Catawissa Township v. Midland Asphalt Materials, Inc.

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF PENNSYLVANIA

CATAWISSA TOWNSHIP, No. 4:24-CV-00280

Plaintiff, Chief Judge Brann

v.

MIDLAND ASPHALT MATERIALS,

INC. and LIBERTY MUTUAL

INSURANCE COMPANY,

Defendants.

MEMORANDUM OPINION

MAY 14, 2024

I. BACKGROUND

On January 11, 2024, Plaintiff, Catawissa Township, filed a five-count

complaint against Defendants, Midland Asphalt Materials, Inc. (“Midland”) and

Liberty Mutual Insurance Company (“Liberty Mutual”) in the Court of Common

Pleas of Columbia County.1 Defendants then removed this action on the basis of

diversity jurisdiction.2 Midland and Liberty Mutual each filed a Motion to Dismiss

on February 23, 2024 pursuant to Federal Rule of Civil Procedure 12(b)(6) for

failure to state a claim.3 These motions are now ripe for disposition. For the

reasons that follow, Midland’s motion is granted in part and denied in part, and

Liberty Mutual’s motion is granted.

1 See Doc. 1 (Notice of Removal), Ex. A (Columbia Cnty. Compl.).

2 See Doc. 1 (Notice of Removal).

II. DISCUSSION

A. Motion to Dismiss Standard

Under Federal Rule of Civil Procedure 12(b)(6), courts dismiss a complaint,

in whole or in part, if the plaintiff fails to “state a claim upon which relief can be

granted.” Following the landmark decisions of Bell Atlantic Corp. v. Twombly4 and

Ashcroft v. Iqbal,5 “[t]o survive a motion to dismiss, a complaint must contain

sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible

on its face.’”6 The United States Court of Appeals for the Third Circuit has

instructed that “[u]nder the pleading regime established by Twombly and Iqbal, a

court reviewing the sufficiency of a complaint must take three steps”: (1) “take

note of the elements the plaintiff must plead to state a claim”; (2) “identify

allegations that, because they are no more than conclusions, are not entitled to the

assumption of truth”; and (3) “assume the[] veracity” of all “well-pleaded factual

allegations” and then “determine whether they plausibly give rise to an entitlement

to relief.”7

When deciding a motion to dismiss, a court generally considers only the

allegations in the complaint, exhibits attached thereto, and facts of public record.8

4 550 U.S. 544 (2007).

5 556 U.S. 662 (2009).

6 Id. at 678 (quoting Twombly, 550 U.S. at 570).

7 Connelly v. Lane Construction Corp., 809 F.3d 780, 787 (3d Cir. 2016) (internal quotations

and citations omitted).

8 Mayer v. Belichick, 605 F.3d 223, 230 (3d Cir. 2010).

Normally, to consider anything beyond those sources, a motion to dismiss must be

converted to a motion for summary judgment.9 But consideration of materials

outside the complaint is not completely barred on a 12(b)(6) motion. Courts may

consider any documents that are integral or explicitly relied upon in the

complaint.10 “However, before materials outside the record may become the basis

for a dismissal, several conditions must be met.”11 “For example, even if a

document is ‘integral’ to the complaint, it must be clear on the record that no

dispute exists regarding the authenticity or accuracy of the document.”12 It must

also be clear that there exists no material disputed issues of fact regarding the

relevance of the document.13 In this matter, this Court finds that these conditions

have been met and will consequently consider Pennsylvania Department of

Transportation (“PennDOT”) Publication 408.

B. Facts Alleged in the Complaint

1. The Parties

Catawissa Township is a “Second Class Township in Columbia County,

Pennsylvania.”14 Midland is incorporated in New York and maintains its principal

9 See Fed. R. Civ. P. 12(d).

10 Schmidt v. Skolas, 770 F.3d 241, 249 (3d Cir. 2014).

11 Faulkner v. Beer, 463 F.3d 130, 134 (2d Cir. 2006).

12 Id.; see also Kaempe v. Myers, 367 F.3d 958, 965 (D.C. Cir. 2004); Alternative Energy, Inc.

v. St. Paul Fire and Marine Ins. Co., 267 F.3d 30, 33 (1st Cir. 2001).

13 Faulkner, 463 F.3d at 134.

14 Doc. 1 (Notice of Removal), Ex. A (Columbia Cnty. Compl.) ¶ 1.

place of business there.15 Through a bidding process, the Township selected

Midland to perform repair work on McIntyre Road in 2019.16 Finally, Liberty

Mutual is a Massachusetts corporation with a principal place of business in Boston,

Massachusetts; it provided the surety bond required by Plaintiff.17

2. The Proposal

Midland “created a proposal for work to be performed on McIntyre Road for

Catawissa Township” on April 12, 2018.18 To ensure the proper material was

supplied, the Proposal required Midland to provide a bill of lading for each load

delivered, daily material certifications, oil samples, an affidavit showing aggregate

and oil compatibility, and a copy of a PennDOT approved seal coat design.19 An

escalator clause in the Proposal allowed for the price adjustment of bituminous

material as needed.20 Plaintiff was also to receive two weeks’ notice before any

work began, and all work was to be completed in accordance with PennDOT

Publication 408.21 Finally, the Proposal required Midland to perform full depth

reclamation (“FDR”) on the road and to test and submit a laboratory design mix to

the Township three weeks before commencing the repair work.22

15 See id. ¶ 2; Doc. 1 (Notice of Removal), Ex. B (Coleman Decl.) ¶ 3.

16 See id. ¶ 8.

17 See id. ¶ 3.

18 Id. ¶ 7.

19 See Doc. 1 (Notice of Removal), Ex. A (Columbia Cnty. Compl.), Attach. 1 (The Proposal)

at 3-e.

20 See id. at 3-f.

21 See id.

22 See id. at 3-3-a.

3. The Contract

The Catawissa Township Board of Supervisors approved the Proposal on

April 9, 2019 through PennDOT Form MS-944 (“Form MS-944” or “the

Contract”).23 Form MS-944 is divided into two parts.24 Part A describes how to

submit proposals.25 In Part B, the relevant proposal is identified and followed by a

signed contractor’s certification.26 Underneath the signed certification is a page

divider that states: “TO BE EXECUTED ONLY IN THE EVENT THE ABOVE

PROPOSAL IS ACCEPTED.”27 The municipality then signs and dates the form

under this page divider.28

4. The Surety Bond

The Contract required Midland to provide a Performance Bond and Payment

Bond (“the Bond”) “for 100% of the work to Catawissa Township within twenty

days … of receipt of the bid award.”29 On April 18, 2019, Midland provided a

bond issued by Liberty Mutual for $151,111.07 “to guarantee Midland’s

compliance and performance of the terms and conditions of the Contract ….”30 The

23 See Doc. 1 (Notice of Removal), Ex. A (Columbia Cnty. Compl.) ¶ 8.

24 See Doc. 1 (Notice of Removal), Ex. A (Columbia Cnty. Compl.), Attach. 2 (Executed

Contract) at 52-53.

25 See id.

26 See id.

27 Id.

28 See id.

29 Doc. 1 (Notice of Removal), Ex. A (Columbia Cnty. Compl.) ¶ 9.

30 Id.

Bond “irrevocably bound” Liberty Mutual to Catawissa Township “to assure the

completion of the work by Midland under the Proposal and Contract.”31

5. Modifying the Proposal Terms

Pursuant to the escalator clause, “Midland met with Catawissa Township [in

June 2019] to seek a modification of the Proposal” as its “emulsion projections

prohibited it from performing the project for the full length at the agreed upon

price ….”32 Due to this issue, the parties reduced the amount of work to be

performed.33

6. Performance Failures

Catawissa Township alleges several breaches of the Proposal. These failures

are best divided into the following categories: nonperformance of certain tests or

investigations; lack of adequate notice and certifications; and noncompliance with

specific performance metrics.

i. Nonperformance of Tests and Investigations

Midland did not provide a “laboratory design mix” or perform a Marshall

Design Test before work on the road began.34 Further, it did not “investigate the

traffic and water flow on McIntyre and Quarry Roads” nor did it “provide oil

31 Id. ¶ 11.

32 Id. ¶ 14.

33 See id.

34 Id. ¶¶ 15-17.

samples ….”35 And, finally, Midland did not “perform a 300-foot test strip

demonstrating the FDR process prior to work being performed ….”36

ii. Lack of Adequate Notice and Certifications

Midland was supposed to provide two weeks’ notice before working on the

roads.37 No such notice was given; instead, Midland “arrived unannounced and

began work on McIntyre Road” on June 25, 2019.38 Additionally, the Township

never received the required daily material certifications, a compatibility affidavit,

or load tickets.39

iii. Noncompliance with Performance Metrics

Midland notably did not comply with PennDOT Publication 408 or provide

“an approved PennDOT seal coat design ….”40 These failures contributed to the

company’s inability to “provide a road surface that lasted more than a few months

prior to failure” and “to construct the road in such a way as to avoid premature

road failure.”41

35 Id. ¶¶ 39(d), (h).

36 Id. ¶ 39(k).

37 See id. ¶ 39(l).

38 Id. ¶ 22.

39 Id. ¶¶ 39(f), (g), (i).

40 Id. ¶¶ 39(a), (e).

41 Id. ¶¶ 39(m), (n).

7. Payment and Failure of the Road

Plaintiff “paid Midland in full in two payments on August 2, 2019 and

September 6, 2019.”42 In February 2020, Catawissa Township became aware of the

road’s “failure” and “immediately notified” Midland of this issue.43 Engineers

from the Township and Midland agreed “that the road had failed and required

repairs.”44 The road had an emulsion rate of 1.5% to 1.8%.45 In order to avoid

failure, McIntyre Road actually required an emulsion rate of 3% to 4.5%.46 This

prompted Plaintiff to send “a formal notice of the failure of the reclaimed base and

roadway surface ….”47

C. Analysis

The Township has filed a five-count complaint against the Defendants. In

Counts I through IV, Plaintiff alleges claims against Midland stemming from the

failure of McIntyre Road. Count V is a claim for breach of surety contract solely

alleged against Liberty Mutual. This is a contractual dispute predicated on this

Court’s diversity jurisdiction and brought under Pennsylvania law.48 “In the

absence of authoritative guidance from the Supreme Court of Pennsylvania, the

Court looks to ‘decisions of [Pennsylvania] intermediate appellate courts, of

42 Id. ¶ 24.

43 Id. ¶ 25.

44 Id. ¶ 28.

45 Id. ¶ 30.

46 Id.

47 Id. ¶ 31.

48 See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S. Ct. 817, 82 L.Ed. 1188 (1938).

federal courts interpreting [Pennsylvania] law, and of other state supreme courts

that have addressed the issue ….”49

1. Count I – Breach of the Contract

Under Pennsylvania law, “‘three elements are necessary to plead a cause of

action for breach of contract: (1) the existence of a contract, including its essential

terms[;] (2) a breach of the contract; and[] (3) resultant damages.’”50 Midland

disputes the terms of the contract, Plaintiff’s ability to show any breach, and

causation.

i. Terms of the Contract

Midland contends that the Contract does not incorporate the Proposal it had

previously submitted to the Township as it is not “clear[ly] reference[d]” in the

Contract.51 This argument fails to recognize the critical issue: whether the Proposal

served as an offer that Plaintiff was free to accept.

Courts in Pennsylvania have routinely concluded that “‘a solicitation for bid

proposals is not an offer but only an invitation for parties to submit bids in

response to this request. The submission of the bid is, in fact, the offer which the

49 First Nonprofit Ins. Co. v. Meenan Oil LLC, 462 F. Supp. 3d 537, 540 (E.D. Pa. 2020)

(quoting Spence v. ESAB Grp., Inc., 623 F.3d 212, 216 (3d Cir. 2010)).

50 Doe v. Univ. of the Scis., 961 F.3d 203, 211 (3d Cir. 2020) (quoting Meyer, Darragh,

Buckler, Bebenek & Eck, P.L.L.C. v. Law Firm of Malone Middleman, P.C., 635 Pa. 427, 137

A.3d 1247, 1258 (Pa. 2016)).

51 Fegley Real Estate, LLC v. Boyle Constr., Inc., No. 2009-C-4007, 2011 Pa. Dist. & Cnty.

Dec. LEXIS 366, at *4 (Lehigh Cnty. Ct. of Common Pleas) (quoting Standard Bent Glass

Corp. v. Glassrobots Oy, 333 F.3d 440, 447 (3d Cir. 2003)).

contracting agency is free to accept or reject.’”52 This view is consistent with the

discussion of public construction contracts in the Restatement (Second) of

Contracts.53 The structure of Form MS-944 also aligns with the three-steps of

forming a contract through an auction process. Part A is the Township’s initial

request for offers.54 Part B first memorializes Midland’s submission of its offer to

Catawissa Township.55 Then, below the page divider, Plaintiff accepts that offer.56

Accordingly, I conclude that the Proposal operated as an offer which Plaintiff

accepted through Form MS-944; the terms of the Proposal are an appropriate basis

for this breach of contract claim.

The course of performance of this contract reinforces this determination.

“[T]he Supreme Court of Pennsylvania has recognized that the ‘course of

performance is always relevant in interpreting a writing.’”57 “As the

[Pennsylvania] Supreme Court explained, ‘[t]he parties to an agreement know best

52 Yurcho v. Hazleton Area Sch. Dist., No. 1430 C.D. 2011, 2012 Pa. Commw. Unpub. LEXIS

821, at *22-23 (Pa. Commw. Ct. 2012) (quoting Nat’l Constr. Servs. V. Phila. Reg’l Port

Auth., 789 A.2d 306, 309 (Pa. Commw. Ct. 2001)).

53 See RESTATEMENT (SECOND) OF CONTRACTS § 28, cmt. c (1981) (“Governmental agencies …

often advertise for bids from construction contractors prepared to undertake the building of a

building or other structure … The rule in such cases is much like that governing auctions –

unless a contrary intention is manifested, the advertisement is not an offer but a request for

offers; bidders on both prime contract and subcontract make offers when they submit bids;

and all bids may be rejected ….”). “Pennsylvania courts regularly employ the Restatement

(Second) of Contracts when resolving contract disputes.” Hart v. Arnold, 2005 PA Super

328, 884 A.2d 316, 333 (Pa. Super. 2005), appeal denied, 587 Pa. 695, 897 A.2d 458 (Pa.

2006).

54 See RESTATEMENT (SECOND) OF CONTRACTS § 28, cmt. c (1981).

55 See id.

56 See id.

57 Norfolk Southern Ry. v. Pittsburgh & W. Va. R.R., 101 F. Supp. 3d 497, 525 (W.D. Pa. 2015)

(quoting Atl. Richfield Co. v. Razumic, 480 Pa. 366, 390 A.2d 736, 741 n.6 (Pa. 1978)).

what they meant, and their action under it is often the strongest evidence of their

meaning.’”58 The Third Circuit has similarly “observed that ‘[a] court always may

consider the course of performance as evidence of the intent of the parties.’”59

Notably, “Midland met with Catawissa Township to seek a modification of

the Proposal pursuant to the Escalator Clause” in June 2019. This escalator clause

is not mentioned in what Midland asserts is the only operative document: the

signed and executed version of Form MS-944. This behavior suggests that the

parties did in fact intend to be bound by the terms of the Proposal.

ii. Breach of the Terms and Causation

Since I have determined that the terms of the Proposal are binding on

Midland for purposes of this motion, Plaintiff has also appropriately identified

various breaches of the contract.60 For this reason, I will now address Midland’s

causation argument.

“In order to prevail on a breach of contract claim in Pennsylvania, a plaintiff

must show not only damages, but also ‘a causal connection between the breach and

the loss.’” 61 As alleged, Plaintiff contends that “[a]s a direct and proximate result

of Midland’s material breach of the Contract, [it] has suffered damages in excess

of $150,000.00 ….” Other courts in this Circuit have found similar language

58 Id.

59 Id. at 526 (quoting In re Old Summit Mfg., LLC, 523 F.3d 134, 137-38 (3d Cir. 2008)).

60 See Doc. 1 (Notice of Removal), Ex. A (Columbia Cnty. Compl.) ¶ 39.

61 Enslin v. Coca-Cola Co., 739 F. App’x 91, 95 (3d Cir. 2018) (quoting Logan v. Mirror

Printing Co. of Altoona, Pa., 410 Pa. Super. 446, 600 A.2d 225, 226 (Pa. Super. Ct. 1991)).

sufficient to allege a causal connection between the relevant breach and damages.62

This conclusion is supported by the stated purpose of various terms of the

Contract: to ensure that the proper materials were used.63 Despite Midland’s

suggestion to the contrary, the Township has also adequately shown how the

breaches caused its damages. The various alleged breaches contributed to

Midland’s inability “to provide a road surface that lasted more than a few months

prior to failure.”64 That then required Catawissa Township to “remedy the issues

caused by Midland’s defective performance ….”65

2. Count II – Breach of Express Warranty

“To sustain a claim for breach of express warranty, a plaintiff must generally

establish: ‘(1) defendants breached or failed to meet its warranty promise, (2) the

breach was the proximate cause of the harm, and (3) there were ensuing

damages.’”66 “Where a contract contains an express warranty to remedy defects

due to faulty workmanship or materials appearing within the specified time, [that

party] is responsible for defects resulting from such causes which appear within the

warranty period and is required to make good [its] warranty according to its terms

62 See e.g., Jazz Pharms., Inc. v. Synchrony Grp., LLC, 343 F. Supp. 3d 434 (E.D. Pa. 2018).

63 See Doc. 1 (Notice of Removal), Ex. A (Columbia Cnty. Compl.), Attach. 1 (The Proposal)

at 3-e.

64 Doc. 1 (Notice of Removal), Ex. A (Columbia Cnty. Compl.) ¶ 39.

65 Id. ¶ 34.

66 Dietrick v. Barnett Outdoors, LLC, No. 3:20-CV-215, 2021 U.S. Dist. LEXIS 188839, 2021

WL 4494631, at *6 (M.D. Pa. Sept. 30, 2021) (Mariani, J.) (quoting Stevens v. C.R. Bard,

Inc., No. 17-cv-1388, 2018 U.S. Dist. LEXIS 17536, 2018 WL 692097 (W.D. Pa. 2018)).

….”67 “In addition, accepting a completed project does not waive imperfections in

the construction and workmanship that are inherently latent and could not have

been revealed upon reasonable inspection.”68

In support of this claim, Plaintiff identified three possible express

warranties: Midland’s responsibility for maintaining the road for a year as

expressed in the Final Completion Certificate;69 PennDOT Publication 408 Section

105.12;70 and PennDOT Publication 408 Section 107.16(b).71

As to Midland’s obligation to repair the road for a year, I note that the Final

Completion Certificate is unsigned. Assuming for purposes of this motion, without

67 Buddy’s Plant Plus Corp. v. CentiMark Corp., Civil Action No. 10-670 2013 U.S. Dist.

LEXIS 6373, 2013 WL 169697, at *31 (W.D. Pa. Jan. 16, 2013), aff’d 604 F. App’x 134

(quoting Brandywine Area Joint Sch. Auth. v. Van Cor, Inc., 57 Pa. D. & C.2d 606, 616

(Chester Cnty. Ct. of Common Pleas 1971)).

68 Id. (citing Abram Singer Sons, Inc. v. DeStefano, 17 Pa. D. & C.2d 146 (Montgomery Cnty.

Ct. of Common Pleas 1971)).

69 In the Final Completion Certificate, it states “The Contractor is responsible for maintenance

of permanent pavement repairs for a period of one year from this date.” See Doc. 1 (Notice of

Removal), Ex. A (Columbia Cnty. Compl.), Attach. 1 (The Proposal) at 36.

70 See PENNSYLVANIA DEPARTMENT OF TRANSPORTATION, SPECIFICATIONS, PUB 408/2016

(Change 6) § 105.12, Defective Work and Material (Apr. 5, 2019) (“If any work and/or

material does not meet the requirements of the plans and specifications, or is not within

reasonably close conformity, as determined by the Representative, such work and/or material

will be declared defective. Unless otherwise specified, repair, as directed, or remove and

replace defective work and/or material at no expense to the Department.”).

71 See id. at § 107.16(b), Responsibility for Latent Defects (“The Representative will determine

if a defect is a latent defect. The Contractor and the Surety continue to be liable for all latent

defects; however, the Surety is liable only until the performance bond is released.

Satisfactorily repair or correct latent defects at no expense to the Department. If defects

cannot be satisfactorily repaired or corrected, provide reimbursement for any expenses or

damages incurred by the State because of latent defects. Failure to satisfactorily correct latent

defects, or to reimburse the State for expenses or damages incurred as a result of latent

defects, will be considered sufficient cause to suspend or remove prequalification, according

to 67 PA Code Chapter 457, regulations governing prequalification of prospective bidders,

provided that any adjudication regarding such latent defects is final.”).

deciding that this precludes Plaintiff from relying on it as an express warranty, the

Township has nonetheless adequately pled this claim. The Contract explicitly

incorporates by reference PennDOT Publication 408. Therefore, Plaintiff has

“referred to the warranty … and cited specific examples of” Midland’s “failure to

construct” and repair the road in accordance with the express warranties.72 These

examples include: the determination of the emulsion rate in May 2020; the failure

to provide a PennDOT approved seal coat design; the failure to perform a test strip

demonstrating the FDR process; and the failure to provide an approved FDR mix

design prior to commencing work on the road.73

Midland again challenges Plaintiff’s ability to demonstrate causation. It

contends that the “Township says only that Midland declined to repair the road or

refund its money ….”74 “[R]ather than attempting to ‘show’ how Midland caused

its injury, … the Township simply says that it did so.”75 In making this argument,

Midland does not persuasively consider the impact of incorporating Paragraphs 1

through 41 of the Complaint into this cause of action. The deficiencies in materials

and processes alleged in those paragraphs contributed to the failure of the road and

the latent defect at issue. While this claim may ultimately prove to be duplicative,

for now it is appropriate to allow it to proceed.

72 Roberts v. NVR, Inc., Civil Action No. 15-489, 2015 U.S. Dist. LEXIS 76795, 2015 WL

3745178, at *8 (W.D. Pa. June 15, 2015).

73 See Doc. 1 (Notice of Removal), Ex. A (Columbia Cnty. Compl.) ¶¶ 30, 39.

74 Doc. 9 (Brief in Support of Midland’s Motion to Dismiss) at 13.

75 Id.

3. Count III – Breach of Implied Warranty

For a claim for a breach of an implied warranty, the Township must show

“‘1) the existence of the implied warranty; 2) breach of the implied warranty; 3) a

causal connection between the defendant’s breach and the plaintiff’s injury or

damage; and 4) the extent of loss proximately caused by the defendant’s

breach.’”76 Both federal and state courts in Pennsylvania have “previously

recognized on several occasions that all service contracts—not just residential

construction contracts—may include an implied warranty that services will be

performed in a reasonable and workmanlike manner.”77

First, Midland contends that “the Township does not allege how Midland

allegedly failed to perform [the] services in a way that breached the implied

warranty.”78 In making this argument, Midland does not seriously consider the

significance of incorporating the prior allegations into this claim; instead, it

dismisses these allegations after a cursory discussion.79 But these earlier

allegations in fact establish “how” the implied warranty of workmanship has been

violated: through Midland’s allegedly inadequate performance and improper use of

76 State Farm Fire & Cas. Co. v. Waterbury Kitchen and Bath, Inc., No. 22-447, 2023 U.S.

Dist. LEXIS 151546, 2023 WL 5538048, at *2 (E.D. Pa. Aug. 25, 2023) (quoting Byrd v.

Essex Silverline Corp., No. 04-cv-4827, 2008 WL 81887, at *3 (E.D. Pa. Jan. 8, 2008))

(emphasis removed).

77 Delaware, Lackawaxen and Stourbridge R.R. Co. v. Star Trak, Inc., No. 3:18-CV-0480, 2018

U.S. Dist. LEXIS 183035, 2018 WL 5296292, at *3 (M.D. Pa. Oct. 25, 2018) (Saporito, Jr.

M.J.) (collecting cases).

78 Doc. 9 (Brief in Support of Midland’s Motion to Dismiss) at 14-15.

79 See Doc. 13 (Reply Brief in Support of Midland’s Motion to Dismiss) at 7-8.

materials. As with the other causes of action where causation has been challenged,

the identified deficiencies allegedly caused the road’s failure. Again, this cause of

action may ultimately prove to be duplicative. However, at this stage of the

proceeding, it is appropriate to allow it to proceed.

4. Count IV – Unjust Enrichment

“To state an unjust enrichment claim, a plaintiff must allege: (1) benefits

conferred on the defendant by the plaintiff; (2) appreciation of such benefits by the

defendant and (3) acceptance and retention of such benefits under such

circumstances that it would be inequitable for the defendant to retain the benefit

without payment of value.”80 But unjust enrichment is “inapplicable when the

relationship between parties is founded on a written agreement or express

contract.”81 When the unjust enrichment claim “concerns conduct outside the scope

of the original agreement or contract,” a plaintiff is allowed to plead such a claim

in the alternative.82

Based on my earlier determinations, the terms of the contract fully govern

the relationship between Plaintiff and Midland. As a result, dismissal of this claim

is appropriate, but I do so without prejudice.

80 Bordoni v. Chase Home Fin. LLC, 374 F. Supp. 3d 378, 388 (E.D. Pa. 2019) (citing Mitchell

v. Moore, 1999 PA Super 77, 729 A.2d 1200, 1203 (Pa. Super. 1999)).

81 Id. (quoting Benefit Tr. Life Ins. Co. v. Union Nat. Bank of Pittsburgh, 776 F.2d 1174, 1177

(3d Cir. 1985)).

82 Kraus Indus. v. Moore, Civil Action No. 06-00542, 2007 U.S. Dist. LEXIS 68869, 2007 WL

2744194, at *8 (W.D. Pa. Sept. 18, 2007) (citing Hershey Foods Corp. v. Ralph Chapek, Inc.,

828 F.2d 989, 999 (3d Cir. 1987)).

5. Count V – Punitive Damages for Breach of Suretyship

Finally, Liberty Mutual seeks dismissal of Plaintiff’s demand for punitive

damages. Punitive damages are not available under Pennsylvania law when based

solely on a breach of contract.83 Instead, “‘[o]nly where the person who breaks a

contract also breaches some duty imposed by society will compensatory or

punitive damages be imposed against the wrongdoer in order to punish the

wrongful act and in order to serve as a deterrent.’”84 Since no breach of a societal

duty has been alleged, dismissal of this claim for punitive damages is appropriate.

Dismissal of this request shall be without prejudice solely to allow Plaintiff the

opportunity to allege a breach of a societal duty. It is currently futile for the

Township to bring a claim under 42 Pa. C.S. § 8371.85 Should the Pennsylvania

Supreme Court eventually disagree with this conclusion, Catawissa Township may

file a motion for reconsideration at that time.

III. CONCLUSION

For the reasons above, Midland’s motion to dismiss is granted in part and

denied in part; Liberty Mutual’s motion to dismiss is granted.

83 See e.g., McShea v. City of Phila., 995 A.2d 334, 340 n. 5 (Pa. 2010); Nicholas v. Penn. State

Univ., 227 F.3d 133, 147 (3d Cir. 2000).

84 Judge v. Shikellamy Sch. Dist., 135 F. Supp. 3d 284, 299 (M.D. Pa. 2015) (quoting Daniel

Adams Associates v. Rimbach Publishing Inc., 287 Pa. Super. 74, 429 A.2d 726, 728 (Pa.

Super. 1981)).

85 See East Steel Constructors, Inc. v. Int’l Fid. Ins. Co., 2022 PA Super 149, 282 A.3d 827,

965 (Pa Super. Ct. 2022) (“Section 8371 does not apply to suretyships ….”).

Plaintiff is granted to leave amend. “The Federal Rules of Civil Procedure

do not address the situation in which a deficiency in a complaint could be cured by

amendment but leave to amend is not sought.”86 But the law in the Third Circuit is

clear that leave to amend should be “freely given” regardless of whether leave is

specifically requested.87 As such, Plaintiff will be given fourteen days from today’s

date to file an amended complaint.

An appropriate Order follows.

BY THE COURT:

s/ Matthew W. Brann

Matthew W. Brann

Chief United States District Judge

86 Shane v. Fauyer, 213 F.3d 113, 116 (3d Cir. 2000).

87 Id. (quoting F .R.C .P. 15(a)).