SENECA INSURANCE COMPANY v. BEALE et al

Filing 17

MEMORANDUM OPINION & ORDER granting 9 Motion to Dismiss in Part re 1 Complaint filed by MARKS MAINTENANCE AND REPAIR, MARK BEALE, dismissing Plaintiff's request for punitive damages. Signed by Magistrate Judge Robert C. Mitchell on 3/5/2014. (spc)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
SENECA INSURANCE CO. a/s/o WILD BLUE
MANAGEMENT, LP,
Plaintiff,
vs
MARK BEALE and MARKS MAINTENANCE
AND REPAIR,
Defendants.

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Civil Action No. 13-1737

MEMORANDUM AND ORDER
Presently before the Court is a partial motion to dismiss pursuant to Federal Rule of Civil
Procedure 12(b)(6), filed by the Defendants, seeking to dismiss Plaintiff’s request for punitive
damages. For the reasons that follow, the motion will be granted.
Plaintiff, Seneca Insurance Company, as subrogee of Wild Blue Management, LP, brings
this diversity action alleging that Defendants, Mark Beale and Marks Maintenance and Repair,
negligently performed certain electrical work at an unoccupied space at the Natrona Heights
Plaza Shopping Mall, such that when other workers subsequently entered the property and turned
the live breakers on, the flow of electrical energy from the transformers caused an electrical fire
causing in excess of $6 million in property damages. Plaintiff seeks various forms of relief from
Defendants for their alleged negligence.
Facts
Wild Blue Management (Wild Blue) was the owner of certain real and personal property
located at 1800 Union Avenue, Natrona Heights, Pennsylvania and operated the Natrona Heights
Plaza shopping mall, at which stores were leased to various tenants. (Compl. ¶¶ 6-7.)1 In or
about the fall of 2012, Lung and Wellness Centers of Western Pennsylvania entered into a lease
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ECF No. 1.

with Wild Blue to lease existing unoccupied space at the property. (Compl. ¶ 8.) This tenant
required that a neon sign attached to the front façade of the property advertising a former tenant
be removed. Wild Blue retained the services of a general contractor, who in turn retained the
services of Defendants to remove the neon sign. (Compl. ¶¶ 9-10.)
Defendants were responsible for disconnecting and removing the neon sign and, as part
of that responsibility, had a duty to properly and adequately cut and cap the wires that were
attached to the sign, disconnect the wires from the transformer and its 9,000 volts by
disconnecting and capping the wires at the circuit breaker and remove the circuit breaker from
the circuit breaker box. Plaintiff alleges that Defendants did none of the above and left a “ticking
time bomb” which ultimately resulted in the loss which is the subject of this suit. (Compl. ¶ 11.)
Subsequent to the removal of the neon sign, on or about December 17, 2012, two painters
entered the property to paint the interior of the space leased by the tenant. Plaintiff believes the
painters unknowingly turned the live breaker on in order to do their work, and an electrical fire
occurred at the property that same day. (Compl. ¶¶ 13-15.)
Plaintiff alleges that:
The subject fire was due to the flow of electrical energy from the
transformers located in the cavity of the façade to the cut wires from the neon sign
adjacent to the exterior front section of the façade of the Property. The voltage
carried by the wires was sufficient to produce heat which ignited the wooden
combustible materials that made up the façade of the Property.
As a direct result of the fire, [Wild Blue] sustained serious economic
losses including extensive physical damage to the Property, destruction of
inventory, equipment, supplies, costs for emergency services, demolition, repair,
and reconstruction, replacement of contents, temporary facilities, relocation costs,
labor costs, loss of use, loss of income, and business interruption.
Thereafter, pursuant to the terms and conditions of Plaintiff’s policy of
insurance issued to [Wild Blue], Plaintiff has thus far paid in excess of Six
Million Dollars ($6,000,000.00) to or on behalf of [Wild Blue] for the damages
sustained as set forth above. Plaintiff continues to make payments to or on behalf
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of [Wild Blue] for the above-described damages.
(Compl. ¶¶ 16-18.)
Procedural History
Plaintiff filed this complaint on December 5, 2013. Jurisdiction is based on diversity of
citizenship in that Plaintiff is a New York corporation with its principal place of business in New
York, New York; Beale is a Pennsylvania citizen; Marks Maintenance and Repair is a
Pennsylvania corporation with its principal place of business in Tarentum, Pennsylvania; and the
amount in controversy exceeds the sum of $75,000.00, exclusive of interest and costs. (Compl.
¶¶ 1-5.) Count I (the only count) alleges that Defendants acted carelessly, negligently and
recklessly in their electrical work as described above. Plaintiff seeks “compensatory and
punitive damages together with interest, delay damages, costs, and such other relief as this Court
deems appropriate under the circumstances.” (Compl. at 7.)
On February 10, 2019, Defendants filed a partial motion to dismiss the punitive damages
request (ECF No. 9). Plaintiff filed a brief in opposition on February 28, 2014 (ECF No. 14).
Standard of Review
The Supreme Court has issued two decisions that pertain to the standard of review for a
motion to dismiss for failure to state a claim upon which relief could be granted under Federal
Rule of Civil Procedure 12(b)(6). The Court held that a complaint must include factual
allegations that “state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “[W]ithout some
factual allegation in the complaint, a claimant cannot satisfy the requirement that he or she
provide not only ‘fair notice’ but also the ‘grounds’ on which the claim rests.” Phillips v.
County of Allegheny, 515 F.3d 224, 232 (3d Cir. 2008). In determining whether a plaintiff has

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met this standard, a court must reject legal conclusions unsupported by factual allegations,
“[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory
statements;” “labels and conclusions;” and “‘naked assertion[s]’ devoid of ‘further factual
enhancement.’” Iqbal, 556 U.S. at 678 (citations omitted). Mere “possibilities” of misconduct are
insufficient. Id. at 679. District courts are required to engage in a two part inquiry:
First, the factual and legal elements of a claim should be separated. The District
Court must accept all of the complaint’s well-pleaded facts as true, but may
disregard any legal conclusions…. Second, a District Court must then determine
whether the facts alleged in the complaint are sufficient to show the plaintiff has a
“plausible claim for relief.” … In other words, a complaint must do more than
allege the plaintiff’s entitlement to relief. A complaint has to “show” such an
entitlement with its facts.
Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009) (citations omitted).
Defendants argue that the Complaint is devoid of facts suggesting that they knew or had
reason to know that their conduct created an unreasonable risk of physical harm to another or
that such risk was substantially greater than that which is necessary to make their conduct
negligent. They further contend that Plaintiff fails to aver any facts tending to show that they
had a state of mind required for a finding of recklessness or wantonness in that they deliberately
acted or failed to act in conscious disregard of a known high risk of harm to another. Thus, they
contend that the factual allegations set forth no more than a claim for ordinary negligence, not
for punitive damages.
Plaintiff responds that it has pleaded facts showing Defendants acted with “reckless
indifference to the interests of others” and engaged in conduct that created “an unreasonable risk
of harm to another and such risk is substantially greater than that which is necessary to make
[the] conduct negligent.” Plaintiff argues that Defendants’ conduct led to calamitous property
loss and unnecessarily exposed people to the potential of life-threatening, extremely dangerous

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conditions of unbridled high-voltage electricity.
Determining State Law
“It is well established that a federal court exercising diversity jurisdiction must apply the
substantive law of the appropriate state.” Covington v. Continental Tire, Inc., 381 F.3d 216, 218
(3d Cir. 2004). As Pennsylvania is the forum state, Pennsylvania law governs the legal issues
presented herein.
Punitive Damages
Under Pennsylvania law:
punitive damages are an “extreme remedy” available in only the most exceptional
matters. See Martin v. Johns-Manville Corp., 508 Pa. 154, 494 A.2d 1088, 1098
n. 14. (Pa.1985), rev’d on other grounds sub nom., Kirkbride v. Lisbon
Contractors, Inc., 521 Pa. 97, 555 A.2d 800 (1989). Punitive damages may be
appropriately awarded only when the plaintiff has established that the defendant
has acted in an outrageous fashion due to either “the defendant’s evil motive or
his reckless indifference to the rights of others.” Martin, 494 A.2d at 1096; see
also Hutchison v. Luddy, 870 A.2d 766, 770 (Pa. 2005) (finding that punitive
damages may be appropriately awarded only when the plaintiff has established
that the defendant has acted in a fashion “so outrageous as to demonstrate willful,
wanton or reckless conduct”). A defendant acts recklessly when “his conduct
creates an unreasonable risk of physical harm to another [and] such risk is
substantially greater than that which is necessary to make his conduct negligent.”
Id. at 771 (citation omitted). Thus, a showing of mere negligence, or even gross
negligence, will not suffice to establish that punitive damages should be imposed.
SHV Coal, Inc. v. Continental Grain Co., 526 Pa. 489, 587 A.2d 702, 705 (1991).
Rather, the plaintiff must adduce evidence which goes beyond a showing of
negligence, evidence sufficient to establish that the defendant’s acts amounted to
“intentional, willful, wanton or reckless conduct....” Id. at 704 (citation omitted).
Phillips v. Cricket Lighters, 883 A.2d 439, 445-46 (Pa. 2005) (footnote omitted). In Phillips, a
two-year-old child started a fire while playing with a disposable butane lighter, killing himself,
his mother, and another minor child. Id. at 442. The administratrix of the estates of these
decedents brought a products liability action against the defendant manufacturers and distributors
of the disposable butane lighters on the ground that the lighter at issue was defective because it

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should have had child-resistant features. In support of punitive damages, the administratrix
presented evidence that the defendant manufacturer had notice of prior instances in which its
disposable butane lighters were used by children to accidentally cause fatal fires. Id. at 446-47.
The administratrix presented evidence showing that fires caused by children playing with butane
lighters resulted in the deaths of 120 people per year, with an additional 750 people being injured
in these fires. Id. at 446. Property damage from these fires was in the range of $300 to $375
million per year. The administratrix also proffered evidence that the defendant manufacturer
decided not to produce a lighter with a child-proof design after discovering during test marketing
that its adult customers disliked the lighter with child-resistant features. Id. The Pennsylvania
Supreme Court concluded, however, that the defendant manufacturer’s knowledge of these prior
accidental fires, along with the defendant’s strategic choice based on consumer desires not to
create a child-proof lighter, did not exhibit reckless indifference sufficient for a reasonable jury
to impose punitive damages. Id. at 447.
Plaintiff’s theory herein is that Defendants, despite knowledge of how dangerous it would
be not to de-energize the electrical circuits, proceeded not to do so in reckless indifference to the
interests of others and created an unreasonable risk of harm substantially greater than that which
is necessary to make the conduct negligent. However, there is no meaningful basis to distinguish
such an argument from the argument presented in Phillips, in which the defendants were alleged
to have had actual knowledge of the dangers of lighters without child-proof features and to have
made a strategic choice based on consumer desires not to create a child-proof lighter and three
individuals died as a result. See also Richetta v. Stanley Fastening Sys., L.P., 661 F. Supp. 2d
500, 513-14 (E.D. Pa. 2009) (plaintiff alleged that manufacturer had notice of injuries resulting
from nail guns’ contact trigger design and did not redesign guns to include a safety switch, but

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this allegation did not suffice to impose punitive damages).
Plaintiff cites Takes v. Metropolitan Edison Co., 695 A.2d 397 (Pa. 1997), as a case in
which there was a punitive damages instruction given where a painting contractor filed an action
against an electric company to recover damages for personal injuries sustained when painting a
substation and the company failed to warn that a 4,800 volt capacitor had not been de-energized.
However, the actual holding of that case was that the Superior Court had erred in addressing on
the merits a challenge to a jury charge that a party had not preserved for appellate review. More
relevantly, the case noted that it was “undisputed that the trial court committed error by
improperly permitting the jury to consider negligence concepts in the determination of the right
to punitive damages.” Id. at 399 n.4.
Plaintiff also cites Hall v. Episcopal Long Term Care, 54 A.3d 381, 397 (Pa. Super.
2012), appeal denied, 69 A.3d 243 (Pa. 2013), as a case in which the issue of punitive damages
was sent to the jury. However, in that case, the evidence was that a nursing home was
chronically understaffed and complaints went unheeded, staff was deliberately increased during
times of state inspections and then decreased thereafter, staff falsified care logs indicating that
the deceased received care when she had not and she continuously cried out in pain during
exercises but the staff ignored her complaints. Thus, even though the claim was for negligence,
the case clearly involved outrageous intentional behavior causing personal injury and death.
None of the cases Plaintiff cites involved only property damage.
For these reasons, the partial motion to dismiss submitted on behalf of defendants (ECF
No. 9) will be granted.
An appropriate order follows.

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IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
SENECA INSURANCE CO. a/s/o WILD BLUE
MANAGEMENT, LP,
Plaintiff,
vs
MARK BEALE and MARKS MAINTENANCE
AND REPAIR,
Defendants.

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Civil Action No. 13-1737

ORDER
AND NOW, this 5th day of March, 2014,
IT IS HEREBY ORDERED that the partial motion to dismiss filed by Defendants (ECF
No. 9) is granted and Plaintiff’s request for punitive damages is dismissed.

s/Robert C. Mitchell__________
ROBERT C. MITCHELL
United States Magistrate Judge

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