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Consumer Protection Law Helps Pierce the Corporate Veil and Leads to Treble Damages (PA)

December 20, 2019

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<p style="text-align: justify;">The Pennsylvania Superior Court recently affirmed the trial court’s decision to pierce the corporate veil and award treble damages under the Pennsylvania Unfair Trade Practices and Consumer Protection Law, Pennsylvania’s Consumer Protection Law, in relation to home repairs in Philadelphia.  In <em><a href="https://www.wcmlaw.com/wp-content/uploads/2019/12/Sereda-v.-Center-City-Acquisitions-LLC.pdf">Sereda v. Center City Acquisitions LLC</a> </em>the Superior Court heard the appeal of defendants Center City Acquisitions and Noah Ostroff following a bench trial regarding damages to the Sereda’s home.  Appellants argued that, <em>inter alia,</em> the trial court erred in piercing the corporate veil to find Ostroff personally liable and awarding damages under the UTPCPL.</p>
<p style="text-align: justify;">In the underlying case, the Seredas alleged that Ostroff and Center City were liable for breach of contract, breach of implied warranty of habitability and reasonable workmanlike construction, and violations of the UTPCPL for failing to address and repair problems dealing with gaps in the hardwood floors and also leaking windows.  The Seredas presented evidence that they communicated only with Ostroff for the two-year period during which the repairs were requested and that Ostroff was the representative from Center City who coordinated the contractors and workers to address the issues.</p>
<p style="text-align: justify;">In its opinion, the Superior Court agreed with the trial court’s decision to pierce the corporate veil and to find Ostroff personally liable under the participation theory because Ostroff was the president, acting officer and sole shareholder of Center City; and also cited that he bought the land, built the house, promised a warranty, and participated in the dealings with the Seredas throughout.  The Superior Court also agreed with the trial court’s decision to award treble damages under the UTPCPL for water damage stemming from the leaking windows.  The Court pointed out that the ‘catchall’ provision of the UTPCPL does not require the showing of an actor’s intent to support a fraudulent or negligent misrepresentation claim, and that while Ostroff’s actions with regard to the flooring did not raise to a level requiring additional punitive damages, the failure to fix the windows and subsequent water damages was sufficient to support a finding that Ostroff misled the Seredas into believing the errors in their home would be corrected under a promised builder’s warranty.  Ultimately, the Superior Court affirmed the trial court’s decision finding Ostroff and Center City jointly and severally liable and awarding damages under the UTPCPL.</p>
Thanks to Greg Herrold for his contribution to this post.  Please e-mail <a href="mailto:vterrasi@wcmlaw.com">Vincent F. Terrasi</a> with any comments.

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