Hranec Sheet M, Corp. v. Metalico Pittsburgh, Inc., 78 WDA 2014

• Decision Date: 18 December 2014
• Docket Number: No. 78 WDA 2014,78 WDA 2014
• Citation: 2014 PA Super 278,107 A.3d 114
• Court: Pennsylvania Superior Court
• Parties: HRANEC SHEET METAL, INC., A Pennsylvania Corporation, Appellant, v. METALICO PITTSBURGH, INC., t/d/b/a Metalico Assad Iron and Metals, also t/d/b/a Metalico Brownsville, and Metalico Neville Realty, Inc., Pennsylvania Corporations, Appellees.

107 A.3d 114

2014 PA Super 278

HRANEC SHEET METAL, INC., A Pennsylvania Corporation, Appellant

v.METALICO PITTSBURGH, INC., t/d/b/a Metalico Assad Iron and Metals, also t/d/b/a Metalico Brownsville, and Metalico Neville Realty, Inc., Pennsylvania Corporations, Appellees.

No. 78 WDA 2014

Superior Court of Pennsylvania.

Argued Sept. 10, 2014.

Filed Dec. 18, 2014.

Gary N. Altman, Uniontown, for appellant.

Robert M. Linn, Pittsburgh, for appellee.

BEFORE: FORD ELLIOTT, P.J.E., SHOGAN and MUSMANNO, JJ.

Opinion

OPINION BY SHOGAN, J.:

Appellant, Hranec Sheet Metal, Inc., appeals from the order granting the preliminary objections, in the nature of demurrers, of Appellees Metalico Pittsburgh, Inc. and Metalico Neville Realty, Inc. (“Metalico”). For the reasons that follow, we reverse.

Appellant is a Pennsylvania corporation engaged in the business of fabricating ductwork used for heating and air conditioning systems. In connection with that business, Appellant purchases and maintains an inventory stock of coils of stainless steel sheets that are used to fabricate this ductwork. The coils weigh thousands of pounds and are not movable except by heavy machinery. Appellant also maintains an inventory of aluminum in the same manner. Metalico owns and operates a scrap metal recycling facility in Brownsville, Fayette County, Pennsylvania.

Appellant filed a complaint against Metalico in the Court of Common Pleas of Fayette County alleging that certain of Appellant's own current or former employees had stolen coils of stainless steel from Appellant and then sold them to Metalico for processing as scrap. Complaint, 3/1/13, at page 2. Appellant claimed that on multiple occasions, Metalico purchased these new coils and violated the “Scrap Metal Theft Prevention Act.”¹ Appellant asserted that Metalico had 1) negligently, 2) grossly negligently, and 3) intentionally “failed to take the necessary steps to determine if the stainless steel coils were stolen property,” thereby making the theft of these coils possible. Complaint, 3/1/13, at ¶¶ 8–16.

Appellant subsequently filed an amended complaint for the “purpose of correcting the caption of this case to include the correct and proper name of [Metalico] previously listed under fictitious names in the caption.” Amended Complaint, 5/2/13, at 1. The amended complaint asserted the same claims identified in the original complaint against Metalico and clarified that Appellant's employees had stolen aluminum in addition to stainless steel. Id. at 2.

Metalico filed preliminary objections to Appellant's amended complaint pursuant to Pa.R.C.P. 1028(a)(4). Preliminary Objections, 5/22/13. By order dated July 16, 2013, the trial court granted Metalico's preliminary objections. Trial Court Order, 7/18/13, at 1. The order also gave Appellant twenty days from the date of the order to file a second amended complaint. Id.

On July 29, 2013, Appellant filed a second amended complaint. Second Amended Complaint, 7/29/13. Appellant claimed that on at least twenty-two occasions between September, 2010, and May, 2011, Metalico purchased the stolen materials. Id. at ¶ 6. Appellant maintained that the value of the stolen property was $408,849.14. Id. at ¶ 8. Appellant contended that Metalico purchased the stolen materials in violation of the Act. Id. at ¶ 7. The second amended complaint set forth claims of conversion, negligence per se, and concerted tortious conduct. Id. at ¶¶ 9–29.

Metalico again filed preliminary objections pursuant to Pa.R.C.P. 1028(a)(4), asserting that: 1) Appellant had failed to establish the requisite causal connection between any alleged act or omission of Metalico and any alleged harm that Appellant had suffered; 2) Appellant had failed to allege the existence of any legally cognizable duty that Metalico owed Appellant; and 3) the Act does not confer a private right of action upon any individual. Preliminary Objections to Second Amended Complaint, 8/19/13, at ¶¶ 29–47. The trial court sustained Metalico's preliminary objections and dismissed Appellant's pleading for its failure to state any legally cognizable claim against Metalico. Trial Court Order, 1/2/14, at 1.

This timely appeal followed. Both Appellant and the trial court complied with the mandates of Pa.R.A.P. 1925.

Appellant presents the following issues for our review:

1. Did Appellant state sufficient facts to plead that a conversion occurred?

2. Is there a causal connection between the thefts and the fencing of the stolen goods?

3. Did Appellant state sufficient facts to plead that there was concerted action between the scrap yard and the thieves?

4. Does the Restatement of Torts (Second), Section 876, apply to this case?

5. Is a violation of the Scrap Material Theft Prevention Act Negligence Per Se ?

Appellant's Brief at 3.

The standard of review we apply when considering a trial court's denial of preliminary objections is well settled:

[O]ur 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 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. When considering preliminary objections, all material facts set forth in the challenged pleadings are admitted as true, as well as all inferences reasonably deducible therefrom. 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.

Richmond v. McHale, 35 A.3d 779, 783 (Pa.Super.2012).

Appellant addresses his first two issues together. Appellant's Brief at 8. Appellant maintains that the trial court erred in granting Metalico's demurrer with regard to the conversion claim because the controlling precedent of L.B. Foster Co. v. Charles Caracciolo Steel and Metal Yard, Inc., 777 A.2d 1090 (Pa.Super.2001), specifically holds that “all that needs to be proven at trial in this conversion case is that [Metalico] purchased the stolen goods.” Id. Appellant asserts that, because it has attached as Exhibit 1 to the Second Amended Complaint the corporate records of Metalico showing that Metalico purchased the stolen goods, the claim of conversion has been established, and the trial court erred in granting Metalico's demurrer. Id. Appellant maintains that the “only real issue here is the value of the stolen goods.” Id.

This Court has stated the following with regard to the tort of conversion:

The classic definition of conversion under Pennsylvania law is “the deprivation of another's right of property in, or use or possession of, a chattel, or other interference therewith, without the owner's consent and without lawful justification.” McKeeman v. Corestates Bank, N.A., 751 A.2d 655, 659 n. 3 (Pa.Super.2000). Although the exercise of control over the chattel must be intentional, the tort of conversion does not rest on proof of specific intent to commit a wrong. Id. It is fundamental that a good faith purchaser of goods from a converter is also a converter and must answer in damages to the true owner. Underhill [ Coal Min. Co. v. Hixon, 438 Pa.Super. 219], 652 A.2d [343,] 345 [ (Pa.Super.1994) ]. See Bank of Landisburg v. Burruss, 362 Pa.Super. 317, 524 A.2d 896, 899 (1987) (“Ordinarily, there is no inconsistency between finding that a defendant acted in good faith and finding that he is a converter.”) The general rule for chattels is that “a bona fide purchaser from a thief gets nothing.” Underhill, 652 A.2d at 346. This is so because a converter has no title to the chattels, and thus can convey nothing to a bona fide purchaser for value. Id. at 346.

L.B. Foster Co., 777 A.2d at 1095–1096.

The facts in L.B. Foster Co. are similar to those in this case. In that case, the appellant, L.B. Foster Company, ran a salvage business. L.B. Foster Co., 777 A.2d at 1092. Two individuals stole metal items from L.B. Foster and sold them to Charles Caracciolo Steel and Metal Yard, Inc. (“Caracciolo”). Id. The thieves eventually pled guilty to multiple counts of theft and receiving stolen property, admitting they sold the stolen items to Caracciolo. Despite evidence that Caracciolo purchased the items in good faith, this Court determined that Caracciolo was guilty of the tort of conversion based on the fact that he purchased the stolen scrap metal. Id. at 1096.

Turning to the case sub judice, Appellant alleged in its second amended complaint that Metalico had a duty not to commit the tort of conversion and “[b]y assisting the employees in converting the stolen coils into money, [Metalico] acted in concert with the employees who removed the coils from [Appellant's] property for the specific purpose of selling them to [Metalico].” Second Amended Complaint, 7/29/13, ¶¶ 13, 15. Given this Court's holding that “[i]t is fundamental that a good faith purchaser of goods from a converter is also a converter and must answer in damages to the true owner,” L.B. Foster, 777 A.2d at 1095, it is irrelevant for purposes of this claim whether Metalico suspected wrongdoing by the individuals selling the chattel to Metalico. All that is necessary, and consistent with L.B. Foster, is that Metalico purchased the stolen property. Appellant has attached evidence as Exhibit 1 to its second amended complaint establishing Metalico's multiple purchases from the thieves. As such, we are constrained to conclude that Appellant has established a prima facie claim of conversion and that the trial court erred in granting Metalico's preliminary objection in the nature of a demurrer to this claim.

Appellant next presents argument on his third and fourth...