Deeter v. Dull Corp., Inc.

• Decision Date: 30 November 1992
• Citation: 420 Pa.Super. 576,617 A.2d 336
• Parties: Garry L. DEETER and Allen R. Kramer, Appellants, v. DULL CORPORATION, INC.
• Court: Pennsylvania Superior Court

Page 336

617 A.2d 336

420 Pa.Super. 576

Garry L. DEETER and Allen R. Kramer, Appellants, v. DULL CORPORATION, INC.

Superior Court of Pennsylvania.

Argued Oct. 22, 1992.

Filed Nov. 30, 1992.

Stanley J. Brassington, Schuylkill, for appellants.

Robert L. Goodman, Pottsville, for appellee.

Before CIRILLO, MONTEMURO and TAMILIA, JJ.

CIRILLO, Judge:

This is an appeal from an order of the Court of Common Pleas of Schuylkill County sustaining appellee Dull Corporation, Inc.'s ("Dull") preliminary objections in the nature of a demurrer and dismissing appellants' Gary L. Deeter ("Deeter") and Allen R. Kramer ("Kramer") amended complaint for failure to state a cause of action. We affirm.

On February 13, 1991, Deeter and Kramer filed a complaint against Dull to recover damages they allegedly sustained while in the course of their employment. ¹ Deeter and Kramer alleged that Dull was liable for their injuries by breaching its duty to protect them as business invitees. ² Deeter and Kramer also alleged that Dull/lessor had breached its affirmative duty under a lease provision to ensure that the employer/lessee obtained workmen's compensation insurance and that Deeter and Kramer were intended third party beneficiaries of that lease provision. Further, Deeter and Kramer alleged that Dull undertook the obligation to perform the duty of enforcing the lease provision which required the employer to obtain workmen's compensation insurance and, as a result, Dull's undertaking created either an obligation of primary liability as a surety or secondary liability as a guarantor for the benefit of third party benefactors, Deeter and Kramer.

Dull filed preliminary objections in the nature of a demurrer to each claim. On September 19, 1991 the trial court sustained the preliminary objections and granted Deeter and Kramer leave to amend their complaint. ³ Deeter and Kramer then filed their amended complaint, which was virtually identical to the original complaint. Dull again preliminarily objected and demurred to each claim asserting that Deeter and Kramer had failed to state a cause of action. On April 10, 1992 the trial court sustained Dull's preliminary objections and dismissed the amended complaint. This timely appeal followed.

In an appeal from an order sustaining preliminary objections in the nature of a demurrer we take all material facts set forth in the complaint as well as all inferences reasonably deduced therefrom as true. Where any doubt exists as to whether a demurrer should be sustained, it should be resolved in favor of overruling the demurrer. Kyle v. McNamara & Criste, 506 Pa. 631, 634, 487 A.2d 814, 816 (1985) (citations omitted); Baker v. Magnetic Analysis Corp., 347 Pa.Super. 188, 192, 500 A.2d 470, 472 (1985) (citations omitted).

This case arises out of work related injuries sustained by Deeter and Kramer while in the employ of Horsehead. Dull owns lands in Schuylkill County, collectively known as the John Filbert Tract. In November, 1987 Dull leased the property to Horsehead for a term of five years for the purpose of mining the property. In February, 1989 Deeter was injured during the course of his employment with Horsehead while attempting to lift a railroad car. In May, 1989 Kramer became totally and permanently disabled as a result of having contacted anthracosilicosis. Deeter and Kramer seek to recover an amount equal to their workmen's compensation benefits from Dull as lessor of the property. ⁴

Pennsylvania law follows the general rule that a lessor of land is not liable to the lessee or to others, including business invitees, for the physical harm caused by either natural or artificial conditions on the land which existed when the land was transferred or which arise after the transfer of possession. Dinio v. Goshorn, 437 Pa. 224, 228-229, 270 A.2d 203, 206 (1969); Pierce v. Philadelphia Housing Authority, 337 Pa.Super. 254, 257, 486 A.2d 1004, 1005 (1985) (citations omitted); Craig v. Ryan, 201 Pa.Super. 307, 191 A.2d 711 (1963); Restatement (Second) of Torts §§ 355-356 (1965). This principle is based upon the theory that when the lessor leases the land, the law regards the lease transaction as the equivalent to the sale of the land for the term of the lease. Restatement (Second) of Torts § 356, Comment a.

There are several exceptions to this general rule: where the lessor contracts to repair; where the lessor fails to disclose dangerous conditions to the lessee; where the land is leased for the purpose of inviting the public; where the lessor retains a portion of the land but allows the lessee to use it; where the lessor retains a portion of the land that is necessary to maintain the leased part in a safe condition; and, where the lessor negligently makes repairs on the land while it is in the possession of the lessee. Smith v. M.P.W. Realty Company, Inc., 423 Pa. 536, 225 A.2d 227 (1967); Miller v. Atlantic Refining Co., 12 D & C.2d 713, (1957) aff'd, 393 Pa. 466, 143 A.2d 380 (1958); Pierce, supra; Yarkosky v. The Caldwell Store, Inc., 189 Pa.Super. 475, 151 A.2d 839 (1959); Coradi v. Sterling Oil Co., 378 Pa. 68, 105 A.2d 98 (1954); Goodman v. Corn Exchange National Bank and Trust Co., 331 Pa. 587, 200 A. 642 (1938); Restatement (Second) of Torts §§ 357-362 (1965). Initially, we note that Restatement sections 355-362 specifically deal with the liability of lessors of land to persons on the land. A review of these sections evidences that liability is premised primarily on possession and control, and not merely ownership. ⁵ See Smith v. King's Grant Condominium, 418 Pa.Super. 260, 614 A.2d 261 (1992) (while ownership may be a factor under Restatement (Second) of Torts, § 364(c) liability is premised on possession and control); Juarbe v. City of Philadelphia, 288 Pa.Super. 330, 431 A.2d 1073 (1981) (lessor may be held liable for injuries sustained on his property if he maintains possession and control over the property).

After a thorough review of the record, particularly the provisions contained in the lease, we find no evidence that establishes the existence of one or more of these exceptions. Thus, the trial court acted properly in sustaining Dull's preliminary objection to the Deeter's and Kramer's first claim. Kyle, supra.

We also find no merit to Deeter's and Kramer's claims that they were intended third party beneficiaries of the lease agreement and that Dull had undertaken the role of surety or guarantor when it failed to enforce the lease provision which required the employer to obtain the necessary workmen's compensation insurance. We recognize that the exclusivity provision of the Workmen's Compensation Act ⁶ does not preclude an employee from pursuing a common law claim against a third party tortfeasor for injury suffered while in the course of employment. 77 P.S. §§ 481, 501, 671; Wagner v. National Indemnity Co., 492 Pa. 154, 422 A.2d 1061 (1980); Brunelli v. Farelly Brothers, 266 Pa.Super. 23, 402 A.2d 1058 (1979). However, as noted above, the lease effectuated a complete transfer of the land during the period of the leasehold during which time the lessor neither possessed nor controlled the leased premises. As Dull did not have sufficient control over the premises as landowner, possessor, or in any way maintain control vicariously, it cannot be said that Dull's actions or inactions were the proximate cause of the injuries suffered by Deeter and Kramer. We find that Deeter and Kramer would be precluded from bringing a third party tortfeasor claim against Dull. See Jamison v. Westinghouse Electric Corp., 375 F.2d 465 (3d Cir.1967) (third party action by employee against landowner/lessor, permissible where property owner retained control, supervision, or possession over the property).

Instead, Deeter and Kramer seek to invoke contract principles to hold Dull liable. Deeter and Kramer initially contend that they were intended beneficiaries of the lease provision which required their employer to obtain the necessary workmen's compensation insurance. The Pennsylvania Supreme Court recently reexamined the rule for identifying the existence of a third party beneficiary in Pennsylvania. Scarpitti v. Weborg, 530 Pa. 366, 609 A.2d 147 (1992). In Scarpitti, the court reiterated the general rule articulated in Spires v. Hanover Fire Ins. Co., 364 Pa. 52, 70 A.2d 828 (1950). There, the court held that in order to have standing as a designated third party beneficiary, the contracting parties must expressly have intended that the third party be a beneficiary and that the express intention of the contracting parties affirmatively appear in the contract itself. Spires, 364 Pa. at 57, 70 A.2d at 830-31. However, an exception to the rule in Spires was formulated in the case of Guy v. Liederbach, 501 Pa. 47, 459 A.2d 744 (1983), which overruled the Spires holding to the extent that it stated the exclusive test for third party beneficiaries in Pennsylvania. In Guy, the Pennsylvania Supreme Court expressly adopted Restatement (Second) of Contracts, § 302 (1979), as a guide for further designating third party beneficiary claims. The Restatement (Second) of Contracts, § 302 states:

Intended and Incidental beneficiaries

(1) Unless otherwise agreed between the promisor and promisee, a beneficiary of a promise is an intended beneficiary if recognition of a right to performance in the beneficiary is appropriate to effectuate the intentions of the parties and either

(a) the performance of the promise will satisfy an obligation of the promisee to pay money to the beneficiary; or

(b) the circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance.

(2) An incidental beneficiary is a beneficiary who is not an intended beneficiary

Restatement (Second) of Contracts, § 302. Section (1) "sets forth a standing requirement which leaves discretion with the court to determine whether recognition of third party beneficiary status would be appropriate."...