Opinion
CIVIL ACTION NO. 00-5866.
June 24, 2003
MEMORANDUM
This action arises out of the alleged failure of defendants Robert Soto ("Soto"), Harclay Builders ("Harclay"), and Sunset Builders Association ("Sunset") to construct a home for plaintiffs on a parcel of land that plaintiffs Joseph DeNofio ("DeNofio") and Sharon Grant ("Grant") owned in Chadds Ford, Delaware County, Pennsylvania. Plaintiffs sued defendants for negligence, negligent misrepresentation, fraudulent misrepresentation, and breach of contract, and sought compensatory and punitive damages. Default was entered against all defendants on April 26, 2001, as a result of their failure to appear, plead, or in any other way defend in this action. Plaintiffs' motion for default judgment was granted against all defendants on July 6, 2001. On June 5, 2003, we granted plaintiffs' motion for assessment of compensatory damages in the amount of $24,701.34. On June 16, 2003, we held a hearing to determine punitive damages, and we now make the following findings of fact and conclusions of law.
The only witnesses at the hearing, plaintiffs DeNofio and Grant, were credible. Plaintiffs had entered into a contract with Soto, as "representative" of defendants Harclay and Sunset, for construction of a modular home on plaintiffs' land in Delaware County. The home was a one-story premanufactured structure to which plaintiffs had planned to bring Grant's elderly aunt to live with them. The home plaintiffs were ultimately able to obtain after defendants failed to perform on the contract was a two-story home in which they could not suitably accommodate Grant's aunt. As a result, Grant has to commute to New Jersey on the weekends to care for her elderly relative.
Soto told plaintiffs that construction would be completed by Thanksgiving, 1999. However, not until December, 1999, did work begin with the digging of a large pit on plaintiffs' property for the foundation of the home. No further work was ever done. The bulldozer remained on plaintiffs' property and the pit was left as is. It then filled with water during a period of bad weather, creating a dangerous condition. At some point in early 2000, plaintiffs learned that they were in violation of a local safety code because of the large open hole on their property. Plaintiffs also faced the potential of liability should the dangerous condition result in harm to anyone.
Plaintiffs introduced into evidence five photographs, taken in January, 2000, of the water-filled pit and the bulldozer that defendants left on plaintiffs' property. These exhibits, marked P-1 through P-5, clearly show the dangerous condition created by defendants' failure to complete construction under their contract with plaintiffs.
DeNofio's regular efforts to contact Soto were for the most part unavailing. Soto avoided contact with plaintiffs, and when plaintiffs were able to reach him, he simply put them off with excuses. Finally, DeNofio was compelled to fence off the pit himself. He also had to buy a pump and drain the pit on a weekly basis over the course of six or seven months.
Eventually, plaintiffs contracted with another builder who installed a home on their property. Because of its configuration, however, Grant's aunt was unable to move in. In addition, plaintiffs lost their down payment on the original premanufactured home.
Because judgment was entered in favor of plaintiffs on their claim of fraudulent misrepresentation, punitive damages are permissible in this case. See Delahanty v. First Pa. Bank, N.A., 464 A.2d 1243, 1263 (Pa.Super.Ct. 1983). Punitive damages may be imposed where there is "sufficiently aggravated conduct contrary to the plaintiff's interests, involving bad motive or reckless indifference. . . ." Chuy v. Philadelphia Eagles Football Club, 595 F.2d 1265, 1277 (3d Cir. 1979). Fraudulent misrepresentation certainly meets this standard. While compensatory damages are aimed at making a plaintiff whole for the specific loss suffered, punitive damages "serve a broader function; they are aimed at deterrence and retribution."State Farm Mut. Auto. Ins. Co. v. Campbell, 123 S.Ct. 1513, 1519 (2003). The finder of fact has discretion over the imposition of punitive damages, but "there are procedural and substantive constitutional limitations on these awards." Id.
In fashioning an appropriate punitive damages award, we are guided by the U.S. Supreme Court's recent decision inCampbell. There, the Court reiterated the importance of the three guideposts first announced in BMW of North America v. Gore, 517 U.S. 559 (1996): first, the degree of reprehensibility of the defendant's conduct, second, the disparity between the actual or potential harm suffered by the plaintiff and the punitive damages award; and finally, the difference between the punitive damages award and the civil penalties authorized or imposed in similar cases. Campbell, 123 S.Ct. at 1520.
The most important determinant of a punitive damages award is the degree of reprehensibility of the defendant's conduct. Id. at 1521. In this regard, Campbell instructs us to consider whether the harm was physical or economic; whether the tortious conduct evinced an indifference or reckless disregard for the safety of others; whether the target of the conduct was financially vulnerable; whether the conduct was an isolated incident or was part of a pattern of conduct; and finally, whether the conduct was the result of intentional malice, trickery, or deceit. Id.
In the instant case, although the harm was economic, physical harm could certainly have occurred had the plaintiffs not taken steps to remedy the dangerous condition in which their property was left. The water-filled pit existed on plaintiffs' property from December 1999 onwards. DeNofio's repeated attempts to contact Soto to remedy the condition were to no avail. Soto's conduct demonstrated complete indifference to the safety of others in the vicinity. In addition, the plaintiffs were left financially vulnerable by defendant's actions. They would have been liable for injury caused to others by the condition on their property, and they were forced to expend additional resources fencing off and draining the pit. The failure of Soto to take further action was part of a pattern of evasiveness and lack of cooperation in this case. On the few occasions when DeNofio did speak to him directly, he made excuses for his nonperformance but never actually acted to remedy the situation. Soto's conduct involved deceit as he misrepresented to plaintiffs that he would build them a home when he had no intention of doing so.
In deciding on any award of punitive damages, we must consider the relationship to any compensatory award. The Supreme Court inCampbell has cautioned that "few awards exceeding a single-digit ratio between punitive and compensatory damages . . . will satisfy due process." Campbell, 123 S.Ct. at 1524. In this case, we awarded compensatory damages in the amount of $24,701.34.
The final factor to consider is what civil penalties are authorized or imposed in comparable cases. Perhaps the most comparable sanctions available under Pennsylvania law are the penalties provided for by the Pennsylvania Unfair Trade Practices and Consumer Protection Law ("UTPCPL"), 73 Pa. Stat. Ann. § 201-1 et seq. The UTPCPL authorizes a civil penalty of $5,000 for violations of injunctions or assurances of voluntary compliance issued or filed pursuant to the act. 73 Pa. Stat. Ann. § 201-8. It also authorizes court awards of treble damages in private actions brought pursuant to the UTPCPL. 73 Pa. Stat. Ann. § 201-9.2.
In this case, Soto left plaintiffs' property in an extremely dangerous condition and was uncooperative when plaintiffs attempted repeatedly to contact him about the situation. As a result of Soto's conduct, plaintiffs for six to seven months had to deal with an open, water-filled pit on their property. They had to worry about the safety of children and others who might come near the pit, as well as about being fined for violating the local safety code as a result of the pit. They also had to expend considerable time, energy, and resources fencing off and regularly draining the pit. Moreover, the home that plaintiffs ultimately obtained to replace the one they lost due to defendant's conduct was of a lesser value and unable to accommodate Grant's elderly aunt. In sum, Soto was engaged from the beginning in fraudulent conduct. In light of Soto's reprehensible behavior, and the actual harm and distress suffered by the plaintiffs in this case, an award of punitive damages against him in the amount of twice the amount of compensatory damages, or $49,402.68, is reasonable.
Plaintiffs ask that we impose punitive damages not only on Soto but also on the two entities he claimed to represent, defendants Harclay and Sunset. While Pennsylvania permits punitive damages on the basis of vicarious liability for the actions of an agent or employee, see Dean Witter Reynolds, Inc. v. Genteel, 499 A.2d 637, 643 (Pa.Super.Ct. 1985), this rule must be applied "with great caution." Id. Although plaintiffs' complaint alleges that Soto held himself out as an authorized agent of defendants Sunset and Harclay, plaintiffs' testimony at the hearing related solely to Soto. There was no evidence presented concerning the knowledge or involvement of Sunset or Harclay as principals. Therefore, we decline to enter punitive damages against these two entities.
ORDER
AND NOW, this day of June, 2003, for the reasons set forth in the accompanying Memorandum, it is hereby ORDERED that:
(1) the motion of plaintiffs for punitive damages against defendant Robert Soto is GRANTED;
(2) judgment is entered in favor of plaintiffs and against defendant Robert Soto for punitive damages in the amount of $49,402.68; and
(3) the motion of plaintiffs for punitive damages against defendants Sunset Builders Association and Harclay Builders is DENIED.