Opinion ID: 2287139
Heading Depth: 2
Heading Rank: 5

Heading: PURCHASE UNDER THE Pa.U.T.P.C.P.L.

Text: The most vexing problem presented by this appeal is whether the absence of technical privity between the Condominium Association and Mameco precludes liability under 73 P.S. § 201-9.2. We find that the Condominium Association was a purchaser under the act, and that the absence of privity did not preclude liability on Mameco's part for injuries to the Condominium Association under the Act. Careful review of the statute reveals that it is silent on the significance of privity. While a claimant under 73 P.S. § 201-9.2 must be a person who makes a purchase for personal, family or household purposes, who suffers an ascertainable loss as the result of an unlawful, unfair or deceptive practice, there is no express requirement that there be strict technical privity between the party suing and the party sued. Whether or not strict technical privity should be deemed to be an implied requirement for a cause of action under the act is therefore a matter of statutory construction. 1 Pa.C.S.A. § 1921(c). In resolving this question of legislative intent, it is necessary first to consider the occasion and necessity for the statute, the circumstances under which it was enacted, the mischief to be remedied, the object to be attained, and the former law. Essentially, we must consider the historical context of the enactment. Succinctly, the law was passed to substantially enhance the remedies available to consumers as the result of unfair or deceptive business practices, specifically including the failure to comply with any written guarantee or warranty. Gabriel v. O'Hara, supra, 534 A.2d at 491 & n. 6; see also 73 P.S. § 201-2(4)(xiv). This underlying legislative intent weighs heavily against implying a restrictive requirement which would hinder the act's remedical effects, or provide a simple expedient for evasion of its force. Next, we consider the law which applies in analogous cases. In Woodward v. Dietrich, 378 Pa.Super. 111, 548 A.2d 301 (1988), this Court traced the erosion of the privity defense in actions for fraud and deceit with particular emphasis on cases involving construction contracts. 548 A.2d at 308-16. We concluded that a contractor may be sued for fraud in absence of strict privity when the third party was specifically intended to rely upon the fraudulent conduct or when the reasonable reliance of a third party on the fraudulent conduct was specially foreseeable. 548 A.2d at 312-16. The latter situation involved an extension of the common law liability for fraud, and an erosion of common law privity concepts. Under the facts pled here, Mameco's liability for the Condominium Association's reasonable reliance upon Mameco's warranty would require no such erosion of common law privity concepts. Even under the early common law, a contractor was liable in tort for injuries to third parties who were specifically intended to rely upon the fraudulent assurances, notwithstanding an absence of privity. See Woodward v. Dietrich, supra, 548 A.2d at 311-12 (collecting cases). In the instant case, it is alleged that Ron-Ike, the roof repair contractor, purchased the roofing material from Mameco in accordance with specifications in its contract with the Condominium Association that Mameco's materials be used, and that Mameco issued its 10-year warranty directly to the Condominium Association. Accepting the facts pled as true, Mameco had unequivocal notice that the Condominium Association was the actual intended beneficiary of its warranty. Indeed, Mameco had issued its warranty directly to the Condominium Association. Hence, even under the early common law, privity would not have been necessary to sustain an action by the Condominium Association against Mameco for damages in tort asserting fraud. See Woodward v. Dietrich, supra, 548 A.2d at 312. Moreover, as the materials were intended to become part of a fixture to realty, Mameco knew or should have known that its warranty would be relied upon by any subsequent purchasers or lessees of the condominium units covered by the roof it warranted. Cf. Woodward v. Dietrich, supra . Otherwise stated, the Condominium Association's reasonable reliance was specially foreseeable even if it had not been specifically intended. Id., 548 A.2d at 315-16. Pennsylvania courts have repeatedly stated that the Pa. U.T.P.C.P.L. is focused upon eradicating fraudulent business practices. Commonwealth v. Monumental Properties, supra ; Gabriel v. O'Hara, supra ; Culbreth v. Lawrence Miller, Inc., supra . Consequently, we find the case law regarding privity and fraud highly relevant in ascertaining the legislature's probable intent with regard to privity and the cause of action authorized by our legislature via 73 P.S. § 201-9.2. This case law also weighs heavily against implying a strict technical privity requirement in the cause of action authorized by 73 P.S. § 201-9.2. Finally, we consider the consequences of the alternate constructions suggested. If we imply a strict technical privity requirement, Mameco and others would be able to successfully evade liability for alleged failures to honor their long-term warranties based upon the simple expedient of supplying their product and their warranties to intended ultimate purchasers, through a general contractor. Disreputable businesses might set-up judgment proof, under-capitalized contractors for just that purpose; or they might deceive reputable contractors, leaving them to pay the judgment when the deception is discovered later. Such an exception could eviscerate the rule. If, on the other hand, we instead follow the common law of fraud as it has developed in this Commonwealth, liability under 73 P.S. § 201-9.2 would extend to those in privity, those specifically intended to rely upon the fraudulent conduct, and those whose reasonable reliance was specially foreseeable. See Woodward v. Dietrich, supra. No injustice is apparent in such a construction. Consequently, we find the latter construction more consonant with the remedial focus of the Pa.U.T.P.C.P.L. on eradicating fraudulent business practices. Based upon the foregoing, we conclude that strict technical privity was not intended by our legislature to be required to sustain a cause of action under 73 P.S. § 201-9.2. The statute is to be construed broadly to effectuate its generally intent to eradicate fraudulent business practices. Consequently, we decline to engraft a requirement of strict technical privity onto a silent statute, especially since no such restriction applies in fraud cases generally. Cf. Woodward v. Dietrich, supra . Hence, we find that the Condominium Association's purchase of the roof from Ron-Ike, which was warranted directly by Mameco, was a purchase giving rise to liability on the part of Mameco under the Pa.U.T.P.C.P.L. for failure of Mameco to honor its warranty, notwithstanding the absence of direct privity between Mameco and the Condominium Association.