Pennsylvania Supreme Court Holds “Pass-Through” Clause Ineffective to Impose Indemnity Obligation on Subcontractor

Bernotas v. Super Fresh Food Markets, Inc.
863 A.2d 478, 2004 Pa. LEXIS 3238 (Dec. 22, 2004)

Barbara Bernotas sustained serious injuries when she fell into a hole at a construction area inside a Super Fresh store. Bernotas sued Super Fresh for her injuries. Super Fresh filed cross-claims against the general contractor, and its electrical subcontractor, seeking indemnity for any damages under those parties’ contracts. Bernotas settled for $200,000, with each defendant contributing 1/3 of the amount. The trial court then held a bench trial in which Super Fresh sought indemnity from the general contractor pursuant to the prime contract, and the general contractor in turn sought indemnity from its electrical subcontractor pursuant to their subcontract. The Supreme Court’s opinion addresses only the scope of the subcontractor’s indemnity obligations to the general contractor. Continue reading “Pennsylvania Supreme Court Holds “Pass-Through” Clause Ineffective to Impose Indemnity Obligation on Subcontractor”

Contract Clause Providing Unilateral Reservation of Right to Litigate Claims is Enforceable

Montgomery v. Decision One Financial Network
2005 U.S. Dist. LEXIS 3031 (E.D. Pa. Mar. 1, 2005)

A borrower brought an action against her lender in connection with the lender’s institution of foreclosure proceedings. The lender moved to dismiss the complaint and sought an order compelling plaintiff’s compliance with the claims resolution provisions contained in the parties’ arbitration agreement. Relying upon the Pennsylvania Superior Court’s decision in Lytle v. CitiFinancial Services, Inc., 2002 Pa. Super. 327, 810 A.2d 643 (2002), the borrower argued in opposition that the arbitration agreement was presumptively unconscionable because it excepted from the scope of arbitrable disputes certain remedies available only to the lender, such as foreclosure. In the Lytle case, the Pennsylvania Superior Court several years earlier declared that “under Pennsylvania law, the reservation by [the lender] of access to the courts for itself to the exclusion of the consumer creates a presumption of unconscionability.” Continue reading “Contract Clause Providing Unilateral Reservation of Right to Litigate Claims is Enforceable”

Pennsylvania Supreme Court Holds That a Contractor May Sue an Architect for Economic Losses Caused By Defective Design, Notwithstanding Lack of Contractual Relationship Between the Architect and Contractor

Bilt-Rite Contractors, Inc. v. The Architectural Studio
2005 Pa. LEXIS 99 (Pa. January 19, 2005)

The East Penn School District entered into a contract with The Architectural Studio (“TAS”), pursuant to which TAS agreed to prepare plans, drawings and specifications (collectively, “Design Documents”) for the construction of a new school. The Design Documents were submitted to contractors for the purpose of preparing bids to perform the general construction of the school. Bilt-Rite submitted a bid for the general construction work, and was awarded the contract as the lowest responsive, responsible bidder. The contract between Bilt-Rite and the School District specifically referred to and incorporated by reference, TAS’s Design Documents. Continue reading “Pennsylvania Supreme Court Holds That a Contractor May Sue an Architect for Economic Losses Caused By Defective Design, Notwithstanding Lack of Contractual Relationship Between the Architect and Contractor”