased thirty-three units and Eisenstein purchased two units at The Coronado. Iron Stone Coronado, L.P., and Eisenstein began marketing and selling units at The Coronado. Defendants elected Eisenstein, Wachs and Canno to serve as the Association's Executive Board. Wachs served on the Executive Board until February 2004, when he resigned and was replaced by Silber. Eisenstein and Canno served on the Executive Board until they resigned on September 28, 2004 and were replaced by newly elected Association members who had, in the interim, purchased units at The Coronado. The newly elected board members discovered serious defects in the common elements and individual units, including damage to the building from structural defects and deterioration and problems with pointing, the building façade, storm water management controls, utility systems, and elevator systems, which the Association claims Defendants should have repaired when they served on the Executive Board. The Association presented evidence on the various defects.
At the conclusion of the Association's evidence, a nonsuit was granted in favor of Defendant Iron Stone Management, LLC. Prior to deliberations, the trial court instructed the jury on the definitions of gross negligence, willful misconduct, and the standards of liability under the Association's Bylaws. The trial court also instructed the jury that if liability were found, to state the amount of damages, if any, which would put the Association in as good a position as if Defendants had properly performed.
The trial court also granted Defendants' motions for nonsuits as to the Association's claims of $300,000 for window repair and $300,000 for pointing work, because this work was merely proposed, but had not yet been contracted for or performed.
The jury returned a verdict for the Association and against Defendants Eisenstein and Canno in the amount of $245,000. By special interrogatories, the jury specifically found that Eisenstein and Canno were grossly negligent, but had not engaged in any willful misconduct. The jury found that Defendants Wachs and Silber were not grossly negligent, and found for all Defendants as to punitive damages.
The Association and Defendants Eisenstein and Canno filed post-trial motions. The trial court granted the motion for a new trial, but limited to damages for only those claims upon which the liability verdict was found. The trial court found that an improper measure of damages had been charged to the jury and that the proper measure of damages relevant to the Association is the difference in costs of repairs between the time repairs were actually made and the time at which repairs should have been made. The trial court denied all other post-trial motions, including Defendants' motion for judgment n.o.v. The Association and Defendants Eisenstein and Canno filed cross appeals with this Court. The appeals were consolidated by order of this Court dated December 18, 2008. The appeal filed by the Association, at Docket No. 2206 C.D. 2007, was dismissed by order of this Court dated December 22, 2008.
By order of this Court dated December 1, 2008, the Association was precluded from filing a brief at Docket No. 2265 C.D. 2007.
Defendants Eisenstein and Canno raise the following issues for our review:
Our scope of review of a trial court's decision denying a motion for post-trial relief is limited to determining whether the trial court abused its discretion or committed an error of law. Burke v. Buck Hotel, Inc., 742 A.2d 239 (Pa.Cmwlth. 1999).
1. Whether the trial court erred in denying Defendants' motion for judgment n.o.v. for the Association's failure to prove damages.
2. Whether the jury in the second trial can determine the difference between the cost of repairs when they should have been made and the cost of repairs when they were made without first deciding when it became gross negligence to fail to make the repairs.
3. Whether the Association offered sufficient evidence in the first trial to prove gross negligence.
First, Eisenstein and Canno contend that the trial court erred in denying their motion for judgment n.o.v. because the Association did not prove that it suffered any harm. We disagree.
A judgment n.o.v. will be granted only in clear cases where the facts are such that no two reasonable persons could fail to agree that the verdict was improper. Moure v. Raeuchle, 529 Pa. 394, 604 A.2d 1003 (1992); Moore v. City of Philadelphia, 571 A.2d 518 (Pa.Cmwlth. 1990),petition for allowance of appeal denied, 527 Pa. 589, 588 A.2d 511 (1991). It is well-settled that judgment n.o.v. cannot properly be granted where there is any evidence in the record from which the jury could have found a verdict for the plaintiff. Clack v. Department of Transportation, 710 A.2d 148 (Pa.Cmwlth. 1998). In deciding whether judgment n.o.v. is warranted, this Court must consider the evidence and any conflicts therein in the light most favorable to the verdict winner who is afforded the benefit of all reasonable factual inferences that arise from the evidence. Sacco v. City of Scranton, 540 A.2d 1370 (Pa.Cmwlth. 1988),petition for allowance of appeal denied, 524 Pa. 601, 568 A.2d 1251 (1989).
Pursuant to the Act and the Bylaws, the Association is responsible for making necessary repairs to the common elements of the condominium. Section 3307 of the Act, 68 Pa. C.S. § 3307; Sections 2.3 and 3.2 of the Declaration, Reproduced Record (R.R.) at 250a, 251a. The Executive Board is required to adopt a budget for the payment of common expenses during the fiscal year of the Association and shall assess the amounts thereof against each unit in accordance with the unit's respective percentage interest. Section 9.1 of the Declaration, R.R. at 258a. The Executive Board shall adopt an annual budget for the Association to pay the cost of maintenance, management, operation, repair and replacement of the common elements. Section 5.2.1 of the Bylaws, R.R. at 301a. The Executive Board shall also include such reasonable amounts as the Executive Board considers necessary to provide working capital, a general operating reserve and reserves for contingencies and replacements. Id. The Executive Board shall act as fiduciaries to the Association exercising their powers in good faith and in the best interests of the Association and with such care, including reasonable inquiry, skill and diligence, as a person of ordinary prudence would use under similar circumstances. Section 3303 of the Act, 68 Pa. C.S. § 3303.
The Executive Board and its members in their capacity as members, officers and employees shall not be liable to unit owners as a result of the performance of the Executive Board members' duties for any mistake of judgment, negligence or otherwise, except for Executive Board members' own " willful misconduct or gross negligence." Section 12.1(b) of the Declaration, R.R. at 263a (emphasis added). Section 3113(a) of the Act, 68 Pa. C.S. § 3113(a), provides that remedies provided under the Act shall be liberally administered to put the aggrieved party in as good a position as if the other party had fully performed. Consequential, special or punitive damages may not be awarded except as specifically provided under the Act or by other rule of law. Section 3113(a) of the Act, 68 Pa. C.S. § 3113(a).
Here, the jury determined that Defendants Eisenstein and Canno, as members of the Executive Board, were grossly negligent by failing to make necessary repairs to the building. The trial court properly instructed the jury that the measure of damages was the amount of money which would put the Association in as good a position as if Defendants had performed properly. The verdict, however, put the Association in a better position than it would have been by awarding the full cost of repairs. The Association is not entitled to a reimbursement of the full cost of repairs in damages because the unit owners are required to pay for repairs to common elements through assessments. Rather, the proper measure of damages is the difference in the cost of repairs, if any, between the time the repairs are actually made and the point in time the repairs should have been made. While the Association offered evidence of the total cost of repairs, it failed to offer evidence showing the difference between the cost of repairs at the time it claimed the repairs should have been contracted for and the cost of repairs when they were undertaken by the successor board of directors. On this basis, the trial court awarded a new trial as to damages only for those claims upon which a liability verdict was found. While Defendants Eisenstein and Canno argue that the Association has failed to demonstrate harm caused by the delay, one can reasonably infer that had the repairs been made in a timely manner, the repairs would have been less extensive and less expensive. Viewing the evidence in the light most favorable to the Association and drawing all reasonable inferences therefrom, there is no basis upon which to grant Defendants' motion for judgment n.o.v. We conclude that the trial court properly denied Defendants' motion for judgment n.o.v.
Next, Defendants Eisenstein and Canno contend that the trial court erred in awarding a new trial on the issue of damages without first making a determination as to when it became gross negligence to fail to make the repairs. We disagree.
As discussed above the proper measure of damages is the difference in the cost of repairs between the time that repairs were actually made and the time that repairs should have been made. Evidence was presented that the repairs were long overdue. While the jury found gross negligence in the delay to repair common elements, a determination was not made as to when the repairs should have been made. Such a determination can be made by the jury at the new trial on damages.
Finally, Defendants Eisenstein and Canno contend that the Association failed to offer sufficient evidence in the first trial to prove gross negligence. We disagree.
There is a substantive difference between ordinary negligence and gross negligence. Ratti v. Wheeling Pittsburgh Steel Corporation, 758 A.2d 695 (Pa.Super. 2000), petition for allowance of appeal denied, 567 Pa. 715, 785 A.2d 90 (2001). Gross negligence constitutes conduct more egregious than ordinary negligence but does not rise to the level of intentional indifference to the consequences of one's acts. Id. The behavior must be flagrant, grossly deviating from the ordinary standard of care. Albright v. Abington Memorial Hospital, 548 Pa. 268, 696 A.2d 1159 (1997).
Herein, the Association claimed that Defendants were grossly negligent in failing to contract for concrete, elevator, and HVAC repairs and brick pointing. In support thereof, the Association presented the testimony of Kevin McGrath, president of a real estate property management company specializing in managing condominium associations; John Regan, a sales representative for United Elevator; and Michael Proud, owner of a construction company specializing in brick pointing. The witnesses testified as lay witnesses, not experts, and shared their observations on what they saw at The Coronado.
McGrath testified that he visited the property in September 2004 before being hired to manage the property. During his visit, he observed "a lot of deteriorated concrete on the sidewalk and walkways around the building." R.R. at 93a. McGrath testified that the building façade had not been pointed or maintained recently. Id. There were visible cracks in the foundation. Id. There were visible areas of missing mortar in the brick work. Id. The paint was peeling. Id. A piece of cornice at the top of the building was loose and dangling. Id. McGrath also testified that large heating and air conditioning pipes in the basement were continually leaking water on the floor. R.R. at 94a. Buckets were placed under the pipes, which had to be emptied periodically, to catch the water coming off of the pipes. Id. McGrath testified that one of the pumps in the boiler room was leaking. R.R. at 97a.
Proud was hired in September 2004 to inspect the building façade. R.R. at 135a. Proud testified that the building had been neglected for several years and that the pointing was in bad condition. Id. The brick pointing showed signs of deterioration, holes, and cracks, and the bricks themselves were deteriorated. Id. Looking at the north and west elevations, over seventy to eighty percent of the building needed to be repointed. Id. The windows had not been painted for years. Id. The caulking was deteriorated around the perimeters of the windows. Id. Fire escapes were old, rusted and broken apart in different areas. Id. Down spouts were missing. Id. Proud testified that he observed evidence of water penetration from the exterior into the building. Id. Proud testified that such conditions do not develop overnight and were years in the making. Id.
Regan was hired in October 2004 to perform a full survey of The Coronado's elevator equipment. R.R. at 163a. Regan testified that he observed several major areas of concern. Regan testified that the elevator's machine room was covered in "rouge", which is red rust that comes from the elevator's hoist cables. R.R. at 166a. Regan observed actual breakage in some of the cable strands. R.R. at 167a. Regan testified that relays mounted on the controller, which is the heart of the elevator, were hanging off the controller and wires were disconnected on the controller. R.R. at 166a. Upon examining the shaft, Regan observed that the door operation was out of adjustment. Id. Sometimes the doors would close fast; sometimes they would close slowly. Id. When the car came into the floor and the doors opened, sometimes the car would be off as much as three inches in the up direction. Id. In the down direction, it would vary. Id. Upon inspection, there was a sign on the return above the buttons that instructed, if the elevator did get stuck and the doors didn't open to constantly push the red button. Id. Regan testified that anyone off the streets could look at the elevator and know the condition without being an expert. R.R. at 164a, 165a.
The testimony given by these witnesses as to their observations provided a reasonable basis for the jury to conclude that The Coronado's common elements had been in need of repair for a significant period of time and that the state of disrepair was rather obvious. The failure to make obvious repairs grossly deviated from the ordinary standard of care required of Defendants Eisenstein and Canno. We, therefore, conclude that sufficient evidence supports the jury's findings of gross negligence.
Accordingly, the order of the trial court is affirmed.
ORDER
AND NOW, this 2nd day of July, 2009, the order of the Court of Common Pleas of Philadelphia County, at Docket No. 2691, December Term 2004, dated October 30, 2007 is AFFIRMED.