Opinion
No. 414 C.D. 2014
01-15-2015
Michael J. Moretti, Appellant v. Glenloch Homes Association, William H. Delany, Paul W. Disciascio, William J. Wolfe, James J. McKeone, Francis A. O'Brien, and Albert Taddeo
BEFORE: HONORABLE RENÉE COHN JUBELIRER, Judge HONORABLE P. KEVIN BROBSON, Judge HONORABLE ROCHELLE S. FRIEDMAN, Senior Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY JUDGE COHN JUBELIRER
Michael J. Moretti appeals from the Order of the Court of Common Pleas of Delaware County (trial court) that sustained the Preliminary Objections (POs) filed by Glenloch Homes Association (Association), and Association Board of Director Members (Board) William H. Delany, Paul W. Disciascio, William J. Wolfe, James J. McKeone, Francis A. O'Brien, and Albert Taddeo (collectively, Defendants) and dismissed, with prejudice, Moretti's Amended Complaint. The trial court concluded Moretti lacked the standing and capacity to sue Defendants because he was no longer a member of the Association when he filed his Amended Complaint and, alternatively, that Moretti failed to state a claim upon which relief could be granted in any of the three counts asserted in the Amended Complaint. On appeal, Moretti argues the trial court erred in sustaining the POs and dismissing the Amended Complaint in its entirety because he has standing and has sufficiently pled the necessary facts and legal requirements to state the claims asserted in the Amended Complaint. Discerning no error, we affirm.
Delany is the only defendant who was on the Board when Moretti filed the Amended Complaint. (Trial Ct. Op. at 2.) Disciascio died in 2012. (Amended Compl. ¶ 4, R.R. at 5a.)
In December 2008, Moretti filed a civil action against Defendants, to which Defendants filed preliminary objections. (Trial Ct. Op. at 1.) Thereafter, Moretti withdrew his request for injunctive relief and Defendants withdrew their POs. (Trial Ct. Op. at 1.) Moretti filed the Amended Complaint in December 2013. (Trial Ct. Op. at 1.)
I. Background
a. The Amended Complaint
The Amended Complaint makes the following, relevant, averments. In 1974, the Association was formed as a homeowners association for the residential community of Glenloch, which consists of twenty single family homes and seventy-two townhomes. (Amended Compl. ¶ 10, R.R. at 6a.) The Association is governed by its Bylaws, and owners of properties in Glenloch are members of the Association. (Amended Compl. ¶¶ 11-12, R.R. at 6a.) Members are required to pay the Association general and limited assessments to cover common costs and expenses. (Amended Compl. ¶ 13, R.R. at 7a.) Moretti owned a home in Glenloch from September 23, 1994 until December 21, 2011, when he sold his home and moved out of the community. (Amended Compl. ¶¶ 15-16, R.R. at 7a.) In 2005, Delany, the Association's president, asked Moretti if he would become the Association's treasurer, and Moretti agreed. (Amended Comp. ¶¶ 3, 18-19, R.R. at 5a, 7a.) Upon assuming the position, Moretti reviewed the records and discovered unpaid dues and problems with the Association's record keeping. (Amended Compl. ¶¶ 22-24, R.R. at 7a-8a.)
Between 2006 and 2008, Defendants managed the Association and its finances in various ways that Moretti alleges benefitted them more than the Association and its members. (Amended Compl. ¶¶ 28-29, 31-32, 34-39, 40-41, 48-49, 51-52, 62-64, R.R. at 8a-13a.) During Defendants' management, one of the Association's accounts had to borrow money from the Association's General Fund in order to meet its obligations, which resulted in a dues increase for all of the Association's members. (Amended Compl. ¶¶ 42, 44-46, R.R. at 10a-11a.) After approving one budget while Moretti was treasurer in the fall of 2007, Moretti alleges Defendants removed Moretti from his position as treasurer and presented a different budget to the Association's members at an Association meeting in January 2008. (Amended Compl. ¶¶ 78, 81-82, 86-89, 97-100, R.R. at 14a-17a.) Moretti alleges that the budget presented in January 2008 did not accurately reflect the Association's financial position and reflected that the Association's financial position was better than it was. (Amended Compl. ¶¶ 102-04, R.R. at 17a.) Subsequently, Moretti alleges that Defendants did not accurately disseminate information to the members regarding the Association's finances, sent untimely notices, and would not answer questions regarding the Association's finances. (Amended Compl. ¶¶ 115-20, 122-30, R.R. at 18a-20a.) Moretti asserted that, based on these facts, Defendants "breached or failed to perform the duties of their offices" and engaged in self-dealing, willful misconduct, recklessness, and/or wasted or dissipated the Association's property. (Amended Compl. ¶ 131, R.R. at 20a-21a.)
The Amended Complaint also averred that, after Moretti filed his initial complaint in 2008 challenging Defendants' actions, the Association revised its policies and procedures associated with governing and administering the Association and its funds. (Amended Compl. ¶ 132, R.R. at 21a.) These revisions addressed or remediated the issues raised in Moretti's initial complaint. (Amended Compl. ¶ 132, R.R. at 21a.)
Count I of the Amended Complaint asserts that Defendants made numerous misrepresentations and engaged in fraudulent or deceptive conduct that created a likelihood of confusion or misunderstanding and constituted unfair or deceptive practices as defined by the Unfair Trade Practices and Consumer Protection Law (CPL). (Amended Compl. ¶¶ 134, 138, R.R. at 21a-22a.) Count II avers that Defendants had a common law fiduciary relationship to the Association and its members and failed to act in good faith, properly deal with the Association's funds and property, communicate truthfully to the members, and "refrain from using any influence or advantage of their offices for" any purpose other than for "the common interest of the Association and all of its members." (Amended Compl. ¶¶ 141-44, R.R. at 22a-23a.) Count III asserts a claim for unjust enrichment, averring that, in response to Moretti's initial 2008 complaint, the Association made changes to its policies on its governance and administration that benefited the Association and its members and it would be unfair for the Association and its members not to reimburse Moretti for the value of his time and resources. (Amended Compl. ¶¶ 150-51, 155, R.R. at 24a-25a.)
Act of December 17, 1968, P.L. 1224, as amended, 73 P.S. §§ 201-1 - 201-9.3.
Moretti asserted he had standing to bring this claim for damages suffered prior to December 21, 2011, and is entitled to recover damages from Defendants, jointly and severally. (Amended Compl. ¶¶ 145-46, R.R. at 23a.)
b. Defendants' Preliminary Objections
Defendants filed POs to the Amended Complaint on January 7, 2014. Defendants challenged Moretti's standing and capacity to sue because: (1) having sold his home in Glenloch, he is no longer a member of the Association; and (2) only one of the named Defendants currently serves on the Board. (Defendants' PO I ¶¶ 2-4.) Defendants demurred to Count I, the alleged violation of the CPL, asserting, inter alia, Moretti failed to state a claim because there are no allegations, as required by the CPL, that Moretti sustained harm to his "'personal, family, or household interests'" or suffered any ascertainable monetary damages. (Defendants' PO II ¶¶ 9-10 (quoting Section 9.2 of the CPL, 73 P.S. § 201-9.2).) Defendants further objected to Count I because Moretti did not allege any facts regarding what conduct constituted unfair or deceptive acts or common law fraud, or what goods and services Moretti purchased as required by the CPL. (Defendants' PO II ¶¶ 11-12.) Defendants demurred to Moretti's claim, in Count II, that they breached their fiduciary duties because Moretti did not allege any specific facts regarding how their acts violated the Uniform Planned Community Act (Planned Community Act) or the Bylaws and, even if he had alleged such facts, Defendants' conduct did not violate those provisions because, inter alia, the Bylaws permit certain Board members and officers to issue "'disbursements made in the ordinary course of business.'" (Defendants' PO III ¶¶ 16-21, 23 (quoting Bylaws Article XII, Section 7, R.R. at 33a).) Defendants further asserted that Moretti's claims are matters of internal Association business subject to the review procedures set forth in the Bylaws, which Moretti never utilized. (Defendants' PO III ¶¶ 22, 24-25.) Finally, Defendants demurred to Moretti's unjust enrichment claim asserting, inter alia: the claim is barred by the four-year statute of limitations and the doctrine of laches; Moretti did not name all of the defendants who allegedly received the benefits of his lawsuit or the value of those benefits; he had adequate remedies at law to contest these issues while he was a resident of Glenloch, but did not do so; and Moretti could not claim money damages as a direct result of bringing his lawsuit. (Defendants' PO IV ¶¶ 29, 39, 42, 45, 47-48.)
Added by Section 1 of the Act of November 24, 1976, P.L. 1166, as amended.
Defendants also requested, in the alternative, that if the trial court did not sustain its demurrers, that certain allegations should be stricken because Moretti failed to plead the necessary underlying facts with sufficient specificity. (Defendants' PO V ¶¶ 49-54.)
We note that the paragraphs in Defendants' PO IV are not in chronological order, and we will refer to the paragraphs as numbered.
c. Trial Court's Decision
On February 11, 2014, the trial court sustained Defendants' PO challenging Moretti's standing and capacity to sue, and struck the Amended Complaint in its entirety with prejudice. (Trial Ct. Order at 1.) The trial court held Moretti lacked standing and capacity to sue Defendants because he no longer owned property in Glenloch and, therefore, was no longer a member of the Association. (Trial Ct. Order at 1.) The trial court explained that Moretti's Amended Complaint was based on his dissatisfaction with how Defendants conducted the Association's business, but, at the time he filed the Amended Complaint, Moretti was no longer a member of the Association and, thus, lacked standing and capacity to sue based on that management. (Trial Ct. Op. at 2-3.) The trial court further noted that the original named Board no longer existed since only Delany remained a member of the Board. (Trial Ct. Op. at 2.)
The trial court refers to Moretti's lack of standing as being a lack of jurisdiction. (Trial Ct. Order at 1.)
The trial court also sustained Defendants' demurrers to all three Counts of the Amended Complaint. On Moretti's CPL claim, the trial court concluded that Moretti did not show he sustained any monetary damages and failed to allege facts demonstrating unfair and deceptive acts or the purchase of goods or services, which are required to maintain a claim under the CPL. (Trial Ct. Order at 1; Trial Ct. Op. at 3.) The trial court also sustained Defendants' demurrer to the breach of fiduciary duty claim because Moretti did not show that the alleged wrongful conduct violated the Planned Community Act or establish that Defendants acted in bad faith, contrary to the best interest of the Association, or in a fashion different than a prudent person would have acted under similar circumstances. (Trial Ct. Order at 2; Trial Ct. Op. at 3.) Finally, the trial court sustained Defendants' demurrer to the unjust enrichment claim, noting that "['u]njust enrichment is the retention of a benefit conferred by another without offering compensation, in circumstances where compensation is reasonably expected, [and] for which the beneficiary must make restitution.[']" (Trial Ct. Order at 2; Trial Ct. Op. at 3 (quoting American and Foreign Insurance Company v. Jerry's Sport Center, Inc., 2 A.3d 526, 531 n.7 (Pa. 2010)).) The trial court concluded that no compensation would have been expected under these circumstances. (Trial Ct. Op. at 3.) The trial court further explained that dismissal of the unjust enrichment count was warranted because: it was untimely; Moretti did not name the Glenloch homeowners, who allegedly benefited from his original law suit, as defendants; and the Association was not a person that could receive a benefit from that action. (Trial Ct. Order at 2; Trial Ct. Op. at 3-4.) Moretti now appeals to this Court.
The trial court also struck, with prejudice, numerous allegations pertaining to Defendants' conduct from the Amended Complaint, such as claims that Defendants' actions were outrageous, egregious, or wanton; and that Defendants engaged in self-dealing, willful misconduct, or recklessness, concluding they were not supported by the facts pled. (Trial Ct. Order at 2.)
Our "review of a trial court's order sustaining preliminary objections and dismissing a complaint is limited to a determination of whether that court abused its discretion or committed an error of law." Petty v. Hospital Service Association of Northeastern Pennsylvania, 967 A.2d 439, 443 n.7 (Pa. Cmwlth. 2009). In reviewing preliminary objections, we consider as true "all well pleaded relevant and material facts." Id. However, "the court need not accept as true conclusions of law, unwarranted inferences from facts, argumentative allegations, or expressions of opinion." Penn Title Insurance Company v. Deshler, 661 A.2d 481, 483 (Pa. Cmwlth. 1995). "A demurrer will not be sustained unless the face of the complaint shows that the law will not permit recovery, and any doubts should be resolved against sustaining the demurrer." Id. Reviewing preliminary objections involves "a question of law . . . to which our standard of review is de novo and our scope of review is plenary." Petty, 967 A.2d at 443 n.7.
II. Moretti's Appeal to this Court
On appeal, Moretti challenges the trial court's conclusions that he lacked standing and did not state claims upon which relief could be granted. We first address whether Moretti has the standing and capacity to file the Amended Complaint because, if we conclude he does not, it will be unnecessary to address Moretti's other assertions of error.
Moretti asserts two bases for standing. Moretti notes that the events giving rise to his claims and damages occurred while he was still a member of the Association and Defendants were members of the Board. Similarly, the benefits accrued by the Association and its members from the changes implemented as a result of Moretti's initial 2008 complaint began in 2009, while Moretti was still a member of the Association. Moretti argues, based on these facts, that he has standing under: (1) Section 5412 of the Planned Community Act, 68 Pa. C.S. § 5412; and (2) the common law because he has demonstrated he was aggrieved by Defendants' actions, he has a substantial, direct, and immediate interest in the outcome of the Amended Complaint, and his interests "surpass[] the common interest of all citizens in procuring obedience to the law." In re Hickson, 821 A.2d 1238, 1243 (Pa. 2003).
Section 5412 of the Planned Community Act, entitled "Effect of violations on rights of action," provides:
If a declarant or any other person subject to this subpart violates any provision of this subpart or any provisions of the declaration or bylaws, any person . . . adversely affected by the violation has a claim for appropriate relief. Punitive damages may be awarded in the case of a willful violation of the subpart.68 Pa. C.S. § 5412 (emphasis added). Pursuant to this language, Section 5412 provides a claim based on a violation of the CPL, a provision of a planned community's declaration, or a planned community's bylaws. After reviewing the Amended Complaint, we conclude that Moretti did not plead any violation of the Planned Community Act, Glenloch's declaration, or the Bylaws. In fact, Moretti essentially acknowledges that he did not plead any such violations because he argues that he was not required to do so in order to state a common law claim for breach of fiduciary duty. (Moretti's Br. at 21-22.) Accordingly, Moretti does not have standing based on Section 5412.
Moreover, after reviewing the allegations contained in the Amended Complaint, we conclude that Moretti does not have standing under traditional, common law principles. Where a litigant is "somehow . . . 'aggrieved' by the matter he seeks to challenge," there is a legitimate controversy for the courts to rule upon, and the litigant has standing to bring the claim. Hickson, 821 A.2d at 1243. A litigant establishes that he is "aggrieved" if he can show that he "has a substantial, direct and immediate interest in the claim sought to be litigated." Bergdoll v. Kane, 731 A.2d 1261, 1268 (Pa. 1999). Our Supreme Court has explained:
A "substantial" interest is an interest in the outcome of the litigation which surpasses the common interest of all citizens in procuring obedience to the law. . . . A "direct" interest requires a showing that the matter complained of caused harm to the party's interest. . . . An "immediate" interest involves the nature of the causal connection between the action complained of and the injury to the party challenging it[.]South Whitehall Township Police Service v. South Whitehall Township, 555 A.2d 793, 795 (Pa. 1989) (citations omitted) (emphasis added). However, if the person "is not adversely affected in any way by the matter he seeks to challenge," then he "is not aggrieved thereby and has no standing to obtain a judicial resolution of his challenge." Independent State Store Union v. Pennsylvania Liquor Control Board, 432 A.2d 1375, 1379-80 (Pa. 1981) (citation omitted).
Here, it is unclear whether Moretti is acting solely on his own behalf or on behalf of the Association's members in his challenges to Defendants' actions in managing the Association. In some Counts Moretti refers to himself and in others he refers to the duties owed to the Association's members. To the extent he seeks to represent the Association's members in this matter, as the trial court noted, Moretti was no longer a member of the Association when he filed his Amended Complaint and, therefore, lacks standing to act on their behalf. With respect to his own standing, Moretti cannot assert any direct, immediate, or substantial interest in the better management of the Association because he is no longer a member of the Association. Finally, a review of the Amended Complaint reveals that, although Moretti makes numerous allegations regarding the Defendants' actions, he has not averred any direct, individualized harm to his interests as a result of those actions. Rather, his only claim for damages is in his general requests "for unliquidated money damages not exceeding $50,000.00," statutory interest, costs, and additional sums, including attorneys' fees. (Amended Compl. Count I, Wherefore Clause, R.R. at 22a; Amended Compl. Count II, Wherefore Clause, R.R. at 23a-24a; Amended Compl. Count III, Wherefore Clause, R.R. at 25a-26a.) Absent allegations that he sustained harm or was adversely affected as a result of Defendants' conduct, Moretti has not established that he has a substantial, direct, and immediate interest in the outcome of this litigation and, therefore, does not have standing to pursue this matter. Independent State Store Union, 432 A.2d at 1379-80.
While unnecessary to resolve because Moretti lacks standing, we also conclude that Moretti lacks the capacity to sue Defendants based on the allegations in the Amended Complaint. The capacity to sue is related to standing, Hall v. Episcopal Long Term Care, 54 A.3d 381, 399 (Pa. Super. 2012), and, generally, "refers to the legal ability of a person to come into court," In re Estate of Sauers, 32 A.3d 1241, 1248 (Pa. 2011). The lack of capacity to sue generally refers "to or involves a general legal disability, . . . such as infancy, lunacy, idiocy, coverture, want of authority, or a want of title in plaintiff in the character in which he or she sues." Id. (citation and emphasis omitted). The "distinction between capacity to sue and standing" is a blurry one. Id. at 1249. Moretti no longer holds title to a property in Glenloch and he does not aver that he suffered any actual damages which he seeks to recover in the Amended Complaint. Accordingly, the trial court properly held that Moretti lacked the capacity to sue Defendants.
Because we conclude that Moretti lacks both the standing and capacity to bring this action, we affirm the trial court's Order sustaining Defendants' POs and dismissing the Amended Complaint with prejudice on those bases.
Based on our resolution of these issues, we will not address Moretti's arguments related to the trial court sustaining Defendants' demurrers. --------
/s/ _________
RENÉE COHN JUBELIRER, Judge ORDER
NOW, January 15, 2015, the Order of the Court of Common Pleas of Delaware County, in the above-captioned matter, is hereby AFFIRMED.
/s/ _________
RENÉE COHN JUBELIRER, Judge