Court Opinion

ID: 9962576
Source: CourtListenerOpinion
Date Created: 2024-04-23 20:13:43.432239+00
Date Added: 2024-06-11T08:19:02.976597
License: Public Domain

J-A04030-23

                                2024 PA Super 80

 SPIRITRUST LUTHERAN                       :    IN THE SUPERIOR COURT OF
                                           :         PENNSYLVANIA
                    Appellant              :
                                           :
                                           :
              v.                           :
                                           :
                                           :
 WAGMAN CONSTRUCTION, INC.                 :    No. 572 MDA 2022
         v.                                :
                                           :
                                           :
 ALPHA CONSULTING ENGINEERS,               :
 INC., KEITH D. SMITH CONCRETE             :
 CONTRACTORS, INC., FITZ & SMITH,          :
 INC.,   KEYSTONE    FOUNDATION            :
 REPAIR,    INC.,   AND     TRIAD          :
 ENGINEERING, INC.                         :

               Appeal from the Order Entered March 14, 2022
                In the Court of Common Pleas of York County
                    Civil Division at No.: 2021-SU-000451

BEFORE: STABILE, J., DUBOW, J., and McCAFFERY, J.

OPINION BY STABILE, J.:                   FILED: APRIL 23, 2024

      In this construction defect case, SpiriTrust Lutheran (SpiriTrust) alleged

that in 2007, Wagman Construction, Inc (Wagman), negligently, and in breach

of contractual duties, built defective retaining walls and other structures on its

property.   Wagman responded that SpiriTrust’s claims were barred by the

statute of limitations, the gist of the action doctrine, and the economic loss

doctrine. Finding merit in those defenses, the Court of Common Pleas of York

County (trial court) sustained Wagman’s preliminary objections and granted

judgment on the pleadings in its favor. SpiriTrust now appeals the trial court’s
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rulings, and on review, we affirm in part, reverse in part, and remand the case

for further proceedings.

       SpiriTrust was previously known as Lutheran Social Services of South

Central Pennsylvania (LSS), and it is the successor-in-interest to Hanover

Lutheran Retirement Village, Inc. (Hanover Lutheran).           See Amended

Complaint, 5/17/2021, at ¶¶ 2-3, 8. In connection with the construction of a

life plan community called the Village at Utz Terrace (the Village), located in

Hanover, York County, Pennsylvania, SpiriTrust's predecessor, LSS, and

Wagman entered into a contract on October 10, 2001. In doing so, the

parties utilized a template document, the AIA A121/CMc-1991 “Standard Form

of Agreement Between Owner and Construction Manager Where the

Construction Manager is also the Contractor” (the A121). Id., at ¶ 7.1

       Under the A121, Wagman was to provide preconstruction and

construction services for a portion of the project called the Independent Living

Facility (The Facility). Id.2 With respect to the project’s construction phase,

the A121 incorporated by reference another form document – the 1987 Edition

of the AIA A201 General Conditions of the Contract. See id., at Exhibit 1.
____________________________________________

1 “AIA” refers to The American Institute of Architects, which publishes
numerous contract templates and form documents for use by architects,
contractors, engineers, attorneys, owners and all other parties involved in a
construction project. The contract templates and form documents may be
revised as needed by the parties.

2 Paragraph 7 in the Amended Complaint states that LSS was to provide these

services. The A121 attached to the Amended Complaint, however, makes clear
that Wagman, as the “Construction Manager,” was to provide these services,
not LSS.

                                           -2-
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      Through subsequent amendments to expand the scope of services that

Wagman was to provide, on June 9, 2005, the parties executed Amendment

No. 4 to the A121, under which Wagman agreed to supply labor, material and

equipment to construct "all site related development and infrastructure for all

specified structures and site preparation for 76+/- independent living cottages

(to be constructed as part of a separate agreement)[.]"          Id., at ¶ 9.

Wagman's site preparation work under Amendment 4 included topsoil removal

and replacement, as well as bulk excavation and compacted fill. Id., at ¶ 10.

      Thereafter, on October 27, 2003, Hanover Lutheran and Wagman

entered into a second contract, utilizing the 1997 Edition of the AIA Document

A111 (“Standard Form of Agreement Between Owner and Contractor where

the basis of for payment is the COST OF THE WORK PLUS A FEE with a

negotiated Guaranteed Maximum Price”) (the A111). Pursuant to the A111,

Wagman would serve as the general contractor in exchange for payment to

construct the portion of the Facility known as “the Cottages.” Id., at ¶ 12.

      On its first page, the A111 adopted by reference the 1997 Edition of the

AIA A201 General Conditions of the Contract. Id., at Exhibit 4. However,

Section 15.1.2 of the A111 identifies the incorporated “Contract Documents”

executed by the parties, and it refers specifically to the 1997 Edition of the

A201, “as revised.” Id. (Emphasis in original).

      On January 10, 2006, Hanover Lutheran and Wagman executed

Amendment No. 4 to the A111, pursuant to which Wagman, in addition to

constructing 12 cottages, was required, inter alia, to design and construct a

                                     -3-
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retaining wall in exchange for payment in the amount of $301,327. Id., at

Exhibit 5.    This retaining wall, known as Wall 1, was one of several other

retaining walls that Wagman also designed and constructed under the A111.

Id., at ¶ 16. Walls 2 and 3 were to be built in the area of the Cottages, and

they were also designed and constructed by Wagman under the A111. Id.,

at ¶ 17. By September 2007, Wagman had completed the Cottages portion

of the project at the Village, including the construction of the retaining walls.

Id., at ¶ 19.

       Years later, on March 9, 2019, following the completion of the site work

for the Cottages under the A121 contract (executed in 2001), and the

construction of the Cottages and retaining walls under the A111 contract

(executed in 2003), Wall 1 collapsed. Id., at ¶ 20. Because of the imminent

danger posed by the incident, dozens of residents had to be relocated, and a

security service had to be hired to monitor the area. Id., at ¶ 21.

       It is not disputed that both the 1987 and 1997 Editions of the AIA form

A201 each include a standardized provision that would make SpiriTrust’s

resulting claims against Wagman arbitrable.3            SpiriTrust commenced

arbitration proceedings on August 4, 2020, with the American Arbitration

Association following the collapse of Wall 1. See Appellant’s Brief, pp. 9-10.

____________________________________________

3 At the time it was seeking arbitration, SpiriTrust’s claims were only
predicated on the 2003 A111 contract. The claims predicated on the 2001
A121 contract were not asserted until after SpiriTrust had withdrawn its
demand to arbitrate the dispute with Wagman.

                                           -4-
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In response, Wagman petitioned the trial court to stay the arbitration, arguing

that SpiriTrust could not establish the arbitrability of the case.

      Wagman argued that since the A111 had incorporated the “as revised

A201,” this evidenced the parties’ intent not to agree to the terms of the

standardized form A201-1997, precluding SpiriTrust from relying on the

arbitration provision in the latter document. Due to Wagman’s contention that

SpiriTrust could not establish the existence of an arbitration agreement, and

out of concern for the statute of limitations, SpiriTrust initiated this civil action

by the filing of a praecipe for a writ of summons on March 2, 2021. It then

filed its complaint on April 5, 2021, and withdrew its demand for arbitration.

      In its original complaint, SpiriTrust asserted two counts against

Wagman; one for breach of the A111 contract, and the other for negligence.

SpiriTrust attached to the complaint the 1997 form A201 not specific to the

project, stating that, despite an exhaustive search, it was unable to find the

governing “as revised A201” contract addendum referenced in the A111.

SpiriTrust stated in a footnote that it was unaware of any revisions to the A201

that were relevant to it claims. See Complaint, 4/5/2021, at ¶ 9, n.1.

      On May 17, 2021, SpiriTrust filed an Amended Complaint, the subject

of this appeal, alleging three causes of action against Wagman. In Count 1,

SpiriTrust asserted that Wagman breached the 2001 A121 contract by failing

to perform the site work in a reasonably workmanlike manner. The work was

allegedly deficient because the reinforced soil material did not meet industry

                                        -5-
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standard gradation requirements, and the reinforced soil was not compacted

to desirable unit weights. See Amended Complaint, 5/17/2021, at ¶ 38.

         In Count II, SpiriTrust asserted that Wagman breached the 2003 A111

contract.     SpiriTrust averred that pursuant to the A111, including under

Amendment No. 4, Wagman had an obligation to design and construct certain

retaining walls for the Project, and that it had architectural and structural

design responsibilities consistent with the rest of all Wagman's work under the

A111. Id., at ¶¶ 44-46. Specifically, SpiriTrust alleged that under the A111,

Wagman did not construct the retaining walls in a reasonable workmanlike

manner or in accordance with industry standards in the following ways:

   (a)      Wagman installed the geogrid, which is used to reinforce the
            soil between the masonry block layers of the retaining walls,
            perpendicular to the walls, resulting in retaining walls that had
            less than half the tensile strength of retaining walls having
            geogrid installed parallel to the walls;

   (b)      Wagman failed to install required granular drainage layers
            behind Wall 1;

   (c)      Wagman failed to install the geogrid in sufficient length and, in
            some locations, the geogrid exceeded standard vertical
            spacing;

   (d)      The reinforced soil material did not meet industry standard
            gradation requirements;

   (e)      The reinforced soil was not compacted to desirable unit
            weights; and

   (f)      Wagman failed to use the services of a licensed engineer in the
            design of the retaining walls.

Id. at ¶ 49(a)-(f).

                                        -6-
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      At Count III, SpiriTrust asserted a claim of negligence against Wagman

with respect to its work under the A111.        Repeating the same specific

allegations averred at paragraphs 49(a)-(f) from Count II, SpiriTrust alleged

that Wagman breached its duty to design the retaining walls in a safe manner

consistent with accepted engineering standards and industry practice by

instead negligently designing the retaining walls, causing the collapse of Wall

1. Id., at ¶ 57.

      Wagman filed preliminary objections in the nature of a demurrer,

asserting two grounds. First, Wagman argued that Count III (Negligence) was

barred because it was duplicative of SpiriTrust’s breach of contract claims and

rooted solely in Wagman’s contractual duties. Second, Wagman argued that

the negligence count was legally deficient because the asserted damages were

all economic losses in nature, and therefore not recoverable in tort.

      The trial court sustained the preliminary objections as to Count III

(Negligence) in its order dated September 21, 2021, and the count was

dismissed. The trial court filed a memorandum giving the reasons for its ruling

which mirrored the grounds Wagman had raised.                See Trial Court

Memorandum, 9/21/2021, at 7-12.

      Wagman later filed a motion for judgment on the pleadings as to Counts

I and II of the Amended Complaint, asserting that the breach of contract

claims were barred by the statute of limitations. The motion relied on the

language contained in the A201 general conditions referenced in both the

A121 and A111 contracts.

                                     -7-
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        As stated above, the 2001 A121 contract was attached to the amended

complaint, and it referenced, but did not include, the 1987 Edition of the AIA

A201.     Likewise, the 2003 A111 contract was attached to the amended

complaint, and while the 1997 Edition of the AIA A201 was referenced in the

form document, the parties specified otherwise that they had negotiated an

“as revised” version of that form document which was to be included in the

contract. This “as revised A201” was not attached to the amended complaint.

        Section 13.7.1 of the 1997 Edition of the form A201, which was attached

to SpiriTrust’s original complaint, provides that any cause of action between

the parties would begin to accrue on the date of the construction’s “substantial

completion.”       This provision is critical because Wagman indisputably

completed all of its construction in 2007. If the substantial completion

provision appeared within the respective A201 documents incorporated by the

A111 and A121 contracts, then SpiriTrust’s claims would be time-barred.4 On

the other hand, if Section 13.7.1 was revised to give another period for causes

of action to accrue, then SpiriTrust would potentially be permitted to invoke

an exception to the statute of limitations if one were applicable.5
____________________________________________

4 Construction was completed no later than 2007, and SpiriTrust’s action was
commenced in 2021, long after the expiration of the limitations periods for
breach of contract claims (four years) and negligence claims (two years).

5 SpiriTrust maintained, pursuant to “the discovery rule,” that its claims did

not begin to accrue until it could have reasonably discovered the latent defects
in the construction. By SpiriTrust’s reckoning, the statutory limitations period
did not begin in 2007 at the time of the construction’s substantial completion.
(Footnote Continued Next Page)

                                           -8-
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       Wagman construed SpiriTrust’s original complaint as containing an

admission as to Count II of the amended complaint that there were no material

differences between the “as revised A201” and the standard form A201.

Although SpiriTrust had attached the 1997 form A201 to its original complaint,

it did so with the caveat that the form A201 was “not specific” to the

construction projects in dispute.        In a footnote, however, SpiriTrust stated

that it was “not aware of any revisions to the [form] A201 that are relevant

for purposes of this action.” Complaint, 4/4/2021, at ¶ 9 fn.1. Wagman seized

on this footnote as definitive proof that Section 13.7.1 had not been altered

or removed from the “as revised A201.”

       SpiriTrust attempted to refute Wagman’s interpretation of its original

complaint in several ways.           First, SpiriTrust stressed that the amended

complaint had superseded the original complaint, making the averments in

the latter pleading a nullity.      Second, the only contracts mentioned in the

amended complaint were the A111 and A121, which on their face contained

no statute of limitations provisions. Third, no version of the A201 had been

attached to, or referenced by, the amended complaint or any other operative

pleading. Accordingly, SpiriTrust argued that Wagman could not rely on any

____________________________________________

It instead began to run when Wall 1 collapsed on March 9, 2019, making the
present action timely filed less than two years later, on March 3, 2021.
Wagman asserts on appeal that SpiriTrust could not invoke the discovery rule
because its amended complaint had not adequately pleaded the requisite
facts. However, in its 1925(a) opinion, the trial court impliedly found that
SpiriTrust had successfully invoked the discovery rule.

                                           -9-
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version of the A201 to establish as a matter of law that SpiriTrust’s claims

were barred as untimely.

      SpiriTrust also asserted that Wagman had misread its footnote in the

original complaint comparing versions of the A201. SpiriTrust explained that

it only meant to state that the arbitration provision in the 1997 form A201 had

not been removed during the parties’ negotiated revisions with respect to the

A111 contract. The original complaint was filed when the arbitrability of the

case was still being disputed, and SpiriTrust equated two versions of the A201

to show that the “as revised” version contained the provision that allowed the

case to be arbitrated.

      In addition to their dispute over the content of the “as revised A201”,

the parties also differed as to the whether the document appeared in the

record.   SpiriTrust maintained that the “as revised A201” had been lost.

Conversely, Wagman maintained that it had produced an “as revised” A201

during the prior litigation on its motion for judgment on the pleadings.

      Wagman had relied on Exhibit B to its petition to stay arbitration, to

which Wagman attached a string of documents that were collectively

purported to be the “as revised A201” that had been incorporated by reference

into the parties’ A111 contract in 2003. The first document is titled, “Project

Manual for Utz Terrace,” and is dated as of March 3, 2005, about a year and

a half after the A111 contract was executed. The designated project number

on the document is “0127.” Following the Project Manual was a form A201,

                                    - 10 -
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as well as yet another document titled, “Section 00800 – Supplementary

Conditions.”

     The Supplementary Conditions ostensibly related to the terms of a form

A201, indicating language to be added or omitted from the parties’ agreement.

They contained no additions or omissions with respect to the statute of

limitations/substantial completion language in Section 13.7.1 of form A201.

Wagman posited that the Project Manual, the form A201, and the

Supplementary Conditions could be read together as constituting the “as

revised A201,” which retained Section 13.7.1 and rendered Count II of

SpiriTrust’s amended complaint untimely.

     SpiriTrust responded that the documents identified by Wagman as the

“as revised A201” were nothing of the sort. It argued that the A111 contract,

executed in 2003 between Wagman and SpiriTrust’s predecessor, Hanover

Lutheran, enumerated in Article 15 the documents then in effect.        This

included the A111 itself, as well as the “as revised A201” contract.

Immediately below that provision in the A111 contract, a section that reads,

“The Supplementary and other Conditions of the Contracts,” was crossed out

and the spaces designated for that information were left blank.

     The apparent non-existence of Supplementary Conditions in the A111

contract prompted SpiriTrust to argue that none of the documents introduced

by Wagman could be the “as revised A201.”        See SpiriTrust’s Answer to

Petition and Application to Stay Arbitration, 3/31/2021, at 13-15.       The

Supplementary Conditions provided by Wagman (dated March 3, 2005) also

                                   - 11 -
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were not contemporaneous with the execution of the A111 contract on October

27, 2003.

      SpiriTrust supported its contention further by presenting the affidavit of

the vice-president of the firm that served as the architect for the construction

projects at the Village – Michael Allen-Hall.     He stated that the “Project

Manual” identified by Wagman in its exhibit “did not apply to the project for

the construction of the Cottages,” which had included the design and

construction of the retaining walls. See id., at Exhibit 1, ¶¶ 6-7. He also

stated that the project number referenced in the Project Manual related to a

different project involving the construction of apartments and a community

center at the Village. See id., at ¶ 4.

      Despite the parties’ disagreements as to the content and terms of their

agreements, the trial court, on March 14, 2022, granted Wagman’s motion for

judgment on the pleadings as to both of SpiriTrust’s breach of contract claims

(Count I and Count II).      In its 1925(a) opinion, the trial court did not

acknowledge that an “as revised A201” appeared in the record. Rather, the

trial court reasoned that SpiriTrust had admitted in its original complaint that

the form A201 attached to the pleading was equivalent in all material respects

to the controlling “as revised” version incorporated in the A111 contract.

Further, since the form A201 contained a statute of limitations/substantial

completion provision, and SpiriTrust had, in effect, conceded it applied,

SpiriTrust would be precluded from raising an exception to the limitations

period as a matter of law. See 1925(a) Trial Court Opinion, 5/13/2022, at 2-

                                     - 12 -
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3. Judgment on the pleadings was therefore granted as to Count II (breach

of the 2003 A111 contract).

      As a separate ground to support the granting of judgment on the

pleadings for both Count I and Count II, the trial court opined that SpiriTrust

had violated Pa.R.C.P. 1019(i), which requires a plaintiff to attach all contracts

that are material to the claims. See id., at 5. SpiriTrust had attached the

A111 and the A121 to its amended complaint, but both of those contracts had

incorporated by reference an A201 document which had been omitted from

the pleadings. See id.

      Notwithstanding its ruling that Count II of SpiriTrust’s complaint was

barred by the statute of limitations period under Section 13.7.1 of the “as

revised A201,” the trial court went on to discuss the inapplicability of the

discovery rule exception to the statute of limitations. The trial court suggested

that SpiriTrust could have discovered the alleged defects in the retaining walls

prior to Wall 1’s collapse in 2019 by hiring an outside engineering firm during

the construction or any time after the walls were completed. See id., at 8.

As to the site work, the trial court reasoned that, in addition to hiring experts

to evaluate the area, the alleged defects were discoverable since 2007

because they were all “clearly visible.” Id., at 8-9.

      SpiriTrust timely appealed from both the order granting judgment on

the pleadings, as well as the order sustaining preliminary objections. In its

brief, SpiriTrust now raises four issues for our consideration:

      1. Whether the Trial Court erred in granting Wagman’s Motion for

                                     - 13 -
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     Judgment on the Pleadings as to breach of the A111 contract
     (Count II of the Amended Complaint) where Wagman relied
     exclusively on a provision in the form A201-1997 document, and
     not the “as revised” A201-1997 document that was part of the
     A111 contract, which “as revised” document was not part of
     pleadings, and thus, the Trial Court made an improper and
     unsupported assumption as to the content of the “as revised”
     A201-1997 document.

     2. Whether the Trial Court erred in granting Wagman’s Motion for
     Judgment on the Pleadings as to Counts I and II of the Amended
     Complaint where SpiriTrust commenced its claims within the
     applicable statutes of limitations following SpiriTrust’s discovery
     of Wagman’s defective design and construction of the retaining
     walls after the collapse of Wall 1 on March 9, 2019.

     3. Whether the Trial Court erred in relying on the gist of the action
     doctrine to sustain Wagman’s Preliminary Objection to SpiriTrust’s
     professional negligence claim (Count III of the Amended
     Complaint), which claim is premised upon Wagman’s breach of its
     professional obligations to design the retaining walls in accordance
     with accepted engineering standards.

     4. Whether the Trial Court erred in relying on the economic loss
     doctrine in sustaining Wagman’s Preliminary Objection to
     SpiriTrust’s professional negligence claim (Count III of the
     Amended Complaint), which claim is premised upon Wagman’s
     breach of its professional obligations to design the retaining walls
     in accordance with accepted engineering standards, and which
     claim alleged damage to real property in addition to economic
     damages.

Appellant’s Brief, at 6-7 (suggested answers omitted).

     With respect to SpiriTrust’s first two claims regarding the trial court’s

entry of judgment on the pleadings, our standard of review is de novo and our

scope of review is plenary.   See Grabowski v. Carelink Cmty. Support

Servs., Inc., 230 A.3d 465, 470 (Pa. Super. 2020).           Judgment on the

pleadings should be granted where there are no disputed issues of material

                                    - 14 -
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fact, and the defendant is entitled to judgment as a matter of law. See id.;

see also Pa.R.Civ.P. 1034.      All well-pleaded allegations in the plaintiff’s

operative complaint are accepted as true.         See Okeke-Henry v. SW.

Airlines, Co., 163 A.3d 1014, 1016–17 (Pa. Super. 2017).

      SpiriTrust’s first claim is that the trial court erred in granting judgment

on the pleadings as to Count II of the amended complaint (breach of the 2003

A111 contract) because the ruling resolved a disputed question of fact

regarding the content of the “as revised” version of the A201 contract – a

document which SpiriTrust argues was not part of the record. It is undisputed

that SpiriTrust did not attach any version of the A201 to the amended

complaint, which is the operative pleading under review.         The trial court

nonetheless inferred that the “as revised A201” precluded SpiriTrust’s breach

claim in Count II based on a perceived admission to that effect in the original

complaint.

      We agree with SpiriTrust that its original complaint is of no moment

because it became a nullity once the amended complaint was filed.          “It is

settled law in this Commonwealth that the filing of an ‘amended complaint has

the effect of eliminating the prior complaint.’” Avery v. Cercone, 225 A.3d

873, 882 (Pa. Super. 2019) (quoting Hionis v. Concord Tp., 973 A.2d 1030,

1036 (Pa. Cmwlth. 2009) (emphasis in original). All pleadings in a complaint

preceding an amendment become “null and void for purposes of the Rules

of Civil Procedure.” Id., at 883 (emphasis added). The trial court therefore

                                     - 15 -
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erred as a matter of law in attributing the averments of the original complaint

to SpiriTrust because that pleading was eliminated by the amended

complaint.6

       Compounding that error, the trial court granted judgment on the

pleadings as to Count I and Count II based upon a finding that SpiriTrust

violated Pa.R.C.P. 1019(i). This rule requires a pleader to attach a copy of a

writing when a claim or defense is based upon it.       See Pa.R.C.P. 1019(i).

When the writing is not accessible, the pleader must “so state, together with

the reason, and . . . set forth the substance in writing.”     Id. There is no

dispute here that SpiriTrust did not attach to its pleadings the 1987 Edition of

the AIA A201 incorporated by the A121 (Count I); nor did it attach the “as

revised A201” incorporated by the A111 (Count II).

       It is significant, however, that Wagman did not file a preliminary

objection asserting that SpiriTrust’s amended complaint was in non-

conformity with Pa.R.C.P. 1019(i). The trial court apparently raised the defect

for the first time, sua sponte, in its 1925(a) opinion as a belated reason for

affirmance. See Trial Court 1925(a) Opinion, 5/13/2022, at 5. “Under the

Rules and case law, it is clear that matters not raised in preliminary objections

may not be considered by the court sua sponte.” MacGregor v. Mediq Inc.,

____________________________________________

6  Our disposition makes it is unnecessary for us to determine whether the
footnote in the original complaint was misconstrued by the trial court. The
amendment of that pleading made it improper for the trial court to construe
it in any context.

                                          - 16 -
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576 A.2d 1123, 1128 (Pa. Super. 1990) (citing Pa.R.Civ.P. 1032). Thus, we

are not persuaded that this is a viable ground to justify the affirmance of the

trial court’s order granting judgment on the pleadings as to Count I and Count

II.7

       We now turn to the sub-issue not directly addressed in the trial court’s

1925(a) opinion. SpiriTrust argues, as to Count II, that the trial court erred

in relying on the terms of the form A201 or the “as revised A201,” because

the former contract addendum was not controlling, and the latter was not part

of the record. Wagman contends, however, that the order granting judgment

on the pleadings as to Count II should be affirmed because Wagman attached

the “as revised A201” to its filings in this case, making the contract’s statute

of limitations provision part of the certified record.

       As a general matter, a defendant may have the trial court consider parts

of a contract that the plaintiff referred to, but did not attach, to a pleading.

See Satchell v. Ins. Placement Fac. Of Penn., 361 A.2d 375, 377 (Pa.

Super. 1976).      SpiriTrust indirectly mentioned the “as revised A201” in its

amended complaint because that document was incorporated by reference in

a document SpiriTrust did attach, the A111 contract, which was the basis of

the breach of contract claim in Count II. An instrument that forms “the very

____________________________________________

7 SpiriTrust asserts in its brief that it did not violate Pa.R.C.P. 1019(i) because

no version of the A201 was material to its claims, which were instead based
solely on the face of the A111 and A121 contracts.

                                          - 17 -
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foundation of the suits” is “properly considered by the court” where the

plaintiff has averred its existence. Id.

      Wagman argues that the instrument at issue is composed of several

documents collected within the “Project Manual” for the Village, the most

significant of which is the “Supplementary Conditions,” which purport to keep

intact the limitations provisions in the form A201 contract.      Wagman had

initially attached these documents to its petition to stay arbitration.    They

were then made part of the certified record of this appeal when Wagman

attached them to its reply to SpiriTrust’s opposition to the motion for judgment

on the pleadings. See Ritter v. Ritter, 518 A.2d 319, 323 (Pa. 1986) (“[A]n

appellate court can only consider the certified record on appeal when

reviewing a case.”).

      Despite the obvious import of the language in the “as revised A201”,

Wagman’s reliance on the Project Manual documents is problematic. To begin,

the trial court declined to accept that Wagman had indeed submitted an “as

revised A201” that relates to the construction of the subject cottages and

retaining walls. The trial court’s ruling (which we hold to be erroneous for the

reasons above) was predicated solely on averments in SpiriTrust’s original

complaint and amended complaint. See 1925(a) Opinion, 5/13/2022, at 4.

      In addition, it is not clear that that the Supplementary Conditions

contained in the Project Manual are in fact what Wagman asserts them to be.

The A111 contract executed by the parties in 2003 struck “Supplementary

                                     - 18 -
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Conditions” from its terms.    The Project Manual also includes no signature

page or any other indication that it represented a negotiated “as revised A201”

that was incorporated into the A111. SpiriTrust also submitted an affidavit of

the project’s architect, stating that the Project Manual concerned work at the

Village other than Wagman’s construction of the cottages and retaining walls.

      Since the parties presented conflicted evidence as to the nature of the

Project Manual documents, their identity as the “as revised A201” poses a

question of fact. The trial court and this Court must decline to determine such

a fact when deciding the propriety of judgment on the pleadings, since there

must be no remaining disputed questions of fact in order for judgment on the

pleadings to be granted. See Grabowski, 230 A.3d at 470.

      We next consider SpiriTrust’s claim that the trial court erroneously

granted judgment on the pleadings as to Counts I and II based on the statute

of limitations. That is, SpiriTrust contends that it invoked the discovery rule

as to those counts, raising a question of fact as to the timeliness of its claims

by asserting that they did not accrue until Wall 1 collapsed on March 9, 2019.

      SpiriTrust’s breach of contract claims are subject to a four-year statute

of limitations that begins to accrue at the time of the breach. See 42 Pa.C.S.A.

§ 5525(a)(8).    The negligence claim is subject to a two-year statute of

limitations that likewise begins to accrue once the right to bring the claim

arises. See 42 Pa.C.S.A. § 5524(7). The present case was not filed until

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2021, over a decade after the alleged breaches of contract and negligent acts

occurred, barring the claims under their respective limitations periods.

      One exception is the discovery rule, which delays the running of the

statute of limitations until the plaintiff “discovers, or reasonably should have

discovered” the basis of the claim. Pocono Int’l Raceway, Inc. v. Pocono

Produce, Inc., 468 A.2d 468, 471 (Pa. 1983).          “[T]he point at which the

complaining party should reasonably be aware that he has suffered an injury

is an issue of fact to be determined by the jury.” Miller v. Ginsberg, 874

A.2d 93, 98 (Pa. Super. 2005); see also Amodeo v. Ryan Homes, Inc.,

595 A.2d 1232, 1236 (Pa. Super. 1991) (same).

      There are two ways for a plaintiff to assert the discovery rule: (1) by

pleading sufficient facts in the complaint, or (2) by raising the discovery rule

in response to the defendant’s statute of limitations defense.        Prevish v.

Northwest Med. Ctr. Oil City Campus, 692 A.2d 192, 197 (Pa. Super. 1997)

(citing Fox v. Byrne, 525 A.2d 428 (Pa. Super. 1987)).           Either way, the

plaintiff must allege facts showing plaintiff’s lack of prior knowledge regarding

the nature of the alleged injury, and why plaintiff could not have learned of it

at an earlier point. See Coyne v. Porter-Hayden Co., 428 A.2d 208, 210

(Pa. Super. 1981).

      Here, in granting judgment on the pleadings as to Count II, the trial

court first relied on the enforceability of the statute of limitations provision in

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the “as revised A201.” See Trial Court Opinion, 5/13/2022, at 5-8.8 Having

found that the claim already was barred, the trial court further determined

that SpiriTrust could not satisfy the discovery rule as to Count I and Count II

because the construction defects alleged therein could have been discovered

at an earlier time. It was suggested by the trial court that the asserted defects

were readily apparent, and that SpiriTrust would have immediately discovered

them at any point after the completion of construction in 2007 by hiring an

outside engineering firm to evaluate Wagman’s work. See id., at 8-9.

       SpiriTrust did not plead that the asserted defects were detectible to the

naked eye as the trial court found. Nor does invocation of the discovery rule

require the plaintiff to have hired an engineering firm within the limitations

period. Wagman does not attempt to defend this portion of the trial court’s

ruling, much less provide any legal authority in support of it. See Brief of

Appellee, at 39-48.

       We likewise are unable to conclude that the trial court’s factual

determinations were appropriate at the pleading stage. It is well established

that “the point at which the complaining party should reasonably be aware

that he has suffered an injury is a factual issue ‘best determined by the

collective judgment, wisdom and experience of jurors.’” White v. Owens–

____________________________________________

8 The trial court granted judgment on the pleadings as to Count II based on

the “as revised A201.” The trial court did not rely on the “as revised A201”
as to Count I, instead citing only a violation of Pa.R.C.P. 1019(i). See Trial
Court 1925(a) Opinion, 5/13/2022, at 5.

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Corning Fiberglas Corp., 668 A.2d 136, 144 (Pa. Super. 1995) (quoting

Petri v. Smith, 453 A.2d 342, 347 (Pa. Super. 1982)).

      Instead of attempting to justify the trial court’s factfinding, Wagman

instead pivots to the sufficiency of SpiriTrust’s pleadings with respect to the

discovery rule. The pleadings do not adequately invoke the discovery rule in

Wagman’s view because SpiriTrust did not state its lack of prior knowledge

regarding the nature of the alleged construction defects, and why it could not

have learned of the defects at an earlier point.

      While SpiriTrust could have given more detail as to its lack of knowledge

prior to the filing of its action, we decline to affirm the trial court’s order on

Wagman's belated ground. Wagman did not assert such a pleading deficiency

in its preliminary objections, and SpiriTrust was never given to understand

that its claim needed to be amended in that regard. Moreover, as evidenced

by the reasoning in its 1925(a) opinion, the trial court presumed that

SpiriTrust’s pleadings were adequate to invoke the discovery rule exception.

      In sum, there remained questions of fact as to whether the “as revised

A201” incorporated into the 2003 A111 contract contained a provision that

would bar the discovery rule and render Count II untimely.         Alternatively,

SpiriTrust’s invocation of the discovery rule raised another question of fact as

to when it could have reasonably learned about the asserted construction

defects raised in Count I and Count II, and this too was a factual issue that

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the trial court was not permitted to address. Thus, the trial court erred in

granting judgment on the pleadings as to both Count I and Count II.

      SpiriTrust’s third claim is that the trial court erred in sustaining

Wagman’s preliminary objection as to Count III (Negligence). The trial court

ruled that this count was precluded by the gist of the action doctrine, in that

the substance of the negligence allegation was “integrally related to [the]

breach of contract claims.” Trial Court Memorandum, 9/22/2021, at 9. The

ruling is erroneous according to SpiriTrust because, despite the heading of the

count, it alleged a claim of “professional negligence,” which concerns the

breach of a different duty than that imposed by the parties’ contractual

obligations. SpiriTrust stresses that the count is independent of the grounds

alleged in the breach of contract claims, such that the gist of action doctrine

does not apply.

      A preliminary objection in the nature of a demurrer tests the legal

sufficiency of the pleading.   See Pa.R.Civ.P. 1028(a)(4).    The trial court’s

rulings on preliminary objections in the nature of a demurrer may be reversed

on review only to correct “an error of law or abuse of discretion.”

McNaughton Properties, LP v. Barr, 981 A.2d 222, 224 (Pa. Super. 2009).

This Court must “examine only the averments in the complaint, together with

the documents and exhibits attached thereto, and the impetus of our inquiry

is to determine the legal sufficiency of the complaint and whether the pleading

would permit recovery if ultimately proven.” Id. “If doubt exists concerning

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whether the demurrer should be sustained, then ‘this doubt should be resolved

in favor of overruling it.’” Bruno v. Erie Ins. Co., 106 A.3d 48, 56 (Pa. 2014)

(quoting Bilt-Rite Contractors v. Architectural Studio, 866 A.2d 270, 274

(Pa. 2005)). The standard of review is de novo. Id.

      The gist of the action doctrine “precludes plaintiffs from re-casting

ordinary breach of contract claims into tort claims.” Mirizio v. Joseph, 4

A.3d 1073, 1079 (Pa. Super. 2010). Our Supreme Cout has elaborated on

that standard, emphasizing that courts must focus on how the plaintiff’s

pleadings described the defendant’s legal duties. See Bruno, 106 A.3d at 56.

A plaintiff may not pursue a claim of negligence where the alleged duty

breached by the defendant arises from the parties’ contract:

      The general governing principle which can be derived from our
      prior cases is that our Court has consistently regarded the nature
      of the duty alleged to have been breached, as established by the
      underlying averments supporting the claim in a plaintiff's
      complaint, to be the critical determinative factor in determining
      whether the claim is truly one in tort, or for breach of contract. In
      this regard, the substance of the allegations comprising a claim in
      a plaintiff's complaint are of paramount importance, and, thus, the
      mere labeling by the plaintiff of a claim as being in tort, e.g., for
      negligence, is not controlling. If the facts of a particular claim
      establish that the duty breached is one created by the parties by
      the terms of their contract – i.e., a specific promise to do
      something that a party would not ordinarily have been obligated
      to do but for the existence of the contract – then the claim is to
      be viewed as one for breach of contract. If, however, the facts
      establish that the claim involves the defendant's violation of a
      broader social duty owed to all individuals, which is imposed by
      the law of torts and, hence, exists regardless of the contract, then
      it must be regarded as a tort.

Id. (footnotes and internal citations excluded).

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      With that standard in mind, we now proceed to assess the nature of the

duties described in SpiriTrust’s respective breach of contract and negligence

claims. In Count I of the amended complaint, SpiriTrust alleged that Wagman

breached the A121 contract by failing to complete its “site work” projects “in

a reasonable    workmanlike     manner    and   in accordance    with   industry

standards.” Amended Complaint, 5/17/2021, at ¶¶ 36-37. Similarly, in Count

II, SpiriTrust alleged that Wagan had breached its obligation to perform “the

design and construction of the retaining walls . . . in a reasonably workmanlike

manner” id., at ¶ 48, or “in accordance with industry standards[.] Id., at ¶¶

49-52.

      The language of Count III uses slightly different terminology to establish

Wagman’s liability but repeats as the basis for negligence the same averments

alleging a breach of contract in Count II. This negligence count provides that

“Wagman was responsible for both the construction and the architectural and

structural design” of the retaining walls. Id., at ¶ 55. SpiriTrust asserted that

Wagman breached its “duty to design the retaining walls in a safe manner

consistent with accepted engineering standards and industry practice[.]” Id.,

at ¶ 57. In addition to carrying out the work in ways that did not comport

with “accepted engineering standards and industry practice,” it was alleged

that Wagman also “failed to use the services of a licensed engineer in the

design of the retaining walls.” Id., at ¶ 58.

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      SpiriTrust attempts to classify its negligence count as a claim of

“professional negligence,” distinguishing the duty imposed for professional

services as distinct from those owed pursuant to its contracts with Wagman.

See Merlini ex rel. Merlini v. Gallitzin Water Auth., 934 A.2d 100, 104

(Pa. Super. 2007) (holding that a professional negligence can be distinguished

from an ordinary negligence claim by determining “(1) whether the claim

pertains to an action that occurred within the course of a professional

relationship; and (2) whether the claim raises questions of professional

judgment beyond the realm of common knowledge and experience.”).

      We do not find this distinction to be availing because the breach of

contract and negligence claims contain the same underlying allegation that

Wagman breached a duty to provide the services outlined in the parties’

construction contracts.    Wagman was contracted to complete a project

involving the design and construction of retaining walls and site work. The

duties outlined in the contracts contemplated that Wagman would be carrying

out engineering services when completing those tasks.            The Amended

Complaint similarly references Wagman’s contractual duties to design the

structures to be built on SpiriTrust’s property.

      In sum, then, the gist of the alleged duty in the breach of contract counts

is that Wagman had to design and construct the retaining walls “in a

reasonable workmanlike manner and in accordance with industry standards.”

The gist of the alleged duty in the negligence count is that Wagman had to

                                     - 26 -
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design and construct the retaining walls in accordance with “accepted

engineering standards and industry practice.”

       There appears to be no material difference between “industry

standards” and “industry practice,” the terms used by SpiriTrust in its

amended complaint to describe the respective duties in the breach of contract

and negligence counts. The record instead establishes that the duty described

in the negligence count arises from Wagman’s contractual obligation to

provide engineering services and to apply the requisite expertise when

carrying that duty out.

       Thus, the trial court did not err in sustaining Wagman’s preliminary

objection as to Count III because the duty described in the negligence count

was duplicative of, and not in addition to, the duties already imposed by the

parties’ contracts.

       SpiriTrust’s final claim pertains again to the portion of the trial court’s

order sustaining a preliminary objection as to Count III (Negligence), this time

disputing the application of the economic loss doctrine.9 Having found that

the trial court did not err in applying the gist of the action doctrine as to this

____________________________________________

9 While closely related, the gist of the action doctrine and the economic loss

doctrine are distinct. The gist of the action doctrine prevents a party from re-
casting a breach of contract claim as a separate claim of negligence, whereas
the economic loss doctrine permits a party to bring a tort action for purely
economic damages as long as the asserted duty is independent from a
contractual obligation. See generally Dittman v. UPMC, 196 A.3d 1036,
1052 (Pa. 2018).

                                          - 27 -
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same count, it is unnecessary for us to separately address whether the

economic loss doctrine is also applicable.

      Order reversed as to Counts I and II of the amended complaint; order

affirmed as to Count III of the amended complaint. Case remanded for further

proceedings consistent with this opinion. Jurisdiction relinquished.

      Judge McCaffery did not participate in the consideration or decision of

this case.

Judgment Entered.

Benjamin D. Kohler, Esq.
Prothonotary

Date: 04/23/2024

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