Steven Pavlesich and Charity Pavlesich, v. Mike Olesh Remodeling, LLC, and Kimberly Olesh, Personal Representative of Michael Olesh

Steven Pavlesich and Charity Pavlesich, v. Mike Olesh Remodeling, LLC, and Kimberly Olesh, Personal Representative of Michael Olesh

Civil Action-Law-Construction-Residence-Addition-Pleadings-Breach of Contract-Unjust Enrichment-Fraud in the Inducement-Preliminary Objections-Legal Sufficiency

Steven Pavlesich and Charity Pavlesich (“Plaintiffs”) filed a Complaint alleging that they contracted with Mike Olesh Remodeling, LLC (“Olesh Remodeling”) to build an addition onto their home.  Plaintiffs allege that they paid Olesh Remodeling $95,000.00, which it failed to use to purchase materials to complete construction or to pay subcontractors working on the project.  Plaintiffs also named as defendants Michael Olesh (“Olesh”), the now deceased owner of Olesh Remodeling, and his wife and personal representative, Kimberly Olesh.  Defendants filed Preliminary Objections to the Complaint asserting that Plaintiffs failed to establish that Olesh was a party to the contract for the construction of the addition and to provide an explanation of the damages alleged, Plaintiffs cannot establish their Unjust Enrichment claim because they allege the presence of a contract and Plaintiffs failed to plead a cause of action in Fraud with the necessary specificity.  

1.  When ruling upon preliminary objections, the court must accept as true all well pleaded and material allegations and any reasonable inferences therefrom. 

2.  A preliminary objection challenging the legal sufficiency of a pleading may be sustained only where the complaint clearly is insufficient to establish a pleader’s right to relief. 

3.  Any doubt should be resolved in favor of overruling the challenge to legal sufficiency of a pleading.

4.  To establish a cause of action in Breach of Contract, a party must establish the following:  (1) the existence of a contract, including its essential terms; (2) a breach of a duty improved by the contract; and (3) resultant damages.   

5.  Unjust Enrichment is an equitable doctrine where a party retains a benefit conferred by another without offering compensation in circumstances where compensation reasonably is expected and for which the beneficiary must make restitution. 

6.  A plaintiff may plead a Breach of Contract cause of action in the alternative with a cause of action in Unjust Enrichment. 

7.  In asserting a claim for Fraud, the pleadings adequately must explain the nature of the claim to the opposing party to permit that party to prepare a dense and to convince the court that the averments are not mere subterfuge. 

8.  Fraud in the Inducement occurs when a party signs the document they intended to sign and the assent was induced by a material misrepresentation about facts external to the document.

9.  Where Plaintiffs will have to be afforded the opportunity to discern evidence in discovery to support a claim that Olesh may be held personally liable for the agreement, Plaintiffs will not be prevented from investigating that issue at this stage of the proceedings.

10.  In light of the fact that Plaintiffs assert that they paid $95,000.00 to Olesh Remodeling that was not used for the project, the Complaint sufficiently asserts the genesis of the alleged damages.

11.  Since Plaintiffs are allowed to plead a claim in Unjust Enrichment in the alternative to a Breach of Contract claim, Plaintiffs may proceed through discovery in support of its claim in Unjust Enrichment.

12.  Where Plaintiffs assert that Olesh Remodeling represented that the funds paid would be used to purchase materials and to pay contractors for the project, the representations were material to their decision to sign the agreement and paying $95,000.00 in funds to Olesh Remodeling and they sustained loss of the funds without receiving what was agreed, Plaintiffs’ claim for Fraud is factually and legally sufficient as pleaded.

L.C.C.C.P. No. 2023-01507, Opinion by Donna Long Brightbill, Judge, July 29, 2024.

IN THE COURT OF COMMON PLEAS OF LEBANON COUNTY, PENNSYLVANIA

CIVIL ACTION – LAW

STEVEN PAVLESICH and CHARITY         :

PAVLESICH,                                                                 :

                                                                                         :

Plaintiffs                                                             : No. 2023-01507

                                                                                         :

                          v.                                                            : 

     :  

MIKE OLESH REMODELING, LLC,          :

and KIMBERLY OLESH, PERSONAL        :

REPRESENTATIVE OF MICHAEL OLESH,  :

                                                                                         :

DEFENDANTS                                                 :

                                                                                         : 

ORDER OF COURT

AND NOW, this 29^th day of July 2024, upon consideration of the Preliminary Objections filed by DEFENDANTS and in accordance with the attached Opinion, the Order of this Court is as follows:

1. The Preliminary Objection filed by the Defendants, pursuant to Pa.R.C.P. 1028(a)(4), based upon the legal sufficiency of Count One of Plaintiff’s Claim of Breach of Contract, is DENIED.
2. Two of Plaintiff’s Claim of Unjust Enrichment, pursuant to Pa.R.C.P. 1028(a)(4), based upon the legal sufficiency of Count Two of Plaintiff’s Claim of Unjust Enrichment, is DENIED.
3. The Preliminary Objection filed by the Defendants, pursuant to Pa.R.C.P. 1028(a)(4) and Pa.R.C.P. 1019, based upon the legal and factual sufficiency of Count Three of Plaintiff’s Claim of Fraud is DENIED.
4. The above-referenced matter shall proceed to the discovery phase of the litigation.

BY THE COURT:

                                                                                    __________________________J.

                                                                                    DONNA LONG BRIGHTBILL

DLB/tjb

cc:        Steven and Charity Pavlesich// 368 Rexmont Road, Lebanon PA 17042

Bret M. Weist, Esq.// 525 South Eighth Street, Lebanon PA 17042

            Court Administration

IN THE COURT OF COMMON PLEAS LEBANON COUNTY

PENNSYLVANIA

CIVIL ACTION-LAW

STEVEN PAVLESICH and CHARITY         :

PAVLESICH,                                                                 :

                                                                                         :

Plaintiffs                                                             : No. 2023-01507

                                                                                         :

                          v.                                                            : 

     :  

MIKE OLESH REMODELING, LLC,          :

and KIMBERLY OLESH, PERSONAL        :

REPRESENTATIVE OF MICHAEL OLESH,  :

                                                                                         :

DEFENDANTS                                                 :

                                                                                         : 

APPEARANCES

Pro se              For Plaintiffs 

Bret M. Weist, Esq.                                                  For Defendants

OPINION BY LONG BRIGHTBILL, J., July 29, 2024

            This matter arises from a construction contract between Steven and Charity Pavlesich, husband and wife (hereafter “PLAINTIFFS”), and Mike Olesh Remodeling, LLC (hereafter “OLESH REMODELING”). PLAINTIFFS also named Michael Olesh (MICHAEL), the now deceased owner of OLESH REMODELING, and his wife and personal representative, Kimberly Olesh (hereafter “KIMBERLY”) as Defendants (hereafter collectively as “DEFENDANTS”).

PLAINTIFFS elected to proceed pro se and filed a Complaint against all DEFENDANTS for claims of: Count I- Breach of Contract; Count II- Unjust Enrichment; Count III- Fraud; Count IV- Violation of the Home Improvement Consumer Protection Act (HICPA); and Count V-Violation of the Unfair Trade Protection and Consumer Protection Law (UTPCPL).  PLAINTIFFS subsequently filed a Praecipe to Withdraw Without Prejudice Counts III-V against MICHAEL and KIMBERLY.  Defense Counsel represents all of the DEFENDANTS and filed Preliminary Objections to Counts I-III.  We issue this Opinion in support of our Order to reject the Preliminary Objections of DEFENDANTS and send the above-referenced matter forward to the discovery phase of litigation. 

I.     FACTUAL AND PROCEDURAL BACKGROUND

            According to the Complaint, filed on November 16, 2023, PLAINTIFFS contracted with OLESH REMODELING to build an addition to their home, located at 386 Rexmont Road in Lebanon. PLAINTIFFS alleged that on September 27, 2022, they entered into an Independent Contractor Agreement (hereafter “AGREEMENT”) (Ex. A) and agreed to pay OLESH REMODELING One-Hundred Seventy-Five Thousand Dollars ($175,000.00) in exchange for construction of a 2-story addition to the residence. PLAINTIFFS asserted that in reliance upon the representation of DEFENDANTS, they secured a personal loan from Jonestown Bank in the amount of One-Hundred and Twenty Thousand Dollars ($120,000.00).

PLAINTIFFS alleged that they paid DEFENDANTS Forty Thousand Dollars ($40,000.00) on November 9, 2022, and Thirty Thousand Dollars ($30,000.00) on April 13, 2023, as draws from their bank loan.  In addition, PLAINTIFFS claimed that they paid DEFENDANTS Twenty-Five Thousand Dollars ($25,000.00) from their personal bank account. PLAINTIFFS stated that DEFENDANTS failed to use the funds to purchase materials necessary to complete the construction and did not pay subcontractors working on the project. PLAINTIFFS seek Ninety-Five Thousand Dollars ($95,000.00) in damages^[1], as well as attorney fees and costs.

            DEFENDANTS filed Preliminary Objections on December 6, 2023.  On December 29, 2023, PLAINTIFFS filed their First Amended Complaint.  DEFENDANTS filed Preliminary Objections to the First Amended Complaint on January 16, 2024.  DEFENDANTS raised the following issues:

1.  WHETHER COUNT I OF PLAINTIFFS’ AMENDED COMPLAINT SHOULD BE DISMISSED FOR LEGAL INSUFFICIENCY (DEMURRER)?
2. WHETHER COUNT II OF PLAINTIFFS’ AMENDED COMPLAINT SHOULD BE DISMISSED FOR LEGAL INSUFFICIENCY (DEMURRER)?
3. WHETHER COUNT III OF PLAINTIFFS’ AMENDED COMPLAINT SHOULD BE DISMISSED FOR FAILING TO CONFORM TO LAW OR RULE OF COURT, INSUFFICIENT SPECIFICITY, AND LEGAL INSUFFICIENCY (DEMURRER)?

The matter was set for the June 2024 Term Argument Court, and the parties opted for a decision on the briefs. DEFENDANTS submitted a brief, but PLAINTIFFS did not. The issues raised by DEFENDANTS’ Preliminary Objections to the First Amended Complaint are now before this Court for disposition.

II.     DISCUSSION AND LEGAL PRINCIPLES

            We will begin our discussion by setting forth the relevant legal principles at issue in this matter.  We will then undertake an analysis of the facts of this case as they pertain to the legal principles posited.

A.     STANDARD OF REVIEW FOR PRELIMINARY OBJECTIONS

When reviewing the preliminary objections, the Court, “must accept as true all well pleaded material allegations and any reasonable inferences therefrom” Bayada Nurses, Inc. v. Dep’t. of Labor and Industry, 8 A.3d 866, 884 (Pa.2010).  The question is whether, on the facts presented, the law says with certainty that no recovery is possible.  Werner v. Plater-Zyberk, 799 A.2d 766, 783 (Pa. Super 2002).  A demurrer admits that well-pleaded facts and reasonable inferences in the claim are true, but not the conclusions of the law.  Gekas v. Shapp, 364 A.2d 691, 693 (Pa. 1976). 

Preliminary Objections pursuant to Pa.R.C.P. 1028(a)(4) (legal insufficiency of a pleading) can be sustained only where the complaint is “clearly insufficient” to establish a pleader’s right of relief.  Lumax Industries, Inc. v. Aultman, 669 A.2d 893 (Pa. 1995).  Stated differently, a demurrer should be sustained only in cases where the plaintiff has clearly failed to state a claim on which relief can be granted.  Pittsburgh National Bank v. Perr, 637 A.2d 334 (Pa. Super. 1994).  Any doubt that exists should be resolved in favor of overruling the demurrer.  Hunter v. Port Authority of Allegheny County, 419 A.2d 631, 637 (Pa. Super. 1980).

B.     BREACH OF CONTRACT

To prove a breach of contract, a party must establish the following: “(1) the existence of a contract, including its essential terms, (2) a breach of duty imposed by the contract, and (3) resultant damages.” McCausland v. Wagner, 78 A.3d 1093, 1101 (Pa. Super. 2013).  If a contract is clear and unequivocal, its meaning must be determined by its contents alone. N.E.A. Cross, Inc. Nat’l Fuel Gas Supply Corp., 600 A.2d 228, 229 (Pa.Super. 1991), appeal denied, 608 A.2d 31 (Pa. 1992). 

“The paramount goal of contractual interpretation is to ascertain and give effect to the intent of the parties. In determining the intent of parties to a written agreement, the court looks to what they have clearly expressed, for the law does not assume that the language of the contract was chosen carelessly.” Id. (quoting PBS Coals, Inc. v. Burnham Coal Co., 558 A.2d 562 (Pa.Super. 1989), appeal denied,  568 A.2d 1248 (Pa. 1989)).

C.     UNJUST ENRICHMENT

Unjust enrichment is an equitable doctrine. Styer v. Hugo, 619 A.2d 347 (Pa.Super. 1993), aff’d,  637 A.2d 276 (Pa. 1994). Unjust enrichment is defined as the retention of a benefit conferred by another, without offering compensation, in circumstances where compensation is reasonably expected, and for which the beneficiary must make restitution.  Commonwealth by Shapiro v. Golden Gate National Senior Care, LLC., 194 A.3d 1010, 1019 (Pa. 2018).  The word “benefit” in this context means any form of advantage.  Zvonik v. Zvonik, 435 A.2d 1236, 1241 (Pa.Super. 1981).

Where unjust enrichment is found, the law implies a contract, which requires the defendant to pay to the plaintiff the value of the benefit conferred.  Schenck v. K.E. David, Ltd., 666 A.2d 327 (Pa.Super. 1995).  An unjust enrichment claim is not based upon the existence of contract, but instead is an alternative to a contract claim, it is a quasi-contract claim.  A quasi-contract imposes a duty, in spite of the absence of an agreement, when one party receives unjust enrichment at the expense of another.  Vacula v. Chapman, 230 A.3d 431, 437 (Pa.Super. 2020). A plaintiff may plead breach of contract, in the alternative with a cause of action under a theory of unjust enrichment. Lugo v. Farmer’s Pride, Inc. 967 A.2d 963 (Pa.Super. 2009); Pa.R.C.P. 1020(c).

D.     FRAUD

Averments of fraud are meaningless unless sufficient facts are set forth which will permit an inference that the claim is not without foundation. The pleadings must adequately explain the nature of the claim to the opposing party so as to permit him/her to prepare a defense and they must be sufficient to convince the court that the averments are not merely subterfuge.  Presbyterian Medical Center v. Budd, 832 A.2d 1066, (Pa.Super. 2003); Pa.R.C.P.1019.

Pennsylvania law recognizes two types of fraud claims that can be brought in relation to a contract: fraud in the inducement and fraud in the execution. Fraud in the inducement occurs when someone signs the document they intended to sign, but their assent was induced by a material misrepresentation about facts external to that document.  MZM Construction Company, Inc. v. New Jersey Building Laborers Statewide Benefit Funds, 974 F.3d 386, 405 (3d Cir. 2020).  The elements of fraud in the inducement are: (1) a representation; (2) which is material to the transaction at hand; (3) made falsely, with knowledge of its falsity or recklessness as to whether it is true or false; (4) with the intent of misleading another into relying on it; (5) justifiable reliance on the misrepresentation (6) the resulting injury that was proximately caused by the reliance. Eigen v. Textron Lycoming Reciprocating Engine Division, 874 A.2d 1179, 1185 (Pa. Super 2005). 

Fraud in the execution occurs where a party alleges that it was mistaken as to the terms and the actual contents of the agreement it executed due to the other’s fraud.  A party alleging fraud in the execution must establish justifiable reliance on the allegedly fraudulent statement or omission. Axalta Coating Systems, LLC v. Midwest II, Inc., 217 F.Supp. 3d (E.D. Pa. 2016).

When a contract is induced by fraud, the injured party has a choice of remedies; the party may either rescind the contract or affirm it and maintain an action in deceit for damages. Mellon Bank Corp. v. First Union Real Estate Equity and Mortg. Investments, 971 F.2d 1399, (3^rd Cir. 1991)(applying Pennsylvania Law).  Fraud in the execution renders an agreement void ab initio. Axalta at 821.

III.     ANALYSIS

            DEFENDANTS seek a dismissal of all Breach of Contract claims in the Complaint.  DEFENDANTS aver that PLAINTIFFS have not established that MICHAEL was a party to the AGREEMENT. MICHAEL signed the AGREEMENT, “on behalf of” OLESH REMODELING. PLAINTIFFS’ argument that MICHAEL was a party to the AGREEMENT is that he was the “single member” of OLESH REMODELING. PLAINTIFFS will need to discern evidence in discovery to support a claim that MICHAEL should be held personally liable for the AGREEMENT between them and OLESH REMODELING.  At this point in time, we will not prevent PLAINTIFFS from investigating this issue. 

DEFENDANTS also assert that PLAINTIFFS cause of action for Breach of Contract is deficient because they failed to provide an explanation of the alleged damages.  We disagree.  It is very clear to this Court that PLAINTIFFS posited that they are owed $95,000.00 based upon money that they withdrew from Jonestown Bank and gave to DEFENDANTS as part of the AGREEMENT, and money that they gave DEFENDANTS from their own bank account^[2].  The Court denies DEFENDANTS’ request to dismiss Count I of Breach of Contract.

It is hard to discern if DEFENDANTS are requesting the Unjust Enrichment claim to be dismissed just against MICHAEL or against all of the DEFENDANTS.  DEFENDANTS allege that PLAINTIFFS failed to demonstrate how MICHAEL has any connection to an unjust enrichment claim.  They also insist that the unjust enrichment action is contrary to PLAINTIFFS’ own Ex. A.  Again, this Court will expect PLAINTIFFS  to present evidence after discovery that shows how MICHAEL was personally enriched through the AGREEMENT.  As discussed above, PLAINTIFFS are allowed to plead an unjust enrichment claim, in the alternative to their breach of contract claim.  We deny DEFENDANTS’ motion to dismiss Count II of Unjust Enrichment.

As noted above, PLAINTIFFS withdrew the claim of fraud against MICHAEL.  DEFENDANTS argue that PLAINTIFFS failed to plead fraud with specificity as it pertains to OLESH REMODELING.  PLAINTIFFS appear to claim fraud in the inducement.  They allege that DEFENDANTS represented that the funds that PLAINTIFFS paid them would be used to purchase materials, pay contractors, and complete construction on the project.  PLAINTIFFS stated that the representations were material to them moving forward, and they relied on those assurances in securing the loan from the bank, resulting in over $95,000.00 in damages to PLAINTIFFS.  The Court finds that PLAINTIFFS’ claim of Fraud is factually and legally sufficiently pleaded.  The DEFENDANTS’ Preliminary Objection to Count III of Fraud is rejected.

IV.     CONCLUSION

The Defendants’ Preliminary Objections are denied.  The above-referenced matter shall proceed to the discovery phase of litigation, where all parties can further flesh out their arguments on Counts I-III. As part of that discovery process the Court anticipates that it will become clear if MICHAEL and his personal representative KIMBERLY should be included as parties in this suit, or if PLAINTIFFS should only be allowed to proceed against OLESH REMODELING.

            An Order to accomplish our decision will be entered today’s date.

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[1] They claim that they are entitled to treble damages under both HICPA and UTPCPL.

[2] In addition, PLAINTIFFS are seeking attorney fees and costs.