LATUSKA et al v. SETHURAMAN et al

Filing 66

MEMORANDUM OPINION AND ORDER - it is hereby Ordered that Bureau Veritas North America, Inc.'s motion to dismiss (ECF No. 9 ) is GRANTED. Plaintiffs' requests for punitive damages and for attorneys' fees and costs in Counts V and VI of their complaint are dismissed. Plaintiffs' Unfair Trade Practices and Consumer Protection Law claim in Count VII of their complaint is also dismissed. Mike Hoffer's motion to dismiss (ECF No. 20 ) is DENIED, without prejudice, as moot. I t is further Ordered that Plaintiffs, Richard F. Latuska and Annette F. Latuska, are granted 21 days from July 29, 2016, to file an amended complaint, and as more fully stated in said Memorandum Opinion and Order. Signed by Judge Kim R. Gibson on 7/29/2016. (dlg)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
RICHARD F. LATUSKA and
ANNETTE E. LATUSKA,

Plaintiffs,

v.
VENKAT SETHURAMAN, NAHEED
SHAHDID,
Defendants and Third-Party Plaintiffs,
BUREAU VERITAS NORTH AMERICA,
INC.
Defendant and Third-Party Plaintiff,
v.
MIKE HOFFER and HERITAGE HOMES,
LLC, LEZZER TRUSS SYSTEMS, INC. and
MITEK USA, INC. f/k/a MITEK
INDUSTRIES, INC.,
Third-Party Defendants.

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CIVIL ACTION NO. 3:15-208
JUDGE KIM R. GIBSON

MEMORANDUM OPINION
I.

Introduction
This action comes before the Court upon motions to dismiss filed by Bureau

Veritas North America, Inc. and Mike Hoffer. (ECF Nos. 9, 20.) For the reasons that
follow, Mr. Hoffer’s motion to dismiss will be denied, without prejudice, as moot. Bureau
Veritas North America, Inc.’s motion to dismiss will be GRANTED. However, Plaintiffs,
Richard E. Latuska and Annette E. Latuska, will be granted leave to file an amended
complaint as set forth in the Order.

II.

Jurisdiction
The Court has diversity jurisdiction over this matter pursuant to 28 U.S.C. §

1332(a)(1), as there is complete diversity of citizenship between the parties, and the
amount in controversy in the state proceeding exceeds $75,000, exclusive of interest and
costs. Venue is proper under 28 U.S.C. § 1391(b)(2) because a substantial portion of the
events giving rise to the claims occurred in the Western District of Pennsylvania.
III.

Background
This case arises from the construction of a new home. The following facts are

alleged in the complaint, which the Court will accept as true for the sole purpose of
deciding the pending motion.
In early 2009, Venkat Sethuraman and Naheed Shahid engaged Heritage Homes,
LLC to construct a new residence. (ECF No. 1-2 ¶ 10.) A zoning permit was issued by
Sandy Township to Mr. Sethuraman on April 22, 2009, for the construction of the new
home. (Id. ¶ 11.) Guardian Inspection Services, Inc., which operates with Bureau Veritas
North America, Inc., approved the building plans and issued a construction permit on
April 27, 2009. (Id. ¶¶ 7, 12.)
Heritage Homes, LLC commenced construction of the home in July 2009. (Id. ¶
13.) At all times during the construction process, Bureau Veritas North America, Inc., as a
service agency for Sandy Township, was charged with the duty of conducting all required
inspections. (Id. ¶ 14.) Bureau Veritas North America, Inc. issued a final certificate of
occupancy, dated August 2, 2010, to Mr. Sethuraman and Ms. Shahid. (Id. ¶ 15.) Mr.

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Sethuraman and Ms. Shahid, who occupied the home for approximately six months,
moved out in February 2011 and listed the property for sale. (Id. ¶ 16.) On or about
October 12, 2011, Richard F. Latuska and Annette E. Latuska entered into a written
agreement to purchase Mr. Sethuraman and Ms. Shahid’s property for $950,000.00. (Id.
¶¶ 17-18.)
Prior to the sale, Mr. Sethuraman and Ms. Shahid provided a disclosure statement
to Mr. and Ms. Latuska. (Id. ¶¶ 19-20.) In the disclosure statement, Mr. Sethuraman and
Ms. Shahid denied the following: (1) any problems with the home, including structural
items or any other component problems; (2) any water damage, leakage or other problems
with water, such as the roof, ice, downspouts, or gutters; and (3) any material defects to
the property, dwelling, or fixtures. (Id. ¶ 21.) Mr. and Ms. Latuska engaged the services
of Minich Home Inspections to complete a residential home inspection, which was limited
to a visual inspection. (Id. ¶¶ 23-24.) The inspection report, dated October 22, 2011, did
not identify any latent or obvious structural defects or deficiencies within the home. (Id.)
Small moisture stains were discovered around the master bath shower. (Id. ¶ 24.) Mr.
Sethuraman and Ms. Shahid’s real estate agent advised Mr. and Ms. Latuska that the
moisture problems arose because Mr. Sethuraman and Ms. Shahid used the bathroom as a
steam room. (Id. ¶ 26.) The real estate agent assured Mr. and Ms. Latuska that Mr.
Sethuraman and Ms. Shahid had denied experiencing leakage or other water issues. (Id.)
Based upon the inspector’s recommendation, the shower door was caulked before Mr.
and Ms. Latuska signed the agreement of sale. (Id. ¶¶ 25, 27.)

3

After Mr. and Ms. Latuska settled with Mr. Sethuraman and Ms. Shahid on
December 19, 2011, they moved into the home on January 13, 2012. (Id. ¶¶ 29-30.) A few
months later, Mr. and Ms. Latuska began to have problems with water marks in the
master bathroom. (Id. ¶ 31.) Mr. and Ms. Latuska attempted to remedy the problem by
not leaving the shower door open while turning on the shower, re-caulking the door, and
minimizing their use of the shower. (Id.) When the ceramic tile in the master bathroom
began to crack at the grout lines, Mr. and Ms. Latuska ceased using the shower. (Id. ¶ 32.)
In July 2014, Mr. and Ms. Latuska hired William Morelock of Morelock
Construction to repair the ongoing water problems in the master bathroom. (Id. ¶ 33.)
After removing tiles, the dry wall, and the shower floor, Mr. Morelock discovered serious
and extensive structural deficiencies, which continue to date. (Id. ¶¶ 33-34.) Specifically,
the home has severe, consistent, and building-wide defects and building code violations
that impact its structural viability and safety. (Id. ¶ 35.) After the home was deemed
uninhabitable, Mr. and Ms. Latuska were forced to live in a renal home from March 2015
until July 2015. (Id. ¶¶ 36-37.) In July 2015, Mr. and Ms. Latuska were required to find a
new rental home, where they expected to remain while structural repairs were completed.
(Id. ¶¶ 37-38.)
Mr. and Ms. Latuska filed a seven-count complaint in the Court of Common Pleas
of Clearfield County on July 13, 2015, and Mr. Sethuraman and Ms. Shahid removed the
action to this Court on August 13, 2015. (See ECF Nos. 1, 1-2 at 4.) Mr. and Ms. Latuska
assert four claims against Mr. Sethuraman and Ms. Shahid: (1) violation of the real estate
seller disclosure law, (ECF No. 1-2 ¶¶ 43-57); (2) fraudulent misrepresentation, (id. ¶¶ 584

64); (3) violation of the Unfair Trade Practices and Consumer Protection Law (“the
UTPCPL”), (id. ¶¶ 65-70); and (4) breach of contract, (id. ¶¶ 71-80). Mr. and Ms. Latuska
assert three claims against Bureau Veritas North America, Inc.:

(1) intentional

misrepresentation, (id. ¶¶ 81-97); (2) negligence, (id. ¶¶ 98-117); and (3) violation of the
UTPCPL, (id. ¶¶ 118-126).
In their answer, filed on August 31, 2015, Mr. Sethuraman and Ms. Shahid asserted
cross-claims against Bureau Veritas North America, Inc. for negligence, intentional
misrepresentation, violation of the UTPCPL, and contribution. (ECF No. 7 ¶¶ 20-38.) On
September 1, 2015, Bureau Veritas North America, Inc. filed an answer and included
cross-claims

against

Mr.

Sethuraman

and

Ms.

Shahid

for

contribution

and

indemnification. (ECF No. 8 ¶¶ 1-5.) On September 14, 2015, Mr. Sethuraman and Ms.
Shahid filed a third-party complaint against Heritage Homes, LLC and Mike Hoffer.
(ECF No. 11.) Mr. Sethuraman and Ms. Shahid asserted a claim against Heritage Homes,
LLC for breach of contract and included claims against Mr. Hoffer for third-party
beneficiary/breach of contract and negligence. (Id. ¶¶ 27-47.)
On April 7, 2016, Bureau Veritas North America, Inc. filed a third-party complaint
against Heritage Homes, LLC, Lezzer Truss Systems, Inc., and MiTek USA, Inc. f/k/a
MiTek Industries, Inc. (“MiTek”). (ECF No. 35.) Bureau Veritas North America, Inc.
asserted claims against each additional defendant for negligence and contribution. (Id. ¶¶
23-54.) MiTek filed an answer on June 8, 2016, and included cross-claims against Mr.
Sethuraman and Ms. Shahid, Bureau Veritas North America, Inc., Mr. Hoffer, Heritage
Homes, LLC, and Lezzer Truss Systems, Inc. for contribution and indemnification. (ECF
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No. 50 at 8.) On June 23, 2016, Lezzer Truss Systems, Inc. filed an answer and asserted
cross-claims against MiTek, Mr. Sethuraman and Ms. Shahid, Heritage Homes, LLC, Mr.
Hoffer, and Bureau Veritas North America, Inc. for contribution and indemnification.
(ECF No. 55 ¶¶ 19-22.)
There are three motions to dismiss pending in this matter. First, Bureau Veritas
North America, Inc. has filed a motion to dismiss Mr. and Ms. Latuska’s UTPCPL claim
and their requests for attorneys’ fees and punitive damages. (ECF No. 9.) Bureau Veritas
North America, Inc.’s motion has been fully briefed and is ripe for disposition. (See ECF
Nos. 9, 10, 12, 13.) Second, Mr. Hoffer filed a motion to dismiss Mr. Sethuraman and Ms.
Shahid’s third-party complaint against him. (ECF No. 20.) After Mr. Hoffer’s motion was
fully briefed (see ECF Nos. 20, 21, 28), an early neutral evaluation session was held, at
which time Mr. and Ms. Latuska’s claims against Mr. Sethuraman and Ms. Shahid were
resolved, and Mr. Sethuraman and Ms. Shahid’s claims against Mr. Hoffer were resolved
(see ECF No. 32). In a joint motion to amend the scheduling order, the parties confirmed
the settlement. (See ECF No. 48 ¶ 5.) In light of the settlement between Mr. Sethuraman
and Ms. Shahid and Mr. Hoffer, the Court will dismiss, without prejudice, Mr. Hoffer’s
motion to dismiss Mr. Sethuraman and Ms. Shahid’s third-party complaint against him.
(ECF No. 20.) Third, MiTek filed a motion to dismiss Bureau Veritas North America,
Inc.’s third-party complaint against it. MiTek’s motion has not been fully briefed and is
not yet ripe for disposition. (ECF No. 60.) Accordingly, the Court will address only
Bureau Veritas North America, Inc.’s motion to dismiss at this time.

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IV.

Standard of Review
Bureau Veritas North America, Inc. moves to dismiss Mr. and Ms. Latuska’s

UTPCPL claim and their requests for attorneys’ fees and punitive damages pursuant to
Rule 12(b)(6). The Federal Rules of Civil Procedure require that a complaint contain “a
short and plain statement of the claim showing that the pleader is entitled to relief.” FED.
R. CIV. P. 8(a)(2). Rule 12(b)(6) allows a party to seek dismissal of a complaint or any
portion of a complaint for failure to state a claim upon which relief can be granted.
Although the federal pleading standard has been “in the forefront of jurisprudence in
recent years,” the standard of review for a Rule 12(b)(6) challenge is now well established.
Fowler v. UPMC Shadyside, 578 F. 3d 203, 209 (3d Cir. 2009).
In determining the sufficiency of a complaint, a district court must conduct a twopart analysis. First, the court must separate the factual matters averred from the legal
conclusions asserted. See id. at 210. Second, the court must determine whether the factual
matters averred are sufficient to show that plaintiff has a “‘plausible claim for relief.’” Id.
at 211 (quoting Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009)). The complaint need not include
“‘detailed factual allegations.’” Phillips v. County of Allegheny, 515 F. 3d 224, 231 (3d Cir.
2008) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)).
Moreover, the court must construe the alleged facts, and draw all inferences
gleaned therefrom, in the light most favorable to the non-moving party. See id. at 228
(citing Worldcom, Inc. v. Graphnet, Inc., 343 F. 3d 651, 653 (3d Cir. 2003)). However, “legal
conclusions” and “[t]hreadbare recitals of the elements of a cause of action . . . do not
suffice.” Iqbal, 556 U.S. at 678. Rather, the complaint must present sufficient “‘factual
7

content that allows the court to draw the reasonable inference that the defendant is liable
for the misconduct alleged.’” Sheridan v. NGK Metals Corp., 609 F. 3d 239, 262 n.27 (3d Cir.
2010) (quoting Iqbal, 556 U.S. at 678).
Ultimately, whether a plaintiff has shown a “plausible claim for relief” is a
“context-specific” inquiry that requires the district court to “draw on its judicial
experience and common sense.”

Iqbal, 556 U.S. at 679.

The relevant record under

consideration includes the complaint and any “document integral to or explicitly relied
upon in the complaint.” U.S. Express Lines, Ltd. v. Higgins, 281 F. 3d 383, 388 (3d Cir. 2002)
(citing In re Burlington Coat Factory Sec. Litig., 114 F. 3d 1410, 1426 (3d Cir. 1997)). If a
complaint is vulnerable to dismissal pursuant to Rule 12(b)(6), the district court must
permit a curative amendment, irrespective of whether a plaintiff seeks leave to amend,
unless such amendment would be inequitable or futile. Phillips, 515 F. 3d at 236; see also
Shane v. Fauver, 213 F. 3d 113, 115 (3d Cir. 2000).
V.

Discussion
Bureau Veritas North America, Inc. has filed a motion to dismiss Mr. and Ms.

Latuska’s UTPCPL claim in Count VII of their complaint and their requests for attorneys’
fees and punitive damages in Counts V and VI of their complaint.

The Court will

separately address Bureau Veritas North America, Inc.’s arguments.
A.

Mr. and Ms. Latuska’s UTPCPL Claim

Bureau Veritas North America, Inc. argues that Count VII of Mr. and Ms.
Latuska’s complaint must be dismissed because they lack standing to sue under the

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UTPCPL. (ECF No. 10 at 3-5.) Specifically, Bureau Veritas North America, Inc. contends
that the UTPCPL applies only to protect those parties who leased or purchased goods and
services from the defendant in question. (Id. at 3-4.) Asserting that Mr. and Ms. Latuska
failed to allege that it entered into a consumer transaction with it, Bureau Veritas North
America, Inc. requests that Count VII be dismissed. (Id. at 4-5.)
In response, Mr. and Ms. Latuska argue that a plaintiff need not be in direct
privity with a defendant to file a UTPCPL claim because the statute extends to third
parties who are intended purchasers or reasonably foreseeable consumers. (ECF No. 13 at
7-8.)

Mr. and Ms. Latuska claim that Bureau Veritas North America, Inc. made

representations in the inspection reports and certificate of occupancy as to the quality and
safety of the home. (Id. at 12.) Contending that their complaint contains sufficient facts to
support a finding that Bureau Veritas North America, Inc. made false and misleading
representations, Mr. and Ms. Latuska maintain that they have standing to file a UTPCPL
claim. (Id.)
The UTPCPL is Pennsylvania’s consumer protection law.

Bennett v. A.T.

Masterpiece Homes at Broadsprings, LLC, 40 A.3d 145, 151 (Pa. Super. Ct. 2012). Its purpose
is to prevent “‘[u]nfair methods of competition and unfair or deceptive acts or practices in
the conduct of any trade or commerce,’” as defined by the statute. Id. (quoting 73 Pa. Stat.
Ann. § 201-3). The Pennsylvania Supreme Court has stated that the UTPCPL should be
liberally construed to give effect to its legislative goal of consumer protection. Id. (citing
Pennsylvania ex rel. Creamer v. Monumental Props., Inc., 329 A.2d 812 (Pa. 1974)).
The UTPCPL provides a private right of action as follows:
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Any person who purchases or leases goods or services primarily for
personal, family or household purposes and thereby suffers any
ascertainable loss of money or property, real or personal, as a result of the
use or employment by any person of a method, act or practice declared by
section 3 of this act, may bring a private right of action to recover actual
damages or one hundred dollars ($100), whichever is greater.
73 Pa. Stat. Ann. § 201-9.2(a). This language establishes that the private right of action
under the UTPCPL is limited to anyone who purchases or leases goods or services for
primarily personal, family, or household purposes. The question here is whether Mr. and
Ms. Latuska “purchase[d] . . . goods or services” within the meaning of the statute. Based
upon relevant case law interpreting this statute, the Court concludes that they did not.
The UTPCPL’s “reach is expansive.” Trunzo v. Citi Mortg., 876 F. Supp. 2d 521, 543
(W.D. Pa. 2012). Its private right of action has been construed to apply not only to those
circumstances where the unfair or deceptive conduct induced the consumer to make the
initial purchase, but also to unfair or deceptive practices which occur after entering an
agreement and which were not a basis for the original agreement. Id. (holding that
liability can be imposed upon a mortgage assignee under the UTPCPL provided that the
plaintiff advances specific allegations of wrongdoing against the assignee, not simply
against the original lender) (citing In re Smith, 866 F.2d 576 (3d Cir. 1989) (noting that a
more limited reading “would insulate all kinds of practices from the [UTPCPL]”)). See
also Behr v. Fed. Home Loan Mortg., No. 1:14-CV-291, 2015 U.S. Dist. LEXIS 116919, at *16-17
(W.D. Pa. July 29, 2015) (holding that liability could be imposed against a lender based
upon an underlying mortgage and related mortgage financing services).

10

In applying a liberal construction of the UTPCPL, the United States Court of
Appeals for the Third Circuit has held that a plaintiff need not be in direct privity with a
defendant to bring a claim for damages under the statute. Katz v. Aetna Casualty & Surety
Co., 972 F.2d 53, 56 (3d Cir. 1992) (citing Valley Forge Towers S. Condominium v. Ron-Ike
Insulators, Inc., 574 A.2d 641, 645 (Pa. Super. Ct. 1990) (stating that there was no “express
requirement that there be strict technical privity between the party suing and the party
sued”)). Rather, standing also extends to “those specifically intended to rely upon the
fraudulent conduct, and those whose reasonable reliance was specially foreseeable.”
Valley Forge Towers S. Condominium, 574 A.2d at 647. Standing does not, however, extend
to “a plaintiff lacking any commercial dealings with the defendant.” Katz, 972 F.2d at 56.
Similarly, standing does not extend to an assignee of a purchaser. Gemini Physical Therapy
& Rehab. v. State Farm Mut. Auto. Ins. Co., 40 F.3d 63, 65 (3d Cir. 1994).
In their complaint, Mr. and Ms. Latuska allege that Guardian Inspection Services,
Inc., which operates with Bureau Veritas North America, Inc., approved the building
plans and issued a construction permit on April 27, 2009. (ECF No. 1-2 ¶¶ 7, 12.) Mr. and
Ms. Latuska aver that Bureau Veritas North America, Inc. was charged with the duty of
conducting all required inspections. (Id. ¶ 14.) Mr. and Ms. Latuska further allege that
Bureau Veritas North America, Inc. issued a final certificate of occupancy, dated August
2, 2010, to Mr. Sethuraman and Ms. Shahid. (Id. ¶ 15.) In asserting their claims against
Bureau Veritas North America, Inc., Mr. and Ms. Latuska maintain that Bureau Veritas
North America, Inc. failed to inspect, ignored, or failed to report the home’s code
violations and material defects. (Id. ¶¶ 88, 90.) Mr. and Ms. Latuska further aver that
11

Bureau Veritas North America, Inc. engaged in willful misconduct because it intentionally
overlooked or ignored serious structural defects and deliberately concealed known facts
or failed to make any reasonable investigation to determine the condition of home. (Id. ¶¶
91-92, 121.)
Mr. and Ms. Latuska have failed to allege that they purchased any goods or
services from Bureau Veritas North America, Inc. The Court recognizes that Mr. and Ms.
Latuska need not be in direct privity with Bureau Veritas North America, Inc. because, as
subsequent purchasers of the home, their reasonable reliance upon Bureau Veritas North
America, Inc.’s inspection and certificate of occupancy was “specially foreseeable.” Valley
Forge Towers S. Condominium, 574 A.2d at 647. However, Mr. and Ms. Latuska have failed
to allege that they had “any commercial dealings with the defendant.” Katz, 972 F.2d at
56.

Specifically, Mr. and Ms. Latuska have not alleged that they had to “give up

something of significant value in order to consummate the transaction.” Johnson v. Metlife
Bank, N.A., No. 11-CV-800, 2011 U.S. Dist. LEXIS 107460, at *13 (E.D. Pa. Sept. 21, 2011).
Thus, in accordance with well-settled law, standing does not extend to Mr. and Ms.
Latuska.
The Court finds that Mr. and Ms. Latuska’s reliance upon Barker v. Hostetter, No.
13-CV-5081, 2014 U.S. Dist. LEXIS 51688 (E.D. Pa. Apr. 15, 2014), is unpersuasive. The
plaintiffs in Barker were “prospective purchasers,” not subsequent purchasers, of lots that
the defendants were developing for residential use.

2014 U.S. Dist. LEXIS 51688, at *91

(emphasis added). Because the plaintiffs alleged that the defendants withheld material
information from them and misrepresented facts about the sewage system and water
12

supply on the lots, the court concluded that although the plaintiffs did not purchase lots
directly from the defendants, “[a]s prospective purchasers, [they] were specifically
intended to rely upon the representations in the [public offering statement].” Id. at *91.
Not only is Barker factually distinguishable because Mr. and Ms. Latuska were subsequent
purchasers of the home, but the court in Barker also did not address the Third Circuit’s
holding in Katz that standing under the UTPCPL does not extend to plaintiffs lacking
commercial dealings with the defendant. Similarly, Mr. and Ms. Latuska’s reliance upon
In re Smith, 866 F.2d 576 (3d Cir. Pa. 1989), and Behr, No. 1:14-CV-291, 2015 U.S. Dist.
LEXIS 116919, is unconvincing because both decisions involved the imposition of liability
against a lender based upon an underlying mortgage and related mortgage financing
services.
Because Mr. and Ms. Latuska have failed to allege that they purchased goods or
services from, or had any commercial dealings with, Bureau Veritas North America, Inc.,
the Court will grant Bureau Veritas North America, Inc.’s motion to dismiss Count VII of
Mr. and Ms. Latuska’s complaint.

See, e.g., Katz, 972 F.2d at 57 (explaining that

“[a]lthough Valley Forge Towers held that strict privity is not always an element of the
private cause of action, there is no indication that the court would have extended the
private cause of action to a plaintiff lacking any commercial dealings with the defendant”
and concluding that the plaintiffs had “conducted no business whatsoever” with the
defendants); Gemini Physical Therapy & Rehab., 40 F.3d at 65 (concluding that the plaintiff
lacked standing because “its complaint does not allege that it is a purchaser or consumer
of goods or services from [the defendant]”); Country Classics at Morgan Hill Homeowners’
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Ass’n v. Country Classics at Morgan Hill, LLC, 780 F. Supp. 2d 367, 376 (E.D. Pa. 2011)
(granting motion to dismiss because the plaintiff did not allege that it contracted with any
party to provide goods or services for the unit owners’ benefits or that it was a third-party
beneficiary of any contract entered into by the defendant); Bracciale v. Nationwide Mut. Fire
Ins. Co., No. 92-CV-7190, 1994 U.S. Dist. LEXIS 198, at *9 (E.D. Pa. Jan. 12, 1994) (granting
motion to dismiss because the plaintiff, who “conducted no business with [the
defendant],” was not a purchaser under the UTPCPL); Schwarzwaelder v. Fox, 895 A.2d
614, 620 (Pa. Super. Ct. 2006) (holding that “[the plaintiffs] purchased nothing from [the
defendant] and cannot claim an attendant cause of action under the UTPCPL”). Cf.
Johnson v. MetLife Bank, N.A., 883 F. Supp. 2d 542, 548 (E.D. Pa. 2012) (finding that the
plaintiff had standing based upon evidence “that he had commercial dealings with [the
defendant], that [the defendant] misled him during those commercial dealings knowing
that he might rely on the misrepresentations, and that he ultimately made a purchase as a
result of the misrepresentations”).
B.

Mr. and Ms. Latuska’s Requests for Attorneys’ Fees and Punitive
Damages

Bureau Veritas North America, Inc. argues that Mr. and Ms. Latuska’s requests for
attorneys’ fees and punitive damages in Counts V and VI of their complaint must be
dismissed. (ECF No. 10 at 5-6.) Bureau Veritas North America, Inc. contends that Mr. and
Ms. Latuska are not entitled to punitive damages because they failed to allege that it
engaged in outrageous behavior. (Id. at 6.) Bureau Veritas North America, Inc. also

14

asserts that Mr. and Ms. Latuska failed to cite to any contract, statute, or legal principle
that would require it to pay the attorneys’ fees requested in Counts V and VI. (Id. at 5.)
In response, Mr. and Ms. Latuska contend that Bureau Veritas North America, Inc.
engaged in outrageous behavior by failing to inspect the home or report the building code
violations and acted with reckless indifference by issuing the occupancy certificate. (ECF
No. 13 at 15.) Mr. and Ms. Latuska further argue that the building-wide defects and code
violations were so severe and numerous that they would have been open and obvious to
Bureau Veritas North America, Inc. (Id. at 16.) Regarding attorneys’ fees and costs, Mr.
and Ms. Latuska first note that Section 908(2) of the Restatement (Second) of Torts
provides that the nature and extent of the harm must be considered in awarding punitive
damages. (Id. at 18.) Asserting that they are entitled to punitive damages, Mr. and Ms.
Latuska claim that their attorneys’ fees and costs “are relevant to the nature and extent of
the harm [they] suffered.” (Id. at 19 (emphasis omitted).)
Punitive damages are an “extreme remedy” available only in the most exceptional
matters. Phillips v. Cricket Lighters, 883 A.2d 439, 445 (Pa. 2005). Under Pennsylvania law,
“[p]unitive damages may be awarded for conduct that is outrageous, because of the
defendant’s evil motive or his reckless indifference to the rights of others.”

Feld v.

Merriam, 485 A.2d 742, 747 (Pa. 1984). Punitive damages “are proper only in cases where
the defendant’s actions are so outrageous as to demonstrate willful, wanton or reckless
conduct.” Hutchison ex rel. Hutchison v. Luddy, 870 A.2d 766, 770 (Pa. 2005). To establish a
claim for punitive damages, a plaintiff must demonstrate that “(1) a defendant had a
subjective appreciation of the risk of harm to which plaintiff was exposed and that (2) he
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acted, or failed to act, as the case may be, in conscious disregard of that risk.” Id. at 772;
see also Ditzler v. Wesolowski, No. 3:05-CV-325, 2007 U.S. Dist. LEXIS 56736, at *10 (W.D. Pa.
Aug. 3, 2007).
In Counts V and VI of their complaint, Mr. and Ms. Latuska assert claims against
Bureau Veritas North America, Inc. for intentional misrepresentation and negligence.
(ECF No. 1-2 ¶¶ 81-117.) In support of their claims, Mr. and Ms. Latuska state that
Bureau Veritas North America, Inc. had a duty to review the building plans and
specifications for compliance with the construction code and all other pertinent
regulations, to perform ongoing construction inspections, to report to the owner to assure
compliance with the construction code and all pertinent building standards, and to issue
written stop orders when a code violation was detected. (Id. ¶¶ 83, 85, 89, 101-103, 105.)
Mr. and Ms. Latuska allege that Bureau Veritas North America, Inc. issued a certificate of
occupancy despite “blatant and obvious” code violations. (Id. ¶ 108.)

Mr. and Ms.

Latuska also aver that Bureau Veritas North America, Inc. “knew or should have known
of the defects,” (id. ¶ 109), that would have been “glaring, open[,] and obvious to an
inspector,” (id. ¶¶ 88, 109). In their claim for intentional misrepresentation, Mr. and Ms.
Latuska state that Bureau Veritas North America, Inc. intentionally overlooked or ignored
the home’s structural defects and that its lack of inspections and/or failure to report
known construction defects constitutes willful misconduct. (Id. ¶¶ 91-92, 96.)
Accepting the allegations of Mr. and Ms. Latuska’s complaint as true, this Court
finds that Mr. and Ms. Latuska have not alleged sufficient facts to establish a plausible
claim for punitive damages against Bureau Veritas North America, Inc. While the facts
16

alleged support Mr. and Ms. Latuska’s claims for intentional misrepresentation and
negligence, they do not rise to the level of outrageous conduct required under
Pennsylvania law to warrant punitive damages.

Rather, Mr. and Ms. Latuska’s

allegations regarding their request for punitive damages are conclusory statements and
not factual averments sufficient to state a plausible claim for relief.
Based upon the allegations in the complaint, Mr. and Ms. Latuska have failed to
satisfy the pleading requirements of the rules of procedure to set forth a plausible claim
for relief for punitive damages in Counts V and VI against Bureau Veritas North America,
Inc. The Court will therefore grant Defendants' motion to dismiss the punitive damages
claim in Counts V and VI of the complaint. See, e.g., Boring v. Google Inc., 362 Fed. Appx.
273, 283 (3d Cir. Pa. 2010) (affirming the trial court’s decision to grant the defendant’s
motion to dismiss the plaintiffs’ claim for punitive damages because the complaint “fails
to allege conduct that is outrageous or malicious” and “there are no facts suggesting that
[the defendant] acted maliciously or recklessly or that [the defendant] intentionally
disregarded the [plaintiffs’] rights”); McCullough v. Peeples, No. 3:14-CV-123, 2015 U.S.
Dist. LEXIS 27683, at *17 (W.D. Pa. Mar. 5, 2015) (granting motion to dismiss the plaintiff’s
claim for punitive damages where the plaintiff alleged that the defendant’s actions
“constituted outrageous conduct and demonstrated wanton and reckless indifference to
the [plaintiff’s] safety” and “evidenced conscious acts of an unreasonable character and
demonstrated disregard of a risk”); Gregg v. Lonestar Transp., LLC, No. 3:14-CV-44, 2015
U.S. Dist. LEXIS 27680, at *10-11 (W.D. Pa. Mar. 6, 2015) (granting motion to dismiss the
plaintiff’s claim for punitive damages because the plaintiff failed to allege sufficient
17

supporting facts); Allegrino v. Conway E & S, Inc., No. 09-CV-1507, 2010 U.S. Dist. LEXIS
106734, at *38-39 (W.D. Pa. Oct. 6, 2010) (dismissing the plaintiff’s request for punitive
damages because it was “pled in a conclusory fashion”).
As discussed above, Mr. and Ms. Latuska have argued that they are entitled to
attorneys’ fees and costs because Section 908(2) of the Restatement (Second) of Torts
provides that the nature and extent of the harm must be considered in awarding punitive
damages. (ECF No. 13 at 18-19.) In support of their argument, Mr. and Ms. Latuska state
that “while not statutorily authorized as independent taxable costs in the Courts for
intentional misrepresentation and negligence, it is appropriate to consider attorney[s’]
fees expended . . . as an element of the compensatory losses and punitive damages
award.” (Id. at 19.)

Accordingly, because Mr. and Ms. Latuska have conceded that

attorneys’ fees and costs are recoverable only as an element of an award for punitive
damages, and because the Court will dismiss Mr. and Ms. Latuska’s claims for punitive
damages in Counts V and VI, the Court will also dismiss their claims for attorneys’ fees
and costs in Counts V and VI. See, e.g., Sloan & Co. v. Liberty Mut. Ins. Co., 653 F.3d 175,
186 (3d Cir. 2011) (“[T]he ‘settled’ law of Pennsylvania is that ‘attorneys[’] fees are
recoverable from an adverse party to a cause only when provided for by statute, or when
clearly agreed to by the parties.’”) (quoting Fidelity-Phila. Trust Co. v. Phila. Transp. Co., 173
A.2d 109, 113 (Pa. 1961)).
C.

Leave to Amend

The law is well settled that, “if a complaint is subject to a Rule 12(b)(6) dismissal, a
district court must permit a curative amendment unless such an amendment would be
18

inequitable or futile.” Phillips, 515 F. 3d at 245. Likewise, Federal Rule of Civil Procedure
15 embodies a liberal approach to amendment and directs that “leave shall be freely given
when justice so requires” unless other factors weigh against such relief. Dole v. Arco Chem.
Co., 921 F. 2d 484, 486-87 (3d Cir. 1990). Factors that weigh against amendment include
“undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to
cure deficiencies by amendments previously allowed, undue prejudice to the opposing
party by virtue of allowance of the amendment, futility of amendment, etc.” Foman v.
Davis, 371 U.S. 178, 182 (1962). Amendment is futile “if the amended complaint would
not survive a motion to dismiss for failure to state a claim upon which relief could be
granted.” Alvin v. Suzuki, 227 F. 3d 107, 121 (3d Cir. 2000). A district court may therefore
“properly deny leave to amend where the amendment would not withstand a motion to
dismiss.” Centifanti v. Nix, 865 F. 2d 1422, 1431 (3d Cir. 1989); Davis v. Holder, 994 F. Supp.
2d 719, 727 (W.D. Pa. 2014). In light of these legal principles favoring the opportunity to
amend a deficiently pleaded complaint, the Court will grant Mr. and Ms. Latuska leave to
amend their complaint.
VI.

Conclusion
For the reasons stated above, the Court will deny, without prejudice, Hoffer’s

motion to dismiss as moot. The Court will grant Bureau Veritas North America, Inc.’s
motion to dismiss. However, Plaintiffs, Richard E. Latuska and Annette E. Latuska, will
be granted leave to file an amended complaint as set forth in the Order.
An appropriate order follows.

19

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
RICHARD F. LATUSKA and
ANNETTE E. LATUSKA,

)
)

Plaintiffs,

CIVIL ACTION NO. 3:15-208

)
)

v.

JUDGE KIM R. GIBSON

)
)

VENKAT SETHURAMAN, NAHEED
SHAHDID,

)
)

)

Defendants and Third-Party Plaintiffs,

)
)

BUREAU VERITAS NORTH AMERICA,
INC.
Defendant and Third-Party Plaintiff,

)
)
)
)

v.

)
)

MIKE HOFFER and HERITAGE HOMES,
LLC, LEZZER TRUSS SYSTEMS, INC. and
MITEK USA, INC. f/k/a MITEK
INDUSTRIES, INC.,
Third-Party Defendants.

)
)
)

)
)

ORDER
AND NOW, this 29th day of July, 2016, upon consideration of Bureau Veritas
North America, Inc.'s motion to dismiss (ECF No. 9) and Mike Hoffer's motion to dismiss
(ECF No. 20), IT IS HEREBY ORDERED as follows:
1.

Bureau Veritas North America, Inc.'s motion to dismiss (ECF No. 9) is

GRANTED. Plaintiffs' requests for punitive damages and for attorneys' fees and costs in
Counts V and VI of their complaint are dismissed. Plaintiffs' Unfair Trade Practices and
Consumer Protection Law claim in Count VII of their complaint is also dismissed.

2.

Mike Hoffer's motion to dismiss (ECF No. 20) is DENIED, without

prejudice, as moot.
IT IS FURTHER ORDERED that Plaintiffs, Richard F. Latuska and Annette F.
Latuska, are granted 21 days from July 29, 2016, to file an amended complaint.

BY THE COURT:

KIM R. GIBSON
UNITED ST ATES DISTRICT JUDGE