PA Superior Court Upholds Personal Liability Judgment Against Homebuilder

June 2012Articles In the Zone

In an opinion filed on March 6, 2012, the Pennsylvania Superior Court decided the appeal of Bennett, et al. v. A. T. Masterpiece Homes, et al., No. 1302 MDA 2011. At issue in Bennett was whether a homebuilder could be found personally liable for breach of contract, breach of warranty and violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law (UTPCPL) resulting from defective construction work.

The Bennetts & the Hoefferles contracted with A.T. Masterpiece Homes for the construction of their respective residences in a York County, PA development. During construction of the homes, both couples noticed numerous building deficiencies. One of the named defendants was the managing member of A.T. Masterpiece Homes, who was the couples’ primary contact during the construction process. He specifically and directly assured the couples regarding the quality of the work on their homes, often in the form of personal guarantees. Once construction finished, the Bennetts and the Hoefferles discovered their newly constructed homes were in various states of disrepair and structural failure.

At the lower court, the jury found A.T. Masterpiece and the managing member individually liable for breach of contract, breach of warranty and violations of the UTPCPL. Further, the jury concluded that the managing member’s representations and guarantees regarding the homes exposed him to personal liability. The case then moved to the damages phase, where the jury found the managing member liable to the Hoefferles for $26,000 and to the Bennetts for $85,000. The court doubled the damages, pursuant to the UTPCPL and assessed counsel fees of $3,250. As a result, the total judgment against the managing member was $173,250 for the Bennetts and $55,250 for the Hoefferles.

The managing member argued he should be shielded from personal liability because he was at all times acting only as an agent on behalf of a limited liability corporation, A.T. Masterpiece, and that any statements attributed to him (such as “I will take care of it” or “I guarantee it”) were simply figures of speech and did not amount to an express assumption of personal liability.

Nevertheless, the court found that a person acting as an agent may assume personal liability on a corporate contract where he executes a contract in his own name or voluntarily undertakes a personal responsibility. Although the couples officially contracted with A.T. Masterpiece, the managing member voluntarily assumed personal liability on the building contract when he guaranteed the final quality of the home. His statements were intended to calm fears about the building deficiencies and reasonably led the couples to believe he would personally ensure the completed home was built properly.