J. A11017/14

NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P. 65.37

ROBERT J. BARKER AND DIANE B.   :            IN THE SUPERIOR COURT OF
BARKER, HUSBAND AND WIFE,       :                  PENNSYLVANIA
                                :
                   Appellants   :
                                :
               v.               :
                                :                No. 1384 WDA 2013
DAHLKEMPER LANDSCAPE ARCHITECTS :
& CONTRACTORS, INC.             :


                   Appeal from the Order, July 25, 2013,
               in the Court of Common Pleas of Erie County
                      Civil Division at No. 11443-2012


BEFORE: GANTMAN, P.J., FORD ELLIOTT, P.J.E., AND OLSON, J.


MEMORANDUM BY FORD ELLIOTT, P.J.E.: FILED OCTOBER 20, 2014

     Appellants, Robert J. Barker and Diane B. Barker (“the Barkers”),

appeal from the order of July 25, 2013, dismissing their negligence claim as

barred by the “as is” clause contained in Paragraph 28(B) of the Agreement

for Sale of Real Estate (“the Agreement”).   The Barkers also appealed the

December 4, 2012 order ruling that they failed to state a viable claim for

breach of an implied warranty. This court dismissed the appeal at No. 1399

WDA 2013 as duplicative and directed that all properly preserved issues be

raised in the appeal at No. 1384 WDA 2013. After careful review, we affirm.

                 The subject matter of this case is a collapsed
           retaining wall. [The Barkers] are the current owners
           of property in Fairview, Pennsylvania located on a
           bluff on the shore of Lake Erie.       In 2007, the
           previous owners of the property contracted
J. A11017/14


            [Dahlkemper Landscape Architects & Contractors,
            Inc. (“Dahlkemper”)] to design and construct a
            retaining wall on the bluff. In 2009, [the Barkers]
            purchased the property from the prior owners, and in
            May 2011, the retaining wall collapsed, causing land
            and foliage to subside along with it. Thereafter, [the
            Barkers] brought this action against [Dahlkemper],
            alleging negligence and breach of implied warranty.

Trial court opinion, 12/4/12 at 1 (citations to the complaint omitted).

      On December 4, 2012, the trial court granted Dahlkemper’s motion for

judgment on the pleadings with respect to the implied warranty claim, on

the basis of lack of privity between the parties. The Barkers, the subsequent

owners of the property, were not in privity of contract with the contractor,

Dahlkemper. The trial court also noted that all of the cases relied upon by

the Barkers pertained to houses, not retaining walls. (Id. at 3.) However,

the trial court denied Dahlkemper’s motion with regard to the Barkers’

negligence claim.

      Subsequently, on July 25, 2013, the trial court granted Dahlkemper’s

summary judgment motion and dismissed the remaining negligence claim,

finding that it was barred by Paragraph 28(B) of the                 Agreement.

Paragraph 28(B) provides,

            Unless otherwise stated in this Agreement, Buyer
            has inspected the Property (including fixtures and
            any personal property specifically listed herein)
            before signing this Agreement or has waived the
            right to do so, and agrees to purchase the property
            IN ITS PRESENT CONDITION. Buyer acknowledges
            that Brokers, their licensees, employees, officers, or
            partners have not made an independent examination
            or determination of the structural soundness of the


                                     -2-
J. A11017/14


              Property, the age or condition of the components,
              environmental conditions, the permitted uses or of
              conditions existing in the locale where the Property is
              situated; nor have they made a mechanical
              inspection of any of the systems contained therein.

(Emphasis in original.)

         The trial court found that this “as is” clause operated to bar the

Barkers’ negligence claim, where Paragraph 28(B) was unequivocal and

unambiguous in stating that they either inspected the property or waived

their right to do so, and purchased the property “in its present condition.”

(Trial court opinion, 7/25/13 at 4.)      The trial court determined that this

language clearly demonstrated the parties’ intent that the Barkers purchase

the property “as is” and release any parties responsible for defects therein

from liability. (Id.) This timely appeal followed.

         First, we will address the implied warranty claim.      The trial court

granted Dahlkemper’s motion for judgment on the pleadings on this issue,

finding that the implied warranty of habitability does not apply to retaining

walls.

              Our scope of review on an appeal from the grant of
              judgment on the pleadings is plenary. Meehan v.
              Archdiocese of Philadelphia, 870 A.2d 912, 918
              (2005).     Entry of judgment on the pleadings is
              permitted under Pennsylvania Rule of Civil Procedure
              1034, which provides that “after the pleadings are
              closed, but within such time as not to unreasonably
              delay trial, any party may move for judgment on the
              pleadings.”     Pa.R.C.P. 1034(a).    A motion for
              judgment on the pleadings is similar to a demurrer.
              Citicorp North America, Inc. v. Thornton, 707
              A.2d 536, 538 (Pa.Super.1998). It may be entered


                                       -3-
J. A11017/14


          when there are no disputed issues of fact and the
          moving party is entitled to judgment as a matter of
          law. Id. In determining if there is a dispute as to
          facts, the court must confine its consideration to the
          pleadings and relevant documents. Id. On appeal,
          we accept as true all well-pleaded allegations in the
          complaint. Meehan, supra.

                On appeal, our task is to determine whether
          the trial court’s ruling was based on a clear error of
          law or whether there were facts disclosed by the
          pleadings which should properly be tried before a
          jury or by a judge sitting without a jury. Citicorp,
          supra.

               Neither party can be deemed to have
               admitted either conclusions of law or
               unjustified inferences.      Moreover, in
               conducting its inquiry, the court should
               confine itself to the pleadings themselves
               and any documents or exhibits properly
               attached to them. It may not consider
               inadmissible evidence in determining a
               motion for judgment on the pleadings.
               Only when the moving party’s case is
               clear and free from doubt such that a
               trial would prove fruitless will an
               appellate court affirm a motion for
               judgment on the pleadings.

          Kelly v. Nationwide Insurance Company, 414
          Pa.Super. 6, 606 A.2d 470, 471-72 (1992)
          (quotations and citations omitted).

Consolidation Coal Co. v. White, 875 A.2d 318, 325-326 (Pa.Super.

2005).

               Our Supreme Court first recognized the implied
          warranty of habitability in Elderkin v. Gaster, 447
          Pa. 118, 288 A.2d 771 (1972). In Elderkin, our
          Supreme Court recognized that the implied
          warranties   of    habitability    and   reasonable
          workmanship were necessary to equalize the


                                  -4-
J. A11017/14


            disparate positions of the builder-vendor and the
            average home purchaser by safeguarding the
            reasonable expectations of the purchaser who is
            compelled to depend upon the builder-vendor’s
            greater manufacturing and marketing expertise.

Conway v. The Cutler Group, Inc., 57 A.3d 155, 158 (Pa.Super. 2012),

reversed, 2014 WL 4064261 (Pa. filed August 18, 2014), citing Elderkin,

288 A.2d at 776-777 (additional citation omitted). The Barkers rely on this

court’s decision in Conway, in which we held that the implied warranty of

habitability extends to a second or subsequent purchaser of a home, stating

that, “A second or subsequent purchaser is entitled to the same assurances

as the original purchaser that the home the builder has constructed is

habitable for human living.” Conway, 57 A.3d at 161. This court reasoned

that, “the risk of latent defects affecting habitability in the home that do not

materialize for years after construction properly rests with the party who

built the home, irrespective of whether the homeowner is the original

buyer.” Id. at 162 (footnote omitted).

      Recently, however, our supreme court reversed, declining to eliminate

the requirement for contractual privity in a claim for breach of the implied

warranty of habitability.        Our supreme court noted that the holding in

Elderkin   was   rooted     in    the   existence   of   a   contract   between   the

builder-vendor of a residence and the purchaser-resident:                  “Thus, in

Elderkin, we adopted the doctrine of implied warranty of habitability for a

newly constructed residence under circumstances where the parties to the



                                         -5-
J. A11017/14


sale of the residence, to wit, the builder-vendor and the purchaser-resident,

were in privity of contract.”     Conway, 2014 WL 4064261 at *2.           The

Conway court concluded that, “the question of whether and/or under what

circumstances to extend an implied warranty of habitability to subsequent

purchasers of a newly constructed residence is a matter of public policy

properly left to the General Assembly.” Id. at *5. Accordingly, our supreme

court held that an action for breach of the implied warranty requires

contractual privity between the parties. Id.

      Here,   as   in   Conway,   the    Barkers   are   second   or subsequent

purchasers.    As such, they are not in contractual privity with Dahlkemper

and cannot, as a matter of law, recover on a claim for breach of the implied

warranty of habitability, a point they now concede in light of the Conway

decision.     (See September 2, 2014 letter from Barkers’ counsel.)1

Therefore, we need not address whether the implied warranty of habitability

applies to retaining walls.       The trial court did not err in granting

Dahlkemper’s motion for judgment on the pleadings with regard to the

Barkers’ claim for breach of an implied warranty of habitability.

      Next, we address the Barkers’ negligence claim. As stated above, this

claim was dismissed on Dahlkemper’s motion for summary judgment on the

basis of Paragraph 28(B)’s “as is” provision.


1
  We appreciate that counsel for the Barkers filed a post-submission
communication informing this court of our supreme court’s decision in
Conway.


                                        -6-
J. A11017/14


            Summary judgment may be granted when the
            pleadings, depositions, answers to interrogatories,
            and admissions on file, together with the affidavits, if
            any, show that there is no genuine issue as to any
            material fact and that the moving party is entitled to
            judgment as a matter of law. Pa.R.C.P. 1035(b),
            42 Pa.C.S.A.      When considering a motion for
            summary judgment, the trial court must examine the
            record in the light most favorable to the non-moving
            party, accept as true all well-pleaded facts in the
            non-moving party’s pleadings, and give him the
            benefit of all reasonable inferences drawn therefrom.
            Dibble v. Security of America Life Ins., 404
            Pa.Super. 205, 590 A.2d 352 (1991); Lower Lake
            Dock Co. v. Messinger Bearing Corp., 395
            Pa.Super. 456, 577 A.2d 631 (1990). Summary
            judgment should be granted only in cases that are
            free and clear of doubt. Marks v. Tasman, 527 Pa.
            132, 589 A.2d 205 (1991). We will overturn a trial
            court’s entry of summary judgment only if we find an
            error of law or clear abuse of discretion. Lower
            Lake Dock Co., supra.

DeWeese v. Anchor Hocking Consumer and Indus. Products Group,

628 A.2d 421, 422-423 (Pa.Super. 1993).

      In this case, the Barkers agreed to purchase the property from Jason

and Olivia Holland (“the Hollands”) “in its present condition,” i.e., “as is.”

We agree with the trial court that the clause is clear and unambiguous. In

PBS Coals, Inc. v. Burnham Coal Co., 558 A.2d 562 (Pa.Super. 1989),

appeal denied, 568 A.2d 1248 (Pa. 1989), this court examined a similar

provision in the context of a transfer of real property interests:

            Here, the agreement contained a term which has
            common meaning; when something is accepted
            ‘as is’ the buyer is put on notice that there may be
            liabilities attendant to the purchase. The warranties
            which may otherwise be implied by law do not attach


                                      -7-
J. A11017/14


            when the buyer agrees to accept the goods in the
            condition in which they are found.

Id. at 564. “The fact that the ‘as is’ clause was applied to a transfer of real

property interests as opposed to the sale of goods is not a sufficient basis for

permitting PBS to plead ignorance of the meaning of that term.” Id. at 564-

565.

       Similarly, here, the Barkers agreed to buy the property “in its present

condition” and acknowledged that they had either inspected the property or

waived their right to do so.       Therefore, the trial court did not err in

concluding that the Barkers had agreed to release any and all parties

responsible for defects on the property from future liability.

       The Barkers argue that Dahlkemper was not an intended third-party

beneficiary of the Agreement and/or that the Agreement merged into the

deed and did not survive closing.2 “In order for a third party beneficiary to

have standing to recover on a contract, both contracting parties must have

expressed an intention that the third party be a beneficiary, and that

intention   must   have   affirmatively   appeared   in   the    contract   itself.”

Kirschner v. K & L Gates LLP, 46 A.3d 737, 762 (Pa.Super. 2012), appeal

denied, 65 A.3d 414 (Pa. 2013), quoting Scarpitti v. Weborg, 609 A.2d

147, 149 (Pa. 1992).



2
   Dahlkemper complains that these arguments were not preserved in the
trial court.   However, they were raised in the Barkers’ motion for
reconsideration. (Docket #39.8).


                                     -8-
J. A11017/14


           In [Guy v. Liederbach, 459 A.2d 744 (Pa. 1983)],
           our Supreme Court established a “narrow class of
           third party beneficiaries.” Scarpitti, 609 A.2d at
           151. This narrow exception established a “restricted
           cause of action” for third party beneficiaries by
           adopting Section 302 of the Restatement (Second) of
           Contracts (1979).      Scarpitti, 609 A.2d at 151.
           Section 302 involves a two-part test to determine
           whether one is a third party beneficiary to a
           contract, which requires that (1) the recognition of
           the beneficiary’s right must be appropriate to
           effectuate the intention of the parties, and (2) the
           performance must satisfy an obligation of the
           promisee to pay money to the beneficiary or the
           circumstances indicate that the promisee intends to
           give the beneficiary the benefit of the promised
           performance.      Guy, 459 A.2d at 751 (quotation
           marks omitted); accord Burks v. Fed. Ins. Co., 883
           A.2d 1086, 1088 (Pa.Super. 2005).         Thus, even
           when the contract does not expressly state that the
           third party is intended to be a beneficiary, the party
           may still be a third party beneficiary under the
           foregoing test. Burks, 883 A.2d at 1088. “But Guy
           did not alter the requirement that in order for one to
           achieve third party beneficiary status, that party
           must show that both parties to the contract so
           intended, and that such intent was within the parties’
           contemplation at the time the contract was formed.”
           Id.

Id.

      Instantly, the Barkers agreed to waive inspection and purchase the

property “in its present condition.”   This “as is” clause manifested the

parties’ intent that the Barkers release any parties responsible for latent

defects in the property from liability, known or unknown. This would include

the landscape architect responsible for designing and building the retaining




                                   -9-
J. A11017/14


wall, i.e., Dahlkemper.     As such, Dahlkemper was an intended third-party

beneficiary.

      Finally, the Barkers contend that Paragraph 28(B) of the Agreement

merged into the deed upon sale and the parties did not intend that the

release should survive settlement.

               The doctrine of merger provides that as a general
               rule an agreement of sale merges into the deed and
               no recovery may be had based upon an earlier
               agreement. Stoever v. Gowen, 280 Pa. 424, 124
               A. 684 (1924). Elderkin[, supra]. The merger rule
               does not apply where the expressed intention of the
               parties is to the contrary. Carsek Corp. v. Stephen
               Schifter, Inc., 431 Pa. 550, 246 A.2d 365 (1968).
               An agreement of sale is not merged as to matters
               not to be consummated by the deed issued pursuant
               to it and which are collateral to the deed.
               Rappaport v. Savitz, 208 Pa.Super. 175, 220 A.2d
               401 (1966).

Valvano v. Galardi, 526 A.2d 1216, 1220 n.2 (Pa.Super. 1987).

      Obviously, in order for the “as is” provision to be effective, it would

have to survive closing. Furthermore, Dahlkemper was not a party to the

Agreement, and the deed issued from the Hollands to the Barkers has no

bearing on Dahlkemper’s release of liability by the “as is” agreement.

      For these reasons, the trial court did not err in granting summary

judgment for Dahlkemper and dismissing the Barkers’ negligence claim.

      Order affirmed.




                                     - 10 -
J. A11017/14




Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary

Date: 10/20/2014




                          - 11 -
