Lomas v. Kravitz

ROY H. LOMAS, SR., D/B/A ROY LOMAS CARPET CONTRACTOR, Appellee v. JAMES B. KRAVITZ, ANDORRA SPRINGS DEVELOPMENT,INC., CHERRYDALE CONSTRUCTION CO.,EASTERN DEVELOPMENT ENTERPRISES,INC. AND KRAVMAR, INC., Appellants

J-A19008-13

No. 2391 EDA 2011

SUPERIOR COURT OF PENNSYLVANIA

JANUARY 15, 2013

FILED: MARCH 6, 2014

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

Appeal from the Judgment Entered August 16, 2011

In the Court of Common Pleas of Montgomery County

Civil Division at No(s): 00-5929

BEFORE: BENDER, J., GANTMAN, J., and PANELLA, J.

MEMORANDUM BY BENDER, J.

James B. Kravitz, Andorra Springs Development, Inc., Cherrydale Construction Co., Eastern Development Enterprises, Inc. and Kravar, Inc., (the "Kravitz Entities") appeal from the judgment entered on August 16, 2011, in favor of Roy H. Lomas, Sr., d/b/a/ Roy Lomas Carpet Contractor in the amount of $1,688,379.10.¹ We affirm.

The basis for this litigation began in November of 1994, when Cherrydale and Lomas entered into a contract for Lomas to supply and install flooring in homes being built by Cherrydale. One month later, Lomas stopped working due to Cherrydale's failure to pay for completed work, which at that point amounted to $30,913.00. In January of 1995, Lomas demanded submission to binding arbitration, which resulted in an interim award for Lomas. The arbitrators' final award was issued in September of 1998 and held that Lomas was due $200,601.61 in accordance with the Contractor Subcontractor Payment Act ("CSPA"), 73 P.S. § 501 et seq. Judgment was entered on September 10, 1998. After unsuccessfully securing payment on the judgment, Lomas filed the instant action on March 31, 2000, in order to execute on the judgment.

It is now 2013 and the matter is presently before this Court. The time from January 1995 until the present appeal was filed on September 15, 2011, covers a sixteen year period. This length of time, due significantly to the Kravitz Entities' delaying tactics, is almost incomprehensible, considering that this case began over a thirty-thousand dollar debt and has now resulted in a judgment assessing damages for $1,688,379.10.

When the Kravitz Entities filed their Pa.R.A.P. 1925(b) statement of errors complained of on appeal, they set forth 24 separate claims of error. The trial court wrote a fifty-page opinion responding to each claim raised by the Kravitz Entities. Now, in their brief to this Court, the Kravitz Entities raise seven issues, which essentially encompass most of the issues raised in the Rule 1925(b) statement submitted to the trial court. The Kravitz Entities state these issues as follows:

Whether, as a matter of law, the entire bench of the Montgomery County Court of Common Pleas should have been recused, and/or full, complete, and required discovery permitted, because of the irreparable appearance of impropriety created by the ongoing participation and financial interest in the litigation by a sitting member of that Court?

Whether, as a matter of law, the testimony of Appellee's expert should have been discredited and/or stricken, because Appellee's attorneys and a sitting member of the Montgomery County bench improperly altered, edited, and influenced the content of the expert's report[?]

Whether, as a matter of law, the corporate veil can be pierced to find James B. Kravitz individually liable, and all Appellants liable for fraudulent transfers, based on non-cash accounting adjustments and bookkeeping entries made by licensed professional accountants in the ordinary course of business pursuant to generally accepted accounting practices for the lawful purpose of minimizing tax liabilities[?]

Whether, as a matter of law, punitive damages may be awarded where the underlying arbitration award was based on the Contractor and Subcontractor Payment Act, which includes a provision authorizing the award of a statutory punitive penalty[?]

Whether, as a matter of law, punitive damages may be awarded where Appellants' conduct was motivated by generally accepted accounting and tax planning principles and was not outrageous, willful, wanton, or reckless, and where Appellants' conduct indefending the litigation was within its due process rights and was not dilatory, obdurate, and/or vexatious?

Whether, as matter of law, a punitive damages award far exceeding a 1:1 ratio with the compensatory damages award violates Appellants' rights to due process under the United States Constitution?

Whether, as a matter of law, the trial court could award Lomas attorney's fees, interest, and penalties under the Contractor and Subcontractor Payment Act ("CASPA") when Lomas did not bring a claim under CASPA, the trial court was precluded from altering or adjusting the underlying arbitration award which did award certain damages under CASPA, and the trial court misapplied CASPA in its award of damages?

Kravitz Entities brief at 2-3.

We have reviewed the certified record, the briefs of the parties, the applicable law, and Judge Rogers' thorough and well-crafted opinion, dated January 15, 2013. We conclude that Judge Rogers' extensive, well-reasoned opinion accurately disposes of the issues presented by the Kravitz Entities. Accordingly, we adopt his opinion as our own and affirm the judgment in Lomas' favor on that basis. ²

Judgment affirmed

Judge Gantman notes her dissent.

Judgment Entered.

__________

Joseph D. Seletyn, Esq.

Prothonotary

COURT OF COMMON PLEAS OF MONTGOMERY COUNTY,

PENNSYLVANIA

CIVIL ACTION - LAW

ROY H. LOMAS, SR., d/b/a

ROY LOMAS CARPET CONTRACTOR

vs.

JAMES B. KRAVITZ, CHERRYDALE

CONSTRUCTION COMPANY,

ANDORRA SPRINGS DEVELOPMENT,

INC., KRAVMAR, INC., formerly

known as EASTERN DEVELOPMENT

ENTERPRISES, INC.

ROGERS, J.

SUPERIOR COURT

NO. 2391 EDA 2011

LOWER COURT

NO. 2000-05929

OPINION

I. INTRODUCTION

Appellants, James B. Kravitz ("Kravitz" or "Appellant") and Chenydale Construction Company ("Cherrydale"), Andorra Springs Development, Inc. ("Andorra Springs") and Kravmar, Inc., formerly known as Eastern Development Enterprises, Inc. ("Eastern") (collectively referred to as "the Kravitz Entities" or "Appellants"), have appealed to the Superior Court of Pennsylvania ("Superior Court") from this Court's August 4, 2011 Order denying their Motion for Post-Trial Relief,³ following the bifurcatedportions of the trial in this matter on liability and, subsequently, on attorneys' fees and punitive damages. For the reasons set forth below, Judgment should be affirmed.

II. FACTUAL and PROCEDURAL HISTORY

The relevant facts and tortured procedural history underlying this appeal are as follows.⁴ Appellee Roy H. Lomas, Sr., d/b/a Roy Lomas Carpet Contractors ("Lomas" or "Appellee") is a hardworking individual who owns a floor covering company that sells and installs floor coverings in residential communities, especially new construction homes, as well as engages in a retail and cash-and-carry business. (Notes of Testimony ("N.T.") January 16, 2007, at 40). Approximately seventy (70) to seventy-five (75) percent of Appellee's business consists of the installation of new floor covering in new construction houses. (7c?.).

Kravitz was the sole officer, director, and 100% shareholder of a group of companies, collectively known as The Andorra Group. The Andorra Group, which included Cherrydale, Andorra Springs and Eastern, was a fictitious name for all of Kravitz's companies, most of which were inthe home building business during the years 1994-1998, and used by Kravitz to have one name for his developments for public recognition. (N.T. January 16, 2007, at 76-77, 97-98; N.T. January 17, 2007, at 267-68).

Kravitz also owned The Reserve at Lafayette Hill ("The Reserve"), a property in Whitemarsh Township, Montgomery County, which he intended to develop into a residential community. To that end, Kravitz divided The Reserve into six sections and set up Andorra Springs primarily for the puipose of owning the land and developing single-family housing in Sections I, II, and III. (N.T. January 16, 2007, at 68-69; N.T. January 17, 2007, at 270). Kravitz formed Cherrydale in approximately 1989. (Id. at 195).

Eastern served as the management and payroll company for The Andorra Group and other wholly owned Kravitz companies, including Cherrydale and Andorra Springs. (N.T. January 16, 2007, at 72, 97-98; N.T. January 17, .2007, at 267). Eastern employed Steven A. Braun ("Braun") from 1992 through January 1996 as their Chief Financial Officer. (Id. at 266). After Braun left his employment with Eastern and joined an accounting firm, Kravitz retained Braun to prepare the annual tax returns for The Andorra Group. (N.T. January 17, 2007, at 273).

In November 1993, Cherrydale entered into a written contact with Andorra Springs (the "Owner Contractor Agreement" or "Agreement") as the general contractor to build homes in Sections I and II, and III byseparate agreement, and make site improvements to Sections IV, V and VI at The Reserve. (N.T. January 16, 2007, at 63, 65-66; N.T. January 17, 2007, at 195, 270; Plaintiff's Trial Exhibit ("P-") 1 - Owner Contractor Agreement). Kravitz executed the Owner Contractor Agreement on behalf of Cherrydale as well as on behalf of Andorra Springs. (N.T. January 16, 2007, at 63; P-1 - Owner Contractor Agreement).

The Agreement required Cherrydale to build houses for its only customer, Andorra Springs. (P-1 - Owner Contractor Agreement; N.T. January 17, 2007, at 195-197). The Agreement also required Cherrydale to submit payment applications to Andorra Springs to be paid for its work. Those payment vouchers were then submitted to the bank by Andorra Springs. Andorra Springs was to pay Cherrydale within five (5) days of the bank paying the voucher. (P-1 - Owner Contractor Agreement; January 16, 2007, at 125; January 17, 2007, at 197). Although the Owner Contractor Agreement required Andorra Springs to provide progress payments to Cherrydale so that Cherrydale could meet its obligations to pay subcontractors, Andorra Springs did not pay Cherrydale for its work in...