Linde Enterprises, Inc. v. Hazelton City Authority

• Decision Date: 13 February 1992
• Citation: 602 A.2d 897,412 Pa.Super. 67
• Parties: LINDE ENTERPRISES, INC. v. HAZELTON CITY AUTHORITY v. WESTMORELAND ENGINEERING CO., INC. Appeal of WESTMORELAND ENGINEERING CO., INC.
• Court: Pennsylvania Superior Court

Page 897

602 A.2d 897

412 Pa.Super. 67

LINDE ENTERPRISES, INC. v. HAZELTON CITY AUTHORITY v. WESTMORELAND ENGINEERING CO., INC.

Appeal of WESTMORELAND ENGINEERING CO., INC.

Superior Court of Pennsylvania.

Argued Oct. 10, 1991.

Filed Feb. 13, 1992.

Thomas P. Shearer, Pittsburgh, for appellant.

Robert D. Schaub, Wilkes-Barre, for appellee Linde.

Anthony C. Falvello, Sugarloaf, for appellee Hazelton City Authority.

Before CAVANAUGH, McEWEN and OLSZEWSKI, JJ.

CAVANAUGH, Judge:

This case is a direct appeal from a judgment in favor of plaintiff-appellee Linde Enterprises, Inc. (Linde) against appellant-defendant Westmoreland Engineering Co Inc. (WECO) in the amount of $26,607.66 and against original defendant Hazelton City Authority (HCA) in the amount of $22,691.55. On appeal, appellant WECO ¹ asserts the trial court erred as follows: (1) the trial court erred in allowing Linde to recover against WECO in negligence because there was an absence of privity between Linde and WECO; (2) the trial court erred by allowing Linde's claim for additional money for excavation to be submitted to the jury despite the language of the contract and despite the fact that Linde's alleged damages for excavation were not supported by competent evidence; (3) the trial court erred by allowing Linde's claim for additional money for compaction of the common embankment to be submitted to the jury where there was not enough evidence of WECO's negligence; and (4) the trial court erred by asserting that WECO is obligated to pay interest from February 1, 1984. We find merit with appellant's first argument, and reverse the judgment against WECO.

Linde was the low bidder on a contract for the reconstruction of Dam "G" on Dreck Creek, Hazel Township, by HCA, and was subsequently awarded the job. HCA hired an engineering firm, WECO, to provide the specifications for the dam and also to supervise its construction. Significant cost overruns occurred on parts of the project. Claiming that these cost overruns were due to faulty specifications provided to it by HCA and negligent supervision by agents of HCA (WECO), Linde filed suit against HCA. HCA joined WECO. Prior to the commencement of the jury trial, WECO filed two separate Pre-Trial motions. First, WECO argued that there could be no direct recovery against it by Linde. Second, it argued that any alleged contract ambiguity should be determined by the Court instead of the jury. Both motions were denied.

At trial, Linde claimed it was owed the difference between the cost of the dam "as built" and the estimated cost for certain items. Linde claimed that the contract involved in the matter is what is commonly referred to in the construction trade as a "Unit Price Contract." Under a Unit Price Contract, the cost per unit of certain construction materials are fixed and the amount to be used is estimated. If more material is used, the contractor can apply for additional compensation based on the cost per unit times the additional amount of units used. Linde asserted that HCA would not pay for various extra materials used. Linde additionally asserted that the contract anticipated that the material taken from underneath and near the area of the spillway could be used as part of the dam embankment. Upon excavation, this material was determined to be an ash-like substance unsuitable for constructing a dam. This subsurface had to be excavated and transported from the dam area, which Linde claimed was unanticipated by the contract and caused a considerable cost overrun.

After closing arguments, the trial court instructed the jury as to the relevant law. The trial court, in discussing the potential liability of WECO, asserted:

If Linde is successful in proving that the contract documents prepared by Westmoreland were ambiguous or deficient, and that Linde is thus entitled to recover on those items in the second part of its claim, then Westmoreland is liable, either directly to Linde or liable to indemnify the Authority for any amounts you find must be paid to Linde under this portion of the claim.

WECO made an exception to the charge that Linde could directly recover against WECO. After the jury deliberated on the case, they sent a note to the trial court asking whether liability could be divided between HCA and WECO. This gave the trial court a prime opportunity to correct the inaccurate instruction. Notwithstanding, the trial court answered as follows:

Ladies and gentlemen, you will determine from all the evidence whether [HCA] is liable; and if so, you will make that indication on the jury slip or from all the evidence. If you determine that [WECO] is liable, you make that indication.

Or if you determine from all the evidence that both are liable, you will indicate on the jury slip accordingly.

The jury subsequently found HCA liable in the amount of $22,691.55 and WECO liable in the amount of $26,607.66. WECO specifically reserved its right to argue that Linde could not directly recover against WECO (Transcript II, pp. 589-592), and filed prompt post-trial motions on October 10, 1989. These motions were all denied, and this appeal followed.

It is well-settled that when reviewing a party's challenge to a jury instruction, an appellate court will scrutinize the entire instruction against the evidence presented to determine if prejudicial error has occurred. Schecter v. Watkins, 395 Pa.Super. 363, 374, 577 A.2d 585, 591, alloc. den., 526 Pa. 638, 584 A.2d 320 (1990); Nobel C. Quandel Co. v. Slough Flooring, Inc., 384 Pa.Super. 236, 240, 558 A.2d 99, 101 (1989). We have held:

The primary duty of a trial judge in charging a jury is to clarify the issues so that the jury may comprehend the questions they are to decide. The instructions must give the jury a reasonable guide for the determination of the question of the defendant's or plaintiff's alleged negligence and on the duty of care or duty to inspect required by any person. The jury cannot determine whether a party is guilty of negligence or contributory negligence without knowing the degree of care required of that party.

Wood v. Smith, 343 Pa.Super. 547, 550-551, 495 A.2d 601, 603 (1985), appeal dismissed, 512 Pa. 641, 518 A.2d 266 (1986); accord Crotty v. Reading Industries, 237 Pa.Super. 1, 4, 345 A.2d 259, 261 (1975). We will not reverse a trial court's instruction on the basis of isolated inaccuracies, but will only reverse if the charge as a whole was erroneous and prejudiced the complaining party. Schecter, supra, 395 Pa.Super. at 374, 577 A.2d at 591; Quandel Co., supra, 384 Pa.Super. at 240, 558 A.2d at 101. "[A] new trial will be granted where a charge is erroneous in a basic respect and it is impossible to determine the extent to which it was prejudicial." 62 Pa.Stand.Pract.2d § 48. It is well-settled that "[w]here an erroneous instruction consists of a palpable misstatement of the law, it is not cured by a conflicting or contradictory one which correctly states the law on the point involved, for the jury, assuming, as is their duty, that the instructions are all correct, may as readily have followed the incorrect as the correct one, and it is impossible to know which they accepted." Smith v. Chardak, 291 Pa.Super. 173, 182, 435 A.2d 624, 629 (1981), quoting Pedretti v. Pittsburgh Railways Co., 417 Pa. 581, 586, 209 A.2d 289, 292 (1965); accord Morrisey v. Commonwealth, Dept. of Highways, 440 Pa. 71, 80, 269 A.2d 866, 870 (1970). A new trial is appropriate under these circumstances. Zitkus v. Southeastern Pennsylvania Transp. Auth., 61 Pa. D. & C. 2d 378 (1972), aff'd 225 Pa.Super. 761, 306 A.2d 903.

The instruction that WECO could be directly liable to Linde despite their lack of privity was a basic error of law prejudicial to WECO. Linde's suit against WECO involves allegations of negligence. "It is a fundamental rule of tort law that a negligence claim must fail if it is based on circumstances for which the law imposes no duty of care on the defendant." Gerace v. Holmes Protection of Phila., 357 Pa.Super. 467, 473, 516 A.2d 354, 358 (1986); accord Morena v. South Hills Health System, 501 Pa. 634, 642, 462 A.2d 680, 684 (1983). Specifically, this case involves allegations of professional negligence. "Pennsylvania courts have long held that privity between parties is required to maintain an action for professional negligence." Hartford Accident & Indemnity Co. v. Parenti Randolph et. al., 642 F.Supp. 38, 40 (M.D.Pa.1985). We agree with WECO that although it may have a duty of care owed to HCA by reason of its contract with it, WECO had no contractual relation with Linde and hence owed no duty of care to Linde. While certainly WECO might be found liable to HCA on a negligence or contract theory, the same is not true of WECO and Linde. Moreover, we have reviewed the instruction as a whole against the the evidence presented, and have found nothing which mitigates the prejudicial instruction.

Linde claims that, notwithstanding the lack of a contractual relationship between Linde and WECO, Linde can recover from WECO on the basis that either it is a third party beneficiary to the WECO-HCA contract or that WECO owed a duty under Pennsylvania law to contractors or subcontractors as an architect drawing up specifications for the job to the contractor to exercise due care in drawing up specifications. We find both arguments without merit.

The general principle for what constitutes a third party beneficiary was first articulated in the seminal case Spires v. Hanover Fire Ins. Co., 364 Pa. 52, 56-57, 70 A.2d 828, 830-831 (1950) (plurality opinion):

To be a third party beneficiary entitled to recover on a contract it is not enough that it is intended by one of the parties to the contract and the third person that the later should be a beneficiary, but both parties to the contract must so intend and must indicate that intention in the contract....

The Court at that time opined that sufficient indication of the intent to make...