Summary
holding that gist of the action doctrine barred fraudulent inducement claim because "pre-contractual statements concerned specific duties that the parties later outlined in the contract"
Summary of this case from GNC Franchising, Inc. v. O'BrienOpinion
CIVIL ACTION No. 01-5542
November 25, 2003
MEMORANDUM
I. Introduction
Soltech, Inc., Defendant and Counter-Claimant, ("Soltech") alleges that Counter-defendants, Penn City Investments, Inc. ("Penn City"), Horizon Stevedoring, Inc. ("Horizon"), John Brown, Jr. and Timothy Brown (collectively "Perm City parties"), engaged in a course of conduct that ultimately resulted in economic loss to Soltech. Soltech's counterclaims set forth the following causes of action: Count I — fraudulent inducement against Penn City and John Brown, Jr., Count II — common law negligence against Penn City, Horizon and Timothy Brown, Count III — common law bailment against Penn City and Horizon, Count IV — breach of statutory duty as warehouseman against Penn City and Horizon, Count V — equitable accounting against all counter-defendants, and Count VI — breach of contract against Penn City and Horizon.
For a discussion of Soltech's cause of action for breach of contract against Penn City, see the Court's previous Opinion entered in this case on 10/29/2003. Although Soltech's Counterclaim Count VI states a breach of contract claim against Horizon, there is no evidence in the record of any contractual relationship between Soltech and Horizon, and presumably Horizon will move to dismiss the claim.
The Penn City Parties move the Court to grant summary judgment on Counts I through V, as listed above, of Soltech's causes of action. The issues before the Court ask whether or not: (1) the gist of the action doctrine bars Soltech's claims for fraudulent inducement and negligence, (2) an employee acting on behalf of his principal can be held liable for common law negligence, (3) the Court should dismiss Soltech's common law bailment and breach of statutory duty as warehouseman causes of action because they are redundant of its breach of contract claim, (4) Soltech is entitled to an equitable accounting and (5) Soltech can seek delay damages.
Soltech moves for summary judgment as to Counts III and VI.
The Court held oral argument on October 15, 2003.
A. Legal Standard
Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." FED. R. Civ. P. 56(c). An issue is "genuine" if the evidence is such that a reasonable jury could return a verdict for the non-moving party.Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A factual dispute is "material" if it might affect the outcome of the case under governing law. Id.
A party seeking summary judgment always bears the initial responsibility for informing the district court of the basis for its motion and identifying those portions of the record that it believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Where the non-moving party bears the burden of proof on a particular issue at trial, the moving party's initial burden can be met simply by "pointing out to the district court that there is an absence of evidence to support the non-moving party's case." Id. at 325. After the moving party has met its initial burden, "the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial." FED. R. Civ. P. 56(e). Summary judgment is appropriate if the non-moving party fails to rebut by making a factual showing "sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex, 477 U.S. at 322. Under Rule 56, the Court must view the evidence presented on the motion in the light most favorable to the opposing party.Anderson, 477 U.S. at 255.
B. Factual Background
Soltech, an importer of produce from Central America with its principal place of business in Pompano Beach, Florida, was looking for a warehouse, in the port of Philadelphia, to store its melons. In 2000, Soltech representatives visited Pier 82 and the parties engaged in negotiations for Soltech's use of the space at Pier 82. Before Perm City could accommodate Soltech, the warehouse would have to undergo renovations to its dry storage area in order to increase the amount of refrigerated space in the warehouse. Soltech claims that John Brown, Jr., a representative of Penn City promised Soltech that it would be granted exclusive use of this space.
On August 15, 2000, the parties entered into a contract ("Contract") that was to begin in January of 2001. The contract provided that Penn City would provide Soltech with stevedoring services and would warehouse its melons in refrigerated space totaling 40,000 square feet with three separate rooms and four truck loading doors exclusively for Soltech's use.
At some point, Penn City engaged Horizon to perform all stevedoring and warehousing services under the contract. Although both companies are owned by the Brown family, they constitute separate legal entities. At oral argument, counsel for the Perm City parties was unable to definitively identify the precise owners of Perm City and Horizon, identifying each company as a Brown family company. (Trans. 10/15/2003 at 30.) Soltech contends that in the course of performing these services, Timothy Brown, a representative of Horizon, decided to remove some of Soltech's melons from refrigerated storage and that this caused those melons to spoil, thereby making them unmarketable.
Soltech also argues that Perm City did not provide it with "around the clock stevedoring," which Soltech interprets the contract as requiring. As a result Soltech claims to have suffered "delay damages." Soltech claims that delays in unloading Soltech's chartered ship, the Nova Fresia, caused it to miss appointments in Honduras to pick up its cargo, which as a result required it to transport produce on other ships. The carriers that owned these "other ships" charged Soltech more than the carrier that owned the Nova Fresia, and Soltech seeks those additional charges as delay damages.
II. Penn City Parties' Motion for Summary Judgment A. The Gist of the Action Doctrine, Which Prevents a Breach of Contract Claim From Being Recast as a Tort, Requires Dismissal of Soltech's Fraudulent Inducement and Common Law Negligence Claims Against Penn City
_______ The Penn City parties have instituted a self-styled attempt to pare down Soltech's multiple claims to what they perceive to be their essence — breach of contract. In so doing, the Penn City Parties first rely on the "gist of the action" defense, and seek dismissal of Soltech's fraudulent inducement and common law negligence claims.
Under Pennsylvania law, the gist of the action doctrine precludes a plaintiff from recasting a breach of contract claim into a tort claim.Etoll, Inc. v. Elias/Savion Advertising, Inc., 811 A.2d 10, 14 (Pa.Super. 2002). "`To be construed as in tort . . . the wrong ascribed to defendant must be the gist of the action, the contract being collateral.'" Id. (quoting Bash v. Bell Tel. Co., 601 A.2d 825, 829 (Pa.Super. 1992)). "`In other words, a claim should be limited to a contract claim when the parties obligations are defined by the terms of the contracts, and not by the larger social policies embodied by the law of torts.'" Id, (quotingBohler-Uddeholm Am., Inc., v. Ellwood Group, Inc., 247 F.3d 79, 104 (3rd Cir. 2001)).
Pennsylvania law applies in this case because the contract was made in Pennsylvania and was to be performed in Pennsylvania.
1. The Gist of the Action Doctrine Can Only Apply to Penn City
Application of this doctrine is appropriate as to the dispute between Soltech and Penn City, because their relationship was exclusively contractual. However, the doctrine cannot be applied to a party that is not privy to the contract. This follows from the requirement under Pennsylvania law that a valid breach of contract claim requires privity — that there is a "valid and binding contract to which the plaintiff and defendant were parties." Tech. Based Solutions, Inc. v. Electronics College, Inc., 168 F. Supp.2d 375, 381 (E.D. Pa. 2001). Here, the only parties to the contract were Soltech and Penn City. As such, the gist of the action doctrine has no applicability to Counter-defendants John Brown, Jr., Timothy Brown and Horizon. 2. The Gist of the Action Doctrine Bars Soltech's Claims for Fraudulent Inducement and Common Law Negligence Against Penn City
While John Brown, Jr. signed the contract, the record indicates that he did so only in his representative capacity, as Penn City's president. Nothing in the contract or the record indicates the intention by the parties to make John Brown personally accountable for carrying out the terms of the contract. As such, he cannot be said to stand in privity of contract with Soltech, and will likely be dismissed as a party.See note 5 infra
Soltech fails to present any record evidence, not barred by the gist of the action doctrine, so as to create a triable issue of fact regarding its claims of fraudulent inducement and common law negligence against Penn City.
a. Soltech's Fraudulent Inducement Claim
Soltech's fraudulent inducement claim is tightly intertwined with its cause of action for breach of contract. In its Counterclaim, Soltech argues that Penn City, through its agent John Brown, Jr., induced it to enter the contract by promising:
• to complete certain specified improvements to the warehouse to convert a large area of dry storage into a new refrigerated and temperature controlled facility; [and]
• that Soltech would be able to use this space by January 2001, it would be temperature controlled through air conditioning, insulation, and heaters, and that the space would be for the exclusive use of Soltech to load its produce onto trucks, and would be at least 40,000 square feet of usable storage.
(Amended Counterclaim ¶ 45.)
The final contract provided that:
• Penn City will allocate 40,000 refrigerated square feet with three separate rooms for three commodities and four truck loading doors exclusively for Soltech, Inc.
(Contract ¶ 13.)
In determining whether or not to permit Soltech to maintain its fraudulent inducement claim against Penn City, the Court must determine if the pre-contractual statements concerned specific duties that the parties later outlined in the contract. If so, the gist of the action doctrine precludes such statements from forming the basis of a tort cause of action. Werner Kammann Maschinenfabrik, GmbH v. Max Lew Autograph, Inc., No. 01-1083, 2002 U.S. Dist. LEXIS 1460, at * 21 (E.D. Pa. Jan. 31, 2002) (in ruling on a motion for Summary Judgment, the Court held that the gist of the action doctrine barred plaintiffs fraud claim because defendant's pre-contractual promise was directly addressed by the contract — namely that the heating elements on a furnace, which plaintiff sold to defendant, would be shielded). See also Owen J. Roberts School Dist. v. HTE, Inc., No. 02-7830, 2003 U.S. Dist. LEXIS 2997 (E.D. Pa. February 28, 2003), (there, the Court granted a Motion to Dismiss, finding that the gist of the action doctrine barred plaintiffs fraud claim because defendant's pre-contractual promise to provide plaintiff with certain software was addressed by contract. Id. at *14).
The parties do not argue in the summary judgment papers whether these statements are barred by the parol evidence rule. However, the Court believes this is an important issue for the admission of evidence at trial.
Likewise, the Court, in Galdieri v. The Monsanto Co., in ruling on a motion for summary judgment, held that the plaintiffs' breach of contract claim could not be bootstrapped to a fraud claim by merely adding the words "fraudulently induced." 245 F. Supp.2d 636, 650 (E.D. Pa. 2002). In Galdieri, the plaintiffs complained that upon their termination defendant refused to remove restrictions on their company stock, as it had promised to do. However, the Court barred plaintiffs' fraud claim, finding that their employment contract specifically addressed the issue of how the company must make incentive payments upon an employee's termination. Id. at 643. InFactory Market, Inc. v. Schuller Int'l, Inc., 987 F. Supp. 387 (E.D. Pa. 1997), the Court granted summary judgment based on the gist of the action doctrine. There, plaintiff complained that defendant failed to provide him with a watertight roof as promised under a settlement agreement between the parties. Id. at 389-90. However, the Court found that the settlement agreement directly addressed the issue of making the roof watertight. Id. at 395. Consequently, the Court applied the gist of the action doctrine to dismiss plaintiffs fraud claim in favor of its breach of contract claim.
The court in HTE also examined two cases that permitted a fraud in the inducement claim to proceed concurrently with a breach of contract claim. In American Guarantee Liab. Ins. Co. v. Fojanini, 90 F. Supp.2d 615, 623 (E.D. Pa. 2000) the Court denied summary judgment, permitting a cause of action for fraud to proceed where the defendant falsely represented the financial stability of his business. 90 F. Supp.2d at 623. Likewise, the court, in Asbury Automotive Group, LLC v. Chrysler Ins. Co., refused to dismiss plaintiffs fraud claim, finding that during pre-contractual negotiations plaintiff misrepresented the scope of its duty to provide insurance coverage under the contract. No. 01-3319, 2002 U.S. Dist. LEXIS 117, at * 10-11 (E.D. Pa. Jan. 7, 2002). Both of these representations dealt with issues not addressed by the parties' contracts.
Soltech argues that the Court should follow the line of reasoning adopted in cases such as Fojanini and Asbury. The Court disagrees, and concludes that Soltech's fraud and negligence claims must be dismissed as to Penn City because they are either directly addressed by the contract, or so closely related to the contractual relationship, that the dispute between the parties should be resolved by exclusive reference to contractual principles.
Before contracting, Soltech claims that Penn City promised it exclusive use of at least 40,000 square feet of refrigerated space in its newly improved dry storage area. (Amended Counterclaim ¶ 45.) The contract specifically provides that Perm City must provide Soltech with 40,000 square feet of refrigerated storage space, but is silent as to the issue of where this specific space will be, and there is no reference to "an improved dry storage area" in the contract.
If the specific location of the 40,000 square feet of refrigerated storage space was important to Soltech, it should have demanded that such a specification be included in the contract. The Court believes that any pre-contract oral discussions or agreements on this topic may be inadmissible at trial under the parol evidence rule, and this provides some guide to the Court that such discussions or agreements, even assuming they would, in the absence of a contract, be fraudulent misrepresentations, are intertwined with the subject matter of the contract, and are not "free-standing" topics which can be the subject matter of a tort claim. b. Soltech's Negligence Claim
Based on the Court's holding that the gist of the action doctrine does apply to Soltech's claims against Penn City, the Court will grant summary judgment, dismissing Soltech's counterclaim for fraudulent inducement against John Brown, Jr. in that Soltech's allegations are clear that he acted for Penn City.
The gist of the action doctrine similarly bars Soltech's common law negligence cause of action against Penn City. Soltech claims that its negligence cause of action arises out of Perm City's failure to refrigerate Soltech's perishable melons. (Soltech's Resp. at 5-6.) However, as noted above, the contract directly addressed this issue by requiring refrigerated space exclusively for Soltech's melons. Consequently, the Court concludes that the gist of the action doctrine also bars Soltech's common law negligence cause of action against Penn City.
B. Genuine Issues of Fact Exist for Trial as to Whether Horizon and Timothy Brown Can Be Held Liable for Common Law Negligence
Soltech's Count II is based on common law negligence and seeks to make Penn City, Horizon and Timothy Brown liable to Soltech for common law negligence relating to acts and omissions that occurred after the contract was signed. The motion of Horizon and Timothy Brown for summary judgment on the common law negligence claims will be denied.
As noted above, because Horizon had no contractual relation with Soltech, there can be no bar to a negligence claim by Soltech against Horizon. Timothy Brown asserts that he should not be personally liable to Soltech for negligence because he was, at all times, only acting as an agent for Perm City and Horizon.
Timothy Brown relies on section 352 of the Restatement (Second) of Agency, which limits the extent to which an agent may be held liable to a third party for failing to adequately perform his duties to his principal. However, as will be discussed below, section 352 does not preclude liability to third parties in all cases, and must be considered carefully with section 343 of the Restatement (Second) of Agency under which an agent may be liable to third parties for his tortious conduct.
Both sections 343 and 352 have been cited to by courts of Pennsylvania and by federal courts interpreting the law of Pennsylvania. Section 352 sets forth that:
An agent is not liable for harm to a person other than his principal because of his failure adequately to perform his duties to his principal, unless physical harm results from reliance upon performance of the duties by the agent, or unless the agent has taken control of land or other tangible things.
Restatement (Second) of Agency § 352.
In this case, there was no physical harm, but there are allegations by Soltech that Timothy Brown, as an agent of Horizon, took control of "tangible things," i.e., the melons.
Section 343 states:
An agent who does an act otherwise a tort is not relieved from liability by the fact that he acted at the command of the principal or on account of the principal, except where he is exercising a privilege of the principal, or a privilege held by him for the protection of the principal's interests, or where the principal owes no duty or less than the normal duty of care to the person harmed.Id. § 343.
The cases dealing with these sections have mixed results.
1. Section 352
In Printed Terry Finishing Co. v. Lebanon, 372 A.2d 460 ( Pa. Super. 1977) the Pennsylvania Superior Court, denied appellant's motion for judgment n.o.v., holding that section 352 did not bar a negligence cause of action. In this case, the city of Lebanon hired appellant, Pitometer, to perform a "Pitometer Water Waste Survey."Id. at 283. To conduct this survey, Pitometer requested that the city turn off numerous water valves. Id. at 284. As a result, when appellee's place of business caught fire the flames could not be extinguished due to a lack of water pressure. Id. at 281.
In seeking its motion for judgment, n.o.v., Pitometer invoked section 352, claiming that it could not be held liable under tort law because it acted only as an agent of the city. The Court rejected this argument finding that the trial record contained sufficient evidence to demonstrate that Pitometer owed an independent duty of care to the plaintiff. This included evidence that Pitometer played an integral role in the decision-making process to close the valves. As such, the court held that Pitometer could be held liable for negligence, because it was "charged with beaching . . . not a duty arising from its contract with the City, but rather a duty imposed by law." Id. at 290.
Although the Court questioned whether or not the appellant truly constituted an agent of the city, it nonetheless fully addressed the issue of agent liability.
The application of section 352 has also shielded the imposition of tort liability. In Newman v. Forward Lands, Inc., 418 F. Supp. 134 (E.D. Pa. 1976), the court declined to impose tort liability against corporate directors for their actions related to corporate management. The court concluded that although a corporate director may owe a duty to his corporation to exercise care in the management of the company, such a duty does not also create liability to third parties who suffer collateral damage due to a director's mismanagement. Id. at 137.
2. Section 343
Cases dealing with section 343 have concluded that an agent remains liable for his conduct, if such conduct constitutes a tort. InDeakator v. Fox Grocery Co., 332 F. Supp. 536 (W.D. Pa. 1971), the District Court for the Western District of Pennsylvania reached a conclusion seemingly contrary to the holding in Newman. The court permitted a tort claim for civil conspiracy to proceed against a corporate officer based on charges that he colluded with his corporation to violate the anti-trust laws. Id. at 541-42 (denying plaintiffs motion for summary judgment).
Similar liability was imposed in In re Donald McCormick, 70 B.R. 49 (Bankr. W.D. Pa. 1987). There, the court applied section 343 in finding defendant, the sole proprietor and employee of the Wemack Insurance Agency ("Wemack"), liable for the debts of Wemack.Id. at 50. Under Wemack's contract with plaintiff, defendant was to write insurance policies and collect premiums for plaintiff. However, Wemack never delivered the premiums to plaintiff. Consequently, the court held him personally liable for these debts, holding that "[a] corporate officer is personally liable for the tortious injury committed by him. . . . He is so liable even if his actions were taken for the benefit of the corporation." Id. at 50.
Finally, in Cosmas v. Bloomingdales Bros., Inc., 660 A.2d 383 (Pa.Super. 1995), the court reversed the lower court's grant of summary judgment, and, pursuant to section 343, permitted a cause of action for defamation to proceed against a Bloomingdale's employee for defamation. Cosmas alleged that the Bloomingdales employee defamed her by accusing her of theft by deception, criminal conspiracy and receiving stolen property. Id. at 480. In reversing summary judgment, the court held that the pertinent question in this case was "not whether the individual [defendant was] acting as [an agent] of Bloomingdales, but whether the individual [defendant] actually committed a tort. If so, [she is] liable for that tort regardless of [her] agency or employment relationship." Id. at 487. Consequently, because the court found that the individual defendant could have committed the tort of defamation, it reversed the lower court's summary judgment order dismissing the claim.
3. The Court Concludes that It Cannot Make a Definitive Ruling on the Motion for Summary Judgment as to the Negligence Claims against Timothy Brown. Acting as an Agent of Horizon
The Court is unable to resolve the issues surrounding the claims of Soltech against Timothy Brown for negligence on summary judgment. The Court cannot determine on the voluminous discovery record which the parties have submitted whether section 343 or section 352, or some other principle, may govern the liability of Timothy Brown as to Soltech's negligence claims, and thus these issues must be submitted to the jury under appropriate instructions.
It is possible that the key to the seeming conflict between section 343 and 352 may be found by looking at the source of an agent's duty. Where the duty owed by the agent is only to the principal, there can be no third party liability. However, if a source of duty exists beyond the duty to the principal, then there can be third party liability. In line with this reasoning is the holding of the Common Pleas Court for Luzerne County, Pennsylvania that section 352 supports the view that:
"although a third person may suffer loss or injury as a result of an employee's failure to perform his duties to his employer, if that breach is unaccompanied by any act or omission of the employee which breaches a duty owing to the third person, no cause of action accrues in favor of the latter against the employee."Roban Construction, Inc. v. Hazelton, 67 Pa. D. C. 2d 130, 142-43 (Pa. Comm. Pleas Ct. 1974) (citing 53 Am. Jur.2d, Master Servant, § 446.).
This Memorandum does not require an exhaustive analysis of Pennsylvania agency law to decide that Timothy Brown's Motion for Summary Judgment must be denied as to Soltech's counterclaims that Timothy Brown was acting as an agent for Horizon. To the extent Timothy Brown may have been acting as an agent for Perm City, considering the nature of this case, Timothy Brown would not have personal liability for negligence. Because Perm City had a contract with Soltech, Timothy Brown cannot be liable to Soltech for any of its allegations regarding his acts or omissions as an agent for Perm City, because they all relate to the formation or performance of the contract.
On the other hand, to the extent that Timothy Brown was acting as an agent for Horizon, as a non-contracting party, Timothy Brown may be liable to Soltech for negligence.
At trial, the parties may present facts that will shed additional light on Timothy Brown's liability for negligence, to the extent that he was acting as an agent for Horizon. On the present record, Timothy Brown's Motion for Summary Judgment as to Count II will be denied.
The Court notes in passing that there is some evidence to support Soltech's claim of negligence against Timothy Brown acting as an agent for Horizon. In particular, the Court takes note that Soltech's representative, Eddie MacGowan, claims that Timothy Brown removed the melons from refrigerated storage and, then, stated "no problem" when told that the melons would have to be returned to such storage once the temperature in the unrefrigerated room increased. (MacGowan Afternoon Depo. at 49.) Hence, viewed in light most favorable to Soltech as the non-moving party, the Court cannot conclude that Timothy Brown did not assume a duty to Soltech independent of his duty to Horizon, thereby making him liable in tort. As such, the Court cannot grant summary judgment as to Soltech's common law negligence cause of action against Timothy Brown.
C. While Soltech's Claims for Common Law Bailment and Duty as Statutory Warehouseman Repeat the Same Request for Relief, Soltech May Go to Trial Only on its Bailment Claim, Which Is Materially Different from Soltech's Breach of Contract Claim
Soltech's claims against Penn City for breach of bailment (Count III of the Amended Complaint) and breach of statutory duty as warehouseman (Count IV of the Amended Complaint) while redundant of each other, do not merely restate Soltech's breach of contract claim. As such, the Court holds that Soltech may pursue a cause of action for common law bailment against Counter-defendants Penn City and Horizon, but not a cause of action for breach of statutory duty as warehouseman.
The Court finds that Soltech's causes of action for breach of bailment and breach of statutory duty as warehouseman constitute redundant causes of action in the sense that 13 Pa. Cons. Stat. Ann. § 7204(a) does not create a separate basis for liability, but rather sets forth the applicable standard of care to be applied in causes of action grounded in common law bailment.
Pursuant to 13 Pa. Cons. Stat. Ann. § 7204:
A warehouseman is liable for damages for loss of or injury to the goods caused by his failure to exercise such care in regard to them as a reasonably careful man would exercise under like circumstances but unless otherwise agreed he is not liable for damages which could not have been avoided by the exercise of such care.13 Pa. Cons. Stat. Ann. § 7204(a).
This does not create a legal obligation distinct from common law bailment. Indeed, no cases applying Pennsylvania law have ever addressed a cause of action alleging a breach of statutory duty as warehouseman. Moreover, in one of the few cases to directly address section 7204, the court noted in dicta that in addition to applying section 7204 in bailment cases, "Pennsylvania applies [a] burden shifting analysis and presumption of liability." Gyamfoah v. EGG Dynatrend, No. 01-4566, 2003 U.S. Dist. LEXIS 18155, at * 17 (E.D. Pa. Sept. 4, 11-25-2003). As will be discussed in detail below, this burden shifting analysis and presumption of liability pertains to a cause of action for common law bailment under Pennsylvania law. Consequently, the Court concludes that rather than creating a cause of action distinct from common law bailment, section 7204 merely sets forth the standard of care to which bailors will be held in cases that allege a breach of common law bailment — requiring them to exercise that degree of care "a reasonably careful man would exercise under like circumstances." 13 Pa. Cons. Stat. Ann. § 7204(a).
Under Pennsylvania law, common law bailment involves the "`delivery of personalty for the accomplishment of some purpose upon a contract, express or implied, that after the purpose has been fulfilled, it shall be redelivered to the person who delivered it, otherwise dealt with according to his directions or kept until he re-claims it.'" Price v. Brown, 680 A.2d 1149, 1151 (Pa. 1996) (quoting Smalich v. Westfall, 269 A.2d 476, 480 (Pa. 1970). It also involves a three staged shifting burden of proof. Hartford Fire Ins. Co. v. B. Barks Sons, Inc., No. 97-7919, 1999 U.S. Dist. LEXIS 7733, at * 26 (E.D. Pa. May 27, 1999).
The first stage of this shifting burden of proof requires the bailor to "put forth evidence of a prima facie case: that it delivered personalty to [the bailee]. . . that it made a demand for return of the property; and the bailee failed to return the property, or returned it in damaged condition." Id. (citing Price, 680 A.2d at 1152). If the bailor satisfies this burden, the burden then shifts to the bailee to "come forward with evidence `accounting for the loss.'" Id. (quoting Price, 680 A.2d at 1152). This burden "encompasses a showing [that] the bailee was not negligent and/or his actions were not the cause of the loss." Id., at * 26-27 (citing E.I. duPont de Nemours Co. v. Berm Studios, Inc., 236 A.2d 555, 557 (Pa.Super. 1967)). Failure to meet this burden gives rise to the presumption that the bailee failed to exercise reasonable care.Id. at 26. Finally, assuming that the bailee also meets its burden, the burden shifts, for the final time, to the bailor to prove negligence on the part of the bailee — which the Court has held to be statutorily defined by section 1704(a). Id.
Based on the foregoing, the Court holds that Soltech may not proceed on its purported cause of action for breach of statutory duty as warehouseman. However, the Court also holds that Soltech should not be barred from bringing concurrent causes of action for breach of contract and common law bailment. Both seek relief pursuant to different and independent theories of law. Failure or success under one theory does not automatically guarantee the same result under the other. For example, Soltech may not be able to show that Perm City breached the contract by not refrigerating its melons. Nevertheless, Soltech may still be able to show that Penn City failed to meet the standard of care required of bailees by placing its melons in unrefrigerated storage, thereby causing them to spoil. Consequently, based on a careful review of the record, the Court finds that Sotech's causes of action for breach of contract and breach of bailment are not completely redundant. It, therefore, will deny Penn City's Morion for Summary Judgement as to Count III (common law bailment) of Soltech's Amended Complaint, and grant Penn City's Motion for Summary Judgment as to Count IV (breach of statutory duty as warehouseman). D. An Equitable Accounting is Not Appropriate Absent a Fiduciary Relationship
Because Soltech's counterclaims for common law bailment and negligence both involve a duty of reasonable care, the Court preserves for trial the issue of whether or not Soltech can seek relief against Horizon under both theories or if Soltech must choose between them.
A careful review of the record shows that Soltech does not present a triable issue of fact entitling it to an equitable accounting. Under Pennsylvania law,
An equitable accounting is improper where no fiduciary relationship exists between the parties, no fraud or misrepresentation is alleged, the accounts are not mutual or complicated, or the plaintiff possesses an adequate remedy at law.Rock v. Pyle, 720 A.2d 137, 142 (Pa.Super. 1998).
A review of the record shows that no fiduciary relationship existed between Soltech and the Penn City Parties, thereby precluding Soltech from requesting an equitable accounting. A fiduciary relationship arises under Pennsylvania law where "`one person has reposed a special confidence in another to the extent that the parties do not deal with each other on equal terms, either because of an overmastering dominance on one side, or weakness, dependence or justifiable trust, on the other.'" LM Bev. Co. v. Guinness Import Co., No. 94-4492, 1995 U.S. Dist. LEXIS 19443, 13-14 (E.D. Pa. Dec. 29, 1995) (quotingPennsylvania Dept. of Transportation v. E-Z Parks, 620 A.2d 712, 717 ( Pa. Commw. 1993)).
The record in this case evidences only a contractual relationship between the parties. At all stages of the parties' relationship they dealt with each other on equal terms. The contract itself arose from an arms length negotiation between sophisticated businesses. Moreover, the contract permitted Soltech to have a representative at Penn City's warehouse who could oversee the day to day stevedoring operations. This significantly curtailed the amount of trust Soltech had to place in the Penn City Parties to properly store its melons. The Court, therefore, cannot conclude based on the record that the Penn City Parties stood in a special relationship to Soltech that would obligate it to provide Soltech with an equitable accounting.
While the parties dispute the scope of this representative's authority, it is undisputed that he had the ability to view the Penn City Parties' stevedoring and warehousing practices and the ability to relate the same to Soltech.
E. The Record Contains Genuine Issues of Material Fact Regarding Penn City's Request for Delay Damages
The record reveals a triable issue of material fact regarding Soltech's request for delay damages. If, at trial, Soltech can prove Penn City committed a breach of contract by not providing it with around the clock stevedoring services, then Soltech will be permitted to seek delay damages as part of its general damages claim.
Penn City attempts to frame Soltech's claim for delay damages as a demand for consequential damages. While "[t]he characterization of a particular claim for damages as either direct or consequential is an issue of fact which is generally reserved for trial. . . . many courts will in clear cut cases rule that particular damages as a matter of law are direct or consequential." Combustion Svs. Servs. v. Schuylkill Energy Resources, No. 92-4228, 1993 U.S. Dist. LEXIS 16374, at * 8 (E.D. Pa. 1993) (internal citations omitted). General damages constitute those "damages which directly flow from a breach of contract. Consequential or special damages are extraordinary in that they do not so directly flow from the contract." Id. at *7-8 (internal citations omitted); see also The Birth Ctr. v. The St. Paul Cos., 787 A.2d 376, 390 (Pa. 2001) (Nigro, J. concurring) ("While general damages compensate the injured party for the immediate injury or loss sustained, consequential damages are damages that flow from the consequences of the direct injury."). Here, there can be no factual dispute that Soltech's claim for delay damages flow directly from its claim that Penn City committed a breach of contract by not providing it with around the clock stevedoring services. Without such a requirement, the record indicates no other basis upon which Soltech can base a claim for delay damages.
The Court notes, nonetheless, that even if Soltech's damages constitute consequential damages, that the record allows such a claim. To prove consequential damages, the "damages to be recoverable must have been reasonably foreseeable at the time the contract was made." Frank B. Bozzo, Inc. v. Electric Weld Div. of Ft. Pitt Bridge Div. of Spang Indus. Inc., 423 A.2d 702, 709 (Pa.Super. 1980); see also The Birth Ctr., 787 A.2d at 390 (Nigro, J. concurring) ("To recover consequential damages, a litigant must prove that they were `reasonably foreseeable' to the parties at the time they entered into the contract."). Here, the record contains sufficient evidence to create a triable issue of fact regarding the foreseeability of delay damages. In his deposition, Rafael Nir, testified that he informed John Brown, Jr. that Soltech was operating on a very tight schedule, running its vessel at full speed between Philadelphia and Honduras, thereby making it imperative that its ship, the Nova Fresia, be unloaded as quickly as possible. (Nir 8/15/2003 Depo. at 93.) Viewing this testimony in the light most favorable to the non-moving party evidences a triable issue of material fact as to the foreseeability of delay damages.
Pursuant to the contract, Soltech was to be provided with "two straight time shifts stevedoring, up to 24 hours daily, Monday through Friday (excluding holidays)." (Contract ¶ 1.) Soltech interprets this provision to require around the clock stevedoring, and weekend and holiday stevedoring services, which were to be paid at an increased "overtime" rate. In support of this interpretation, paragraph one of the contract, states that "all other loading will be billed at overtime rates." (Id. ¶ 1.) Perm City contests this interpretation in its entirety, claiming that the contract did not obligate it to provide around the clock stevedoring or to work on weekends or holidays. Both sides present compelling arguments. The Court does not find the pertinent contractual provision to be readily susceptible to a decision on summary judgment. Hence, a triable issue of material fact regarding Soltech's obligation to provide stevedoring services remains outstanding for trial.
The Court notes that "[w]hen there are alternative readings of a clause in a contract, the rule of construction is that the one that avoids surplusage should be chosen." Continental Ins. Co. v. McKain, 820 F. Supp. 890, 897 (E.D. Pa. 1993) (citing Sparler v. Fireman's Ins. Co., 521 A.2d 433, 438 (Pa.Super. 1987)). Additionally, the Court must not construe contractual terms "in a manner so as to render them meaningless. Girard Trust Bank v. Life Ins. Co. of No. Am., 364 A.2d 495, 498 ( Pa. Super. 1976). Application of these rules of law does not allow the court to make a conclusive interpretation of the contract at hand on a Motion for Summary Judgment.
The Court must give effect to the contractual provisions requiring that: (1) Soltech is to receive "two straight time shifts stevedoring" and (2) such services will be performed for "up to 24 hours daily." But, at the same time, the Court's interpretation must avoid rendering either term meaningless. The primary obstacle facing the Court lies in interpreting the terms "up to 24 hours daily." Two possible interpretations exist. The interpretation that Penn City would espouse defines the contractual terms "up to" as empowering it with the discretion to either provide Soltech with twenty-four hours of stevedoring services or to provide it with less. In contrast, the interpretation favored by Soltech reflects the fact that the contract guarantees it twenty-four hours of stevedoring services, but that the job may be completed sooner. Further complicating the issue is the fact that the contract does not define "two straight time shifts stevedoring." As such, the Court cannot even determine if "two straight time shifts stevedoring" are of sufficient duration to allow for twenty-four hours of stevedoring. Consequently, the Court cannot definitively conclude whether or not the contract requires around the clock stevedoring, and a triable issue of material fact remains outstanding as to that issue.
Penn City also contests Soltech's claim that the contract requires stevedoring on the weekends and holidays, relying on the contract's provision that stevedoring will be performed "Monday through Friday." In response, Soltech argues that regardless of the "Monday through Friday" provision, the contract still contemplated the performance of weekend and holiday stevedoring but that such stevedoring was to billed as overtime. (Nir 8/27/03 Depo. at 147-48); See also (Dostillo Depo. at 75) (noting that additional shifts, if necessary, will be billed at the overtime rate.) Such an interpretation does not render the terms of the contract as surplusage nor does it deprive them of their meaning. Instead, it attempts to explain the existence of another contractual term requiring that "all other loading will be billed at overtime rates." (Contract at ¶ 1.) Alternatively, it attempts to account for a contingency not covered by the contract, thereby adding to the contract's terms — not rendering them meaningless or as mere surplusage. Consequently, based on a careful review of the record the Court concludes that a triable issue of material fact remains outstanding as to Penn City's responsibility to provide stevedoring services on the weekends and holidays. As such, the Court must deny Penn City's Motion for Summary Judgment regarding Soltech's claim for delay damages.
III. Soltech's Motion for Summary Judgment
Soltech moves the Court to grant summary judgment in its favor or claims for breach of contract and breach of common law bailment. These causes of action constitute counterclaims under Counts VI and III, respectively, of Soltech's Counterclaims. In essence, Soltech contends that Counter-defendants Penn City, Timothy Brown and Horizon engaged in a course of conduct that led to the spoliation of certain melons imported by Soltech and for which Penn City and Horizon had an obligation to properly warehouse under the law of contracts and bailment respectively. Soltech only seeks summary judgment against Penn City for breach of contract and against Horizon for breach of common law bailment.
In support of its motion for summary judgment regarding its breach of contract claim, Soltech raises four contentions. First, Soltech argues that there can be no dispute that the contract was breached by Perm City's failure to store its melons in a refrigerated storage area. Second, Soltech contends that there can be no dispute that storing the melons in an unrefrigerated space caused its melons to spoil. Third, contrary to Penn City and Horizon's defenses that a Soltech representative, McGowan, agreed to non-refrigeration of the melons, Soltech contends that McGowan lacked the actual or apparent authority to bind Soltech. Fourth, Soltech contends there is no evidence to support a defense that it waived its breach of contract claim.
Regarding its common law bailment cause of action, Soltech's claims summary judgment is appropriate because Horizon breached the standard of care it owed to Soltech by not refrigerating Soltech's melons, that this caused Soltech's damages, that Horizon's conduct was not authorized by Soltech's representative and that it did not waive its bailment cause of action because of the e-mails sent by Horizon.
Because there are no genuine issues of material fact as to some issues, the Court will grant partial summary judgment to Soltech on those issues, but will deny Soltech's request for summary judgment as to the entirety of Counts VI and III.
Soltech filed a Statement of Undisputed Facts on September 29, 2003. Penn City and Horizon responded on October 7, 2003. Then, in accord with the Court's order of October 15, 2003 Penn City and Horizon amended their responses through a filing made October 27, 2003. Soltech filed a response on November 12, 2003. These filings demonstrate the existence of genuine issues of material fact relating to Soltech's breach of contract and breach of bailment claims.
A. Breach of Contract
Breach of contract under Pennsylvania law consists of four elements.Cottman Transmission Sys. v. Melody, 851 F. Supp. 660, 672 (E.D. Pa. 1994). These elements require the plaintiff to show:
(1) the existence of a valid and binding contract to which the plaintiff and defendant were parties,
(2) the essential terms of the contract,
(3) that the defendant breached a duty imposed by the contract, and
(4) that damages resulted from the defendant's breach.Id.
The parties dispute whether Perm City complied with its obligation to provide Soltech with 40,000 refrigerated square feet of storage. Perm City contends that Soltech received the space guaranteed by contract. This is a jury issue. However, there is no dispute that there was a quantity of melons placed in non-refrigerated space. Penn City contends these melons were "overflow" produce that could not fit within the allotted 40,000 square feet of refrigerated space. (Timothy Brown 4/14/03 Depo. at 161); (John Brown, Jr. Depo. at 185.)
However, the record does not support Penn City's contention that the melons in question constituted "overflow" produce. Penn City admits that it could fit 1,800 pallets of Soltech's melons into 40,000 square feet of refrigerated space. (Resp. to Soltech's Stmt. of Mat. Facts at 22); (John Brown e-mails 1/30/2001 3/15/2001.) There is no genuine dispute as to the following facts: the day that the shipment of those melons, which became spoiled melons, arrived, April 5, 2001, there was sufficient space to warehouse all of Soltech's melons, and this space remained available until April 9, 2001, the day Soltech has documented as the day its melons suffered the most extreme heat exposure. Just prior to April 5, 2001, Penn City warehoused 278 pallets of melons from the last shipment from Honduras. Adding to that number the 2,283 pallets of melons shipped in from Honduras on April 5, 2001, and subtracting the 847 pallets of melons that were shipped out of the warehouse on April 5, 2001, (Depo. Ex. 5); (Bruno Depo at 73-74, 81-83, 85-87); (Timothy Brown Depo. at 76-82.), left 1,714 pallets at the end of that day. This number continued to decrease. On April 6, 2001, 300 pallets were shipped out of the warehouse, and on April 7, 2001, 99 pallets were shipped out of the warehouse. (Depo. Ex. 5); (Bruno Depo. at 86-87.) Hence, by April 9, 2001 only 1,315 pallets of melons remained warehoused — well below the 1,800 pallets of melons Penn City admitted it could fit into 40,000 square feet of refrigerated storage space. Hence, there can be no dispute that Penn City cannot maintain a defense of "overflow" melons during this crucial time period.
Penn City contests these numbers, but cites to no record evidence to rebut their genuineness, responding by stating only "denied." (Penn City's Resp. to Soltech's Stmt. of Material Facts ¶ 49.) Such a bare bones objection does not suffice on a motion for summary judgment.See Fed.R.Civ.P. 56(e) ("the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial.").
The Court also finds no genuine issue of material fact related to the fact that Soltech suffered damages caused by Penn City's breach. Although Penn City puts forth alternative theories to defend against Soltech's heat damage theory, its explanations have no basis in the record. Similarly, Penn City's defense that Soltech cannot link its damaged melons to the melons in non-refrigerated space (room E) is not supported by sufficient evidence to warrant being an issue for trial.
Penn City submitted in defense of summary judgment the written opinion of its expert John Hughes. Hughes concluded that numerous factors could have led to the spoilation of Soltech's melons. These factors include: (1) injury such as bruising, (2) lack of post harvest sanitation to control disease pathogens, and (3) elapsed time from harvest to customer sale leading to advanced maturity. (Hughes Kept, at 3.) Additionally, Hughes called into question Soltech's ability to establish that the spoiled melons were, in fact, the same melons as those stored in unrefrigerated space, noting that Soltech failed to keep adequate records in this regard. (Hughes Rept, at 3.)
Soltech challenges this opinion, arguing that it lacks support within the record, as no evidence has been presented to show that the melons suffered bruising or that the farmers and Soltech did not properly handle the melons in importing them to the United States. Indeed, Soltech presents uncontested evidence to the contrary. Upon their arrival at pier 82, DecoFrut, S.A. inspected the melons at issue and found them to be of good quality with no decay, old age or other serious problems. (Deco Report at 7-9); (Hiriat Depo. at 95.) Thus, because the melons arrived in the United States free of any serious problems, the record indicates that they did not suffer injury due to the harvesting or shipping practices of Soltech and the Honduran growers.
The record contains no evidence to contradict this fact or to substantiate the theories put forth by Hughes. As such, the Court need not accept his testimony in this regard, leaving heat damage as the only source of fruit damage supported by the record. See Pa. Dental Assoc. v. Medical Serv. Assoc. of Pa., 745 F.2d 248, 262 (3d Cir. 1984) (holding that courts may enter summary judgment "against a party who relies solely on an expert's opinion that has no more basis in or out of the record than [ ] theoretical speculations.").
Perm City does not contest that the melons arrived at pier 82 in good condition. (Penn City's Resp. to Soltech's Stmt. of Material Facts ¶ 52.)
The Court also finds adequate uncontradicted support in the record to identify Soltech's heat damaged melons as the melons stored in room E, which was not refrigerated. The parties do not dispute that on April 16, 2001 the United States Department of Agriculture ("USD A") inspected the melons in room E and found that of the 154 pallets inspected, 100% of them contained melons that were decaying and that, therefore, failed the USDA No. 1 quality standard. (Depo. Ex. 40); (Barthel Depo. at 114-17.) This undisputedly links the damaged melons to the melons stored in room E.
B. MacGowan's Authority
The Court still cannot grant summary judgment on the totality of Soltech's breach of contract claim. Perm City maintains that it relied on Soltech's on-site representative MacGowan to direct it in warehousing Soltech's melons, and it was at McGowan's direction that the melons were not put in refrigerated space. Soltech, on the other hand, contends that MacGowan lacked the authority to alter the terms of its contract with Penn City or the terms of its bailment with Horizon. Because the Court holds that the scope of MacGowan's agency constitutes a triable issue of fact, it cannot fully grant Soltech's motion for summary judgment on its breach of contract claim.
This constitutes an anticipatory defense raised in response to the deposition testimony of Timothy Brown, a Horizon representative, that he relied on MacGowan to decide that it was not too hot in the unrefrigerated room to store melons. (Timothy Brown Depo. at 406.)
Questions of agency generally constitute questions of fact. S.K.A. Steel Trading v. Penn Terminals, No. 96-4687, 1998 U.S. Dist. LEXIS 16379, at * 6 (E.D. Pa. Oct. 13, 1998). However, "if all facts relating to the issue of agency are not disputed, the issue can be properly decided by the court." Id. at 7. "The three basic elements of agency are: (1) a manifestation by the principal that the agent shall act for him; (2) the agent's acceptance of the undertaking; and (3) the understanding of the parties that the principal is to be in control of the undertaking." Id.
Under Pennsylvania law, an agent's authority can be actual or apparent.Id. (E.D. Pa. Oct. 13, 1998). Actual authority is the authority "`the authority expressly granted to an agent by his principal.'"Id. (citing Richardson v. John F. Kennedy Mem'l Hosp., 838 F. Supp. 979, 985 (E.D. Pa. 1993)). "`Apparent authority exists where the principal, by words or conduct, leads people with whom the alleged agent deals to believe that the principal has granted the agent the authority he purports to exercise.'" Id. at * 7-8 (citing Residential Roofers Local 30-B v. AB Metal, 976 F. Supp. 341, 345 (E.D. Pa. 1997)). When examining apparent authority, the Court must focus on the principal's conduct rather than the agent's. Id. at * 8.
1. Actual Authority
The parties dispute whether or not MacGowan possessed actual authority to alter the terms of Soltech's contract with Perm City and its bailment with Horizon and to direct Perm City and Horizon to refrigerate its melons in unrefrigerated space.
Soltech claims that MacGowan was essentially a clerk whose primary job was to check in the trucks arriving at Pier 82 to pick up Soltech's melons to ship to its customers. See (Guzi Depo. at 49) (describing MacGowan as a "clerk processing our paperwork"); (Nir 6/12/2003 Depo. at 54-55) (explaining that MacGowan's responsibilities included keeping track of what melons were shipped out of the warehouse.) As such, Soltech contends that he had no actual authority to direct or authorize the warehousing practices of Perm City or Horizon.
Perm City and Horizon present a different account of MacGowan's agency. Primarily, they contend that MacGowan possessed the authority to direct Horizon employees in a supervisory function and did so. (Tim Brown 4/17/2003 Depo. at 168.) MacGowan's own deposition testimony can be viewed as supporting this contention. He often attempted to get the Horizon employees to perform certain tasks, but was always rebuked by them. (MacGowan a.m. Depo. at 52-57.) For instance, he claimed to have asked them to sort Soltech's melons by grade, size and color. (Id. at 52-53.) When they refused to comply, he went to their supervisor at Horizon, Tim Brown, and made the same request. (Id. at 53.) Due to his inability to get the Horizon employees to do any work for him, MacGowan went to Timothy Brown whenever he needed something done. (Id. at 57.) Most notably, MacGowan personally requested that Timothy Brown move the melons, and Timothy Brown complied. (Tim Brown 4/17/2003 Depo. at 161); (MacGowan p.m. Depo. at 139.)
The record does not conclusively support Soltech's claims that MacGowan served only as a clerk whose primary responsibility was to check in trucks. Viewed in light most favorable to the non-moving party, there is an issue for trial whether MacGowan had actual authority to direct the warehousing activities of Horizon employees and their supervisor Tim Brown.
2. Apparent Authority
The same evidence cited above also supports the Court's conclusion that it cannot grant summary judgment regarding MacGowan's apparent authority to direct the work activities of Horizon employees. Despite the uncontested feet that no one from Soltech represented MacGowan as a member of Soltech's management or that the scope of his responsibilities included the right to make storage decisions, the record, viewed in the light most favorable to the non-moving parties, indicates that Soltech relied on MacGowan to direct Horizon's warehousing operations, which were necessary for inspecting the fruit (MacGowan p.m. Depo. at 53-54) and for maintaining a physical inventory of the melons, which facilitated MacGowan's responsibilities related to shipping the melons out of the warehouse in trucks. Id. at 54. Moreover, MacGowan's deposition testimony indicates that Soltech relied on him to oversee Horizon's warehousing practices and to report any major issues. (MacGowan a.m. Depo. at 135-36.)
Hence, viewed in the light most favorable to the non-moving parties, there is an issue for trial that even if MacGowan did not possess actual authority to oversee and direct Horizon's warehousing operations, whether Soltech did rely on him to do so, and whether he had apparent authority. As such, the Court cannot grant summary judgment on this issue.
C. Whether Soltech Waived the Breach of Contract by Penn City
Penn City defends against Soltech's motion for summary judgment that there was a breach of contract, by asserting that two e-mails sent by Timothy Brown sufficed to put Soltech on notice that the melons were being stored in non-refrigerated space, that Soltech did nothing and, thus, waived the breach. This is a jury issue.
If they did give notice to Soltech, Penn City could argue to the jury that Soltech waived Penn City's contractual obligation to store its melons in refrigerated storage. Under Pennsylvania law "waiver may occur when the promisor manifests an intent not to require a promisee to strictly comply with a contractual duty." CONRAIL v. Foster Wheeler Environmental Corp., No. 99-1642, 2000 U.S. Dist. LEXIS 1347, at * 42 (E.D. Pa. Sept. 20, 2000). Put differently, "waiver may be established by conduct inconsistent with claiming the waived right or any action or failure to act evincing an intent not to claim the right." Evcco Leasing Corp. v. Ace Trucking Co., 828 F.2d 188, 195 (3d Cir. 1987). Hence, a failure by Soltech to object to the practice of storing melons in unrefrigerated space when it knew that such a practice was ongoing, could result in a waiver of Penn City's contractual obligation to store Soltech's melons in unrefrigerated storage.
The first e-mail was sent by Timothy Brown on January 30, 2001. It reported that Horizon "presently [has] to stow the melons by deck and hatch until [the] USDA releases the product." (Timothy Brown 1/30/2001 e-mail.) The second email, dated March 15, 2001, reported that Horizon was currently storing five hundred pallets of melons in room E, which it described as "heated, but not considered temperature controlled." (Timothy Brown 3/15/2001 e-mail.) The e-mail also explained that the "room has been consistently used for overflow."
The Court cannot rule as a matter of law that either of these e-mails gave notice to Soltech that melons would be stored in non-refrigerated space for prolonged periods of time and/or would definitely spoil. The first e-mail only states that the melons have to be temporarily kept out of refrigeration until the USDA completes its inspection. The second e-mail, despite mentioning that melons have been "consistently" stored in a room "not considered temperature controlled," only applies to "overflow" melons. The Court has held above that the Perm City's defenses about "overflow" melons are not supported by the undisputed facts. Consequently, the Court finds that there exists a genuine issue of material fact whether Soltech waived the breach of the contract by Perm City.
D. Common Law Bailment
The record indicates that Soltech has met its burden in alleging a prima-facie cause of action against Horizon. It delivered melons to Horizon, made a demand for their return and Horizon returned the melons in a spoiled/"damaged" condition.
As such, the burden shifts to Horizon to "come forward with evidence `accounting for the loss.'" Hartford Fire Ins. Co., 1999 U.S. Dist. LEXIS 7733, at * 26 (quoting Price, 680 A.2d at 1152). Failure to do so gives rise to the presumption that the bailee failed to exercise reasonable care. Id. This burden "encompasses a showing [that] the bailee was not negligent and/or his actions were not the cause of the loss." Id., at * 26-27 (citing E.I. duPont de Nemours Co. v. Berm Studios, Inc., 236 A.2d 555, 557 (Pa.Super. 1967)). As stated above, Horizon's representative, Timothy Brown, claims to have relied on MacGowan when he decided to store Soltech's melons in room E. He also claims that he relied on MacGowan to tell him when to move the melons back. (Timothy Brown Depo. at 406.) Hence, because the scope of MacGowan's authority constitutes a question of fact for trial, Horizon meets its burden of coming forward with evidence which would provide a defense to liability for Soltech's loss. Hence, the Court cannot grant summary judgment in favor of Soltech's common law bailment cause of action.
Horizon contends that all duties, rights or responsibilities it owed to Soltech derived from Soltech's contract with Penn City. However, this incorrectly construes the law of bailment as illustrated by common law bailment's application of the reasonable care standard. Pursuant to this standard, a party may comply with all terms of a contract, but still be liable under common law bailment for failing to exercise reasonable care.
VI. Conclusion
The Court reaches the following conclusions on the Motion for Summary Judgment of the Perm City parties:
1. The Court will dismiss Soltech's cause of action for fraudulent inducement and common law negligence against Penn City and fraudulent inducement against John Brown, Jr. because Soltech fails to present any evidence not barred by the gist of the action doctrine.
2. A triable issue of material fact remains outstanding regarding the tort liability of Horizon, and whether Timothy Brown is liable for negligence to Soltech insofar as Timothy Brown was acting as an agent for Horizon.
3. Soltech may assert a cause of action for common law bailment concurrent with its cause of action for breach of contract. However, it may not assert a cause of action for breach of statutory duty as warehouseman as the Court finds no such cause of action to exist, and Count IV is dismissed.
4. Soltech may not seek an equitable accounting from any of the Penn City Parties, and Count V is dismissed.
5. A triable issue of material fact remains outstanding regarding Soltech's entitlement to delay damages.
6. As to Soltech's Motion for Summary Judgment on Counts III and VI. Soltech has established that it suffered damages as a result of its melons not being stored in a refrigerated space, Perm City may not defend on its "overflow" theory, and Soltech has established a prima facie case against Horizon under a theory of bailment.
The following claims remain for trial on Soltech's Counterclaim:
1. Count II, common law negligence claims against Horizon and Timothy Brown to the extent he was acting as an agent for Horizon.
2. Count III, common law bailment against Horizon.
3. Count VI, for breach of contract by Perm City, but limited to whether Perm City provided the refrigerated space as required by the contract; if not, whether Soltech has waived any breach by Perm City; if not, the amount of damages (including delay damages if proven) for breach of contract and for bailment, if proven.
ORDER
AND NOW, this 25th day of November, 2003, it is hereby Ordered that:
1. The Motion of the Penn City Parties for Partial Summary Judgment (Docket No. 62) is DENIED in part and GRANTED in part; and
2. The Motion of Soltech for Partial Summary Judgment (Docket No. 85) is DENIED in part and GRANTED in part.