Court Opinion

ID: 2758998
Source: CourtListenerOpinion
Date Created: 2014-12-09 22:05:14.374213+00
Date Added: 2024-06-11T11:27:00.456108
License: Public Domain

J-S70044-14

NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P 65.37

ISLAMIC SOCIETY OF GREATER VALLEY          :    IN THE SUPERIOR COURT OF
FORGE                                      :          PENNSYLVANIA
                                           :
   v.                                      :
                                           :
BUILDING CONTRACTORS                       :
INTERNATIONAL, LTD and JOHN                :
COCIVERA and GARIG VANDERVELDT             :
(MD) and GINA VANDERVELDT AND              :
ANGELA COCIVERA A/K/A/ ANGELA              :
NARDINI and JOANNA COCIVERA                :
                                           :
APPEAL OF: ISLAMIC SOCIETY OF              :
GREATER VALLEY FORGE                       :    No. 1437 EDA 2014

             Appeal from the Judgment Entered September 4, 2013
               in the Court of Common Pleas of Chester County,
                      Civil Division, at No(s): 12-08706-RC

BEFORE:      LAZARUS, MUNDY, and STRASSBURGER,* JJ.

MEMORANDUM BY STRASSBURGER, J.:            FILED DECEMBER 09, 2014

        Islamic Society of Greater Valley Forge (Islamic Society) appeals from

the September 4, 2014 judgment entered following a verdict in favor of

Islamic Society and against Building Contractors International, LTD (BCI).

Specifically, Islamic Society challenges the March 5, 2013 order which

dismissed on preliminary objections all claims stated in its Amended

Complaint against John Cocivera, Garig Vanderveldt, Gina Vanderveldt, and

Angela     Cocivera   (a/k/a/   Angela    Nardini)   (Individual   Defendants,

*Retired Senior Judge assigned to the Superior Court.
J-S70044-14

collectively).1    We reverse the order in part and remand for further

proceedings consistent with this memorandum.

      The trial court2 summarized the facts of the case as follows.

      [Islamic Society] contracted with [BCI], as general contractor, to
      construct a house of worship. BCI contracted with various
      subcontractors to complete the project. [Islamic Society] paid
      BCI the total contract price of $1,399,050.         Subsequently,
      [Islamic Society] became aware that BCI failed to pay all of its
      subcontractors.      In fact, numerous subcontractors filed
      mechanics liens against the property. [Islamic Society] further
      alleges that there were deficiencies in certain aspects of the
      construction.    With regard to the [I]ndividual Defendants,
      [Islamic Society] asserts that all four were owners, shareholders
      or officers of BCI. The Amended Complaint asserts the following
      Counts: I - Indemnification Under the Mechanics Lien Statute; II
      - Breach of Contract; III - Breach of Warranty; IV - Fraud in the
      Inducement; V - Breach of the Implied Covenant of Good Faith
      and Fair Dealing; VI - Unjust Enrichment[;] and VII - Piercing
      the Corporate Veil. All of the counts were brought against all
      defendants. [Islamic Society] stated in a footnote: “[Islamic
      Society] seeks judgment against all defendants on the basis of a
      piercing the corporate veil claim as set forth in Count VII below.
      All counts against BCI are also asserted against the [Individual]
      Defendants as they are the owners, shareholder and officers of
      BCI.” Defendants filed preliminary objections to the Amended
      Complaint. The order on appeal sustained in part and overruled
      in part those objections. Specifically, the order sustained the
      objection to Count V as well as the objection to Count VII. The
      order also stated that the claims against the [I]ndividual
      Defendants were dismissed.

Trial Court Opinion, 6/30/2014, at 1-2 (unnecessary capitalization omitted).

1
  While Joanna Cocivera is listed in the caption of this case, she is not
referenced in Islamic Society’s Amended Complaint, the order resolving the
preliminary objections thereto, nor Islamic Society’s brief on appeal.
2
  The trial court opinion was authored by the Honorable Jeffrey R. Summer,
the judge who ultimately tried the case.       The order disposing of the
preliminary objections was entered by the Honorable Ann Marie Wheatcraft.

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      The case proceeded to trial against BCI, resulting in a $462,545.76

verdict in favor of Islamic Society. Islamic Society timely filed a notice of

appeal following the entry of judgment on the verdict. 3            Islamic Society

timely filed a statement of errors complained of on appeal pursuant to court

order, and the trial court filed an opinion.

      Islamic Society presents two questions for this Court’s review.

            1.    Whether the trial court erred in sustaining the
      preliminary objections to Count VII of the Amended Complaint
      seeking to pierce the corporate veil and erred in dismissing all
      claims against the Individual Defendants [] where sufficient facts
      were pleaded to support such claims.

            2.    Whether the trial court erred by overruling the
      preliminary objections to Count VI of the Amended Complaint
      asserting a claim for fraud in the inducement but dismissing the
      Individual Defendants from the case…[.]

Islamic   Society’s   Brief   at   5   (trial   court   answers   and   unnecessary

capitalization omitted).

      We consider Islamic Society’s questions mindful of the following

standard of review.

      Our standard of review of an order of the trial court overruling or
      granting preliminary objections is to determine whether the trial
      court committed an error of law.          When considering the

3
  The March 5, 2013 order did not dispose of all claims and all parties, and
only became final and appealable after judgment was entered on September
4, 2014. See, e.g., Strausser v. PRAMCO, III, 944 A.2d 761, 764 (Pa.
Super. 2008) (holding that when different defendants are removed from a
case piecemeal, the orders dismissing earlier defendants become appealable
when the case is resolved as to the final defendant; prior to such resolution
the orders were not final).

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      appropriateness of a ruling on preliminary objections, the
      appellate court must apply the same standard as the trial court.

      Preliminary objections in the nature of a demurrer test the legal
      sufficiency of the complaint…. Preliminary objections which seek
      the dismissal of a cause of action should be sustained only in
      cases in which it is clear and free from doubt that the pleader
      will be unable to prove facts legally sufficient to establish the
      right to relief. If any doubt exists as to whether a demurrer
      should be sustained, it should be resolved in favor of overruling
      the preliminary objections.

Little Mountain Community Ass’n, Inc. v. Southern Columbia Corp.,

92 A.3d 1191, 1195 (Pa. Super. 2014) (quoting Joyce v. Erie Ins. Exch.,

74 A.3d 157, 162 (Pa. Super. 2013)).        “The question presented by the

demurrer is whether, on the facts averred, the law says with certainty that

no recovery is possible.” Shafer Elec. & Const. v. Mantia, 96 A.3d 989,

994 (Pa. 2014) (quoting Lord Corp. v. Pollard, 695 A.2d 767, 768 (Pa.

1997)).

      Preliminary objections in the nature of a demurrer require the
      court to resolve the issues solely on the basis of the pleadings;
      no testimony or other evidence outside of the complaint may be
      considered to dispose of the legal issues presented by the
      demurrer. All material facts set forth in the pleading and all
      inferences reasonably deducible therefrom must be admitted as
      true.

Hill v. Ofalt, 85 A.3d 540, 547 (Pa. Super. 2014) (quoting Lugo v.

Farmers Pride, Inc., 967 A.2d 963, 966 (Pa. Super. 2009)).

      We first consider the trial court’s sustaining of a demurrer as to the

contract claims against Individual Defendants.    “It is fundamental contract

law that one cannot be liable for a breach of contract unless one is a party to

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that contract.” Electron Energy Corp. v. Short, 597 A.2d 175, 177 (Pa.

Super. 1991). There is no dispute that Islamic Society’s contract was with

BCI alone; Individual Defendants were not parties thereto. Islamic Society’s

Brief at 13.     However, Islamic Society’s contract-based claims against

Individual Defendants are based upon a theory of piercing BCI’s corporate

veil.

        “The purpose of the doctrine of piercing the corporate veil is to assess

liability for the acts of a corporation to the equity holders in the corporation

by removing the statutory protection otherwise insulating a shareholder from

liability.” Newcrete Products v. City of Wilkes-Barre, 37 A.3d 7, 12 (Pa.

Cmwlth. 2012).

        There is a strong presumption in Pennsylvania against piercing
        the corporate veil. When making the determination of whether
        to pierce the corporate veil, the court must start from the
        general rule that the corporate entity should be recognized and
        upheld, unless specific, unusual, circumstances call for an
        exception. Care should be taken on all occasions to avoid
        making the entire theory of corporate entity ... useless.

S.T.    Hudson     Engineers,    Inc.    v.   Camden    Hotel    Development

Associates, 747 A.2d 931, 935 (Pa. Super. 2000) (internal citations and

quotation marks omitted).

        Factors courts consider when determining whether to pierce the

corporate veil include corporate undercapitalization, the failure to adhere to

corporate formalities, a substantial intermingling of corporate and personal

affairs, the use of corporate assets for personal interests, and the use of the

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corporate form to perpetrate a fraud.     Advanced Telephone Systems,

Inc. v. Com-Net Professional Mobile Radio, LLC, 846 A.2d 1264, 1278

(Pa. Super. 2004).

     In the instant case, Islamic Society offered the following averments in

support of proceeding against Individual Defendants on the contract claims

under a piercing-the-corporate-veil theory.

           71. BCI was insufficiently capitalized prior to entering in
     to the Construction Contract and during the course of the
     Project. The reality of the capitalization of BCI does not match
     the documents proffered by Defendants in their attempt to
     induce [Islamic Society] to enter into the Construction Contract.

          72. The individual Defendants, Mr. Cocivera, Mr.
     Vanderveldt, Mrs. Vanderveldt and Ms. Nardini, as the alter ego
     of BCI, have conducted, managed, and controlled BCI’s affairs
     without regard to the separate existence of the corporate entity,
     and have used the corporation to deprive [Islamic Society] and
     the subcontractors of the monies that are rightfully due and
     owing.

           73. The individual Defendants, Mr. Cocivera, Mr.
     Vanderveldt, Mrs. Vanderveldt and Ms. Nardini, have at all times
     relevant hereto exercised total control over BCI.

          74. The individual Defendants, Mr. Cocivera, Mr.
     Vanderveldt, Mrs. Vanderveldt and Ms. Nanlini, have misused the
     corporate form for their own personal benefit.

          75. The individual Defendants, Mr. Coeivcra, Mr.
     Vanderveldt, Mrs. Vanderveldt and Ms. Nardini, have
     commingled personal and financial affairs with those of the
     corporate entity.

          76. The individual Defendants, Mr. Cocivera, Mr.
     Vanderveldt, Mrs. Vanderveldt and Ms. Nardini, have
     misappropriated company funds to pay personal expenses.

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            77.   BCI has failed to observe corporate formalities.

            78. Defendants further misrepresented and held out
      certain parties to be owners, officers and shareholders of BCI,
      when they were not.

            79. Conversely, Defendants represented certain parties
      were not owners, officers and shareholders of BCI, when they
      actually were.

            80. Defendants made the aforesaid false representations
      with the express intent of misleading [Islamic Society].

                                    ***

            82. The individual Defendants, Mr. Coeivera, Mr.
      Vanderveldt, Mrs. Vanderveldt and Ms. Nardini, have acted in a
      fashion such that what they did as representatives of BCI and
      what they did in a personal capacity were indistinguishable.

Amended Complaint, 11/15/2012, at 19-20.        The trial court sustained the

objections to Count VII (piercing the corporate veil), noting the presumption

against piercing the corporate veil and that the “corporate form will be

disregarded only when the entity is used to defeat public convenience,

justify wrong, protect fraud or defend crime.” 4   Order, 3/5/2013, at 3 n.5

(citing Good v. Holstein, 787 A.2d 426, 430 (Pa. Super. 2001)).

4
  The trial court further dismissed all claims against Individual Defendants
because “[p]rivity of contract must exist between the parties for plaintiff to
maintain an action for breach of contract.       Only the corporation may
ordinarily be held liable for contract damages.       If the president of a
corporation signs a contract in his representative capacity and the contract
does not suggest that the president will have personal liability, the president
is not personally liable under the contract. Defendant John Cocivera signed
the contract as a representative on behalf of [BCI]. None of the other
[I]ndividual [D]efendants signed the contract.” Order, 3/5/2013, at 3 n.6.

                                     -7-
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      Islamic Society maintains that the trial court erred in so doing, arguing

that reversal is warranted by this Court’s decision in Village at Camelback

Property Owners Assn. Inc. v. Carr, 538 A.2d 528 (Pa. Super. 1988).

Individual Defendants, on the other hand, claim that resolution of the instant

case is controlled by First Realvest, Inc. v. Avery Builders, Inc., 600
A.2d 601 (Pa. Super. 1991). We examine those two cases, both of which

concerned dismissal of piercing-the-corporate-veil claims on preliminary

objections.

      In Village at Camelback, the plaintiff homeowners’ association sued

Carr and several corporations and limited partnerships of which it alleged

Carr was an officer, a director, the controlling shareholder, or the controlling

partner. 538 A.2d at 530. On claims of breach of contract and breach of

warranties, the plaintiff sought to hold Carr personally liable based upon a

theory of piercing the corporate veil.    In support, the plaintiff alleged the

following facts:

      (a) the corporations were insufficiently capitalized at the outset;

      (b) there was an intermingling of funds between and among the
      corporations as well as with personal assets of Defendant Carr;

      (c) other officers and directors, if any, of the corporations were
      not functioning;

      (d) the corporations failed to observe corporate formalities;

      (e) the corporations did not pay dividends in the regular and
      ordinary course of their business; and

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      (f) in conducting the business affairs of the corporations
      Defendant Carr consistently held himself out as individually
      conducting such affairs without use of the corporate names and
      without identifying that his actions were taken as an officer or
      employee of the corporation.

Id. at 535.   The trial court sustained Carr’s preliminary objections in the

nature of a demurrer as to all counts of the complaint.

      On appeal, this Court noted that the plaintiff “pled that the precise

factors that have compelled numerous other courts to pierce the corporate

veil are present in this case.” Id. While the complaint did not offer much

detail, that was not a basis to sustain a demurrer: “Although such

generalized pleading is not favored in that it does not provide in detail the

material facts supporting the pleaded ultimate facts, this is not a deficiency

that warrants the extreme sanction of dismissal on demurrer.”             Id.

Therefore, because this Court could not “say with certainty that this

complaint is facially devoid of merit with regard to piercing the corporate

veil,” it reversed the dismissal of the claims against Carr. Id.

      In First Realvest, the plaintiff’s factual averments in support of

piercing the corporate veil were as follows, en toto:

      Defendants, Bud Avery and Marcia Avery, formed Avery Builders,
      Inc. for their own benefit in that corporate funds are
      intermingled with their own or other alleged corporations owned
      by them and that they divert corporate funds to their own use
      and treat the corporation as an individual proprietorship and as
      an “alter ego.”

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600 A.2d at 604. The trial court granted the Averys’ preliminary objections

in the nature of a demurrer, and this Court affirmed, with the following

explanation.

      The contents of this paragraph are not sufficient to support the
      extreme remedy of piercing the corporate veil. All corporations
      are formed for the benefit of their shareholders and the
      shareholders draw out profits. It is ridiculous to say that the
      corporate form should be abandoned because a shareholder
      drew out funds; such a conclusion would render the corporate
      form useless. Whether or not the corporation is treated as a
      sole proprietorship or an alter ego requires a conclusion of law
      and is not properly considered here. Further, there are no facts
      pled here to support such a conclusion.

Id.

      Our comparison of the facts alleged in the above cases to those

alleged in the instant case leads us to conclude that Islamic Society’s

Amended Complaint was sufficient to survive a demurrer.               The averments in

the instant case are analogous to, if not more substantial than, those held to

be legally sufficient in Village at Camelback.                 Islamic Society makes

averments that Individual Defendants, inter alia, failed to operate BCI in

accordance with corporate formalities, misused the corporate form for

personal    benefit,   hid   BCI’s   undercapitalization,       and     misappropriated

corporate funds to pay personal expenses.               Unlike the plaintiff in First

Realvest,    Islamic   Society   does    not     rely   upon    legal   conclusions   or

statements of shareholder interest that are applicable to all corporations.

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      Individual Defendants characterize Islamic Society’s allegations as

“bald statements” and “legal conclusions” rather than “factual averments,”

and claim “[n]o reasonable person or jury could take the conclusions at face

value without any evidence.” Individual Defendants’ Brief at 11-12. Clearly,

the allegations are factual in that they relate things that Individual

Defendants did or did not do, rather than the legal implications of those

actions or inactions.    Regarding the claim that the allegations are not

supported by evidence, we remind Individual Defendants that at the

preliminary objections stage, factual averments must be accepted as true

and no other evidence may be considered. Hill, 85 A.3d at 547.

      Although there is a presumption against disregarding the corporate

form, and Islamic Society will be required as the case proceeds to support its

allegations with evidence strong enough to overcome that presumption,

Islamic Society’s piercing-the-corporate-veil allegations are legally sufficient

to survive preliminary objections.    Accordingly, the trial court erred as a

matter of law in dismissing those claims as to the Individual Defendants.

      We now consider the trial court’s dismissal of Islamic Society’s tort

claim against Individual Defendants.          In Count IV of the Amended

Complaint, Islamic Society alleged the following against BCI and Individual

Defendants in support of its claim of fraud in the inducement.

             54. Defendants created a scheme to induce, lure, and by
      artifice delude [Islamic Society] into believing that BCI would
      and/or could fulfill its obligations under the Construction

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      Contract and that BCI would pay subcontractors for the work
      they performed from the funds that were given to BCI from
      [Islamic Society], thus inducing [it] to enter into the
      Construction Contract.

           55. Defendants misrepresented the financial health of
      BCI to lure and induce [Islamic Society] to enter into the
      Construction Contract.

             56. Although the [I]ndividual Defendants represented
      that BCI had no liabilities and provided fraudulent documentation
      to [Islamic Society] reflecting same, the reality is that BCI had
      significant liabilities at the time it entered into the Construction
      Contract.

            57. Defendants further misrepresented and held out
      certain parties to be owners, officers and shareholders, when
      they were not.

            58. Conversely, Defendants misrepresented certain
      parties were not owners, officers and shareholders, when they
      actually were.

            59. Defendants made the aforesaid false representations
      with the intent of misleading [Islamic Society].

            60. [Islamic     Society]   justifiably  relied on the
      aforementioned false representations to its detriment and
      entered into the Construction Contract with BCI.

Amended Complaint, 11/15/2012, at 15-16. Islamic Society claimed that all

of Defendants were liable, noting that it was pursuing Individual Defendants

on the theory of piercing the corporate veil. Id. at 16.

      BCI and Individual Defendants demurred to this count, maintaining

that the gist of the action and economic loss doctrines prohibited Islamic

Society from pursuing as a tort claim what was really a breach of contract

claim, and that Islamic Society cannot show justified reliance given that the

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alleged misrepresentations occurred outside of a fully-integrated contract.

Preliminary Objections to Amended Complaint, 12/7/2012, at 8.

      Holding that neither the economic loss doctrine nor the gist of the

action doctrine barred claims for fraud in the inducement, the trial court

overruled the objection. Order, 3/5/2013, at 2 n.2. However, in sustaining

the objection to the piercing-the-corporate-veil count as discussed above,

the trial court nonetheless dismissed Islamic Society’s fraud claim insofar as

it was stated against Individual Defendants. Id. at 2.

      Islamic Society argues that the trial court erred in dismissing the

misrepresentation claim as to Individual Defendants not only because they

are liable for BCI’s actions, but because Individual Defendants personally

participated in the fraud. Islamic Society’s Brief at 23-24.

      There is a distinction between liability for individual participation
      in a wrongful act and an individual’s responsibility for any
      liability-creating act performed behind the veil of a sham
      corporation. Where the court pierces the corporate veil, the
      owner is liable because the corporation is not a bona fide
      independent entity; therefore, its acts are truly his. Under the
      participation theory, the court imposes liability on the individual
      as an actor rather than as an owner. Such liability is not
      predicated on a finding that the corporation is a sham and a
      mere alter ego of the individual corporate officer. Instead,
      liability attaches where the record establishes the individual’s
      participation in the tortious activity.

Wicks v. Milzoco Builders, Inc., 470 A.2d 86, 89-90 (Pa. 1983) (footnote

omitted).

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      In resolving this question, we again are guided by this Court’s decision

in Village at Camelback.        Therein, after determining that the complaint

was legally sufficient to survive individual defendant Carr’s preliminary

objections to the appellant’s count supporting piercing the corporate veil,

this Court considered the trial court’s sustaining of a demurrer to tort claims.

             Insofar as appellant here attempts to hold Carr personally
      liable for the torts of the corporation under the theory of piercing
      the corporate veil, the analysis of the sufficiency of [that count]
      set forth above is equally applicable. Appellant has pleaded
      enough to survive a demurrer on this ground.

             Insofar as appellant attempts to hold Carr individually
      liable for the commission of the three named torts, we perceive
      appellant as pleading that Carr personally participated in the
      tortious acts of the corporations and that he is, therefore, liable
      under the “participation theory.” Once again, we conclude that
      appellant has pleaded sufficient ultimate facts to survive a
      demurrer.     In this regard, appellant has alleged that Carr,
      presumably acting in his capacity as an officer of the corporate
      defendants,     personally   participated   in   negligent    acts,
      misrepresentations and conversion.         Indeed, reading the
      complaint as a whole, it appears clear that appellant asserts that
      Carr was the sole moving force behind all of the corporate
      defendants and was directly involved in all of their actions
      pertinent to this dispute.     The trial court’s grant of Carr’s
      demurrer to [the tort counts] was improper.

Village at Camelback, 538 A.2d at 535-36.

      The same analysis applies in the instant case. Because we have held

that Islamic Society pled sufficient facts to defeat the preliminary objection

to the piercing-the-corporate-veil count, it necessarily follows that it has

pled sufficient facts to defeat a demurrer on the fraud claim.              Islamic

Society’s   additional   allegations   that     Individual   Defendants   personally

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participated in the fraud, further renders improper the dismissal of the fraud

claim against Individual Defendants.    For both of these reasons, we must

conclude that the trial court committed an error of law in dismissing Islamic

Society’s tort claim against Individual Defendants.

      Accordingly, we reverse paragraphs five (sustaining the objections to

Count VII) and six (dismissing “all claims against John Cocivera, Garig

Vanderveldt, Gina Vanderveldt, and Angela Cocivera a/k/a/ Angela Nardini

individually”) of the trial court’s March 5, 2013 order, and remand the case

for further proceedings consistent with this memorandum.

      Order reversed in part.     Case remanded for further proceedings.

Jurisdiction relinquished.

Judgment Entered.

Joseph D. Seletyn, Esq.

Prothonotary

Date: 12/9/2014

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