PRATTER, District Judge.
This action arises from the termination of Peter Accurso's employment with Infra-Red
Mr. Accurso worked for Infra-Red Services, Inc. ("Infra-Red"), to market and sell roofing services and products. Pursuant to his September 2004 "Independent Contractor Agreement" (hereinafter, "Contract," Docket No. 10-2) with Infra-Red and, Mr. Accurso asserts, Mr. Land, Mr. Accurso was entitled to certain compensation to culminate in his vesting "as a 50/50 partner," upon fulfillment of certain conditions, either by creation of "a full partnership agreement or a(re) incorporation creating 50/50 shareholder status between Company and Contractor." Contract Schedule B, § 1.B (Docket No. 10-3). Because these conditions were met (as, Mr. Accurso contends, Mr. Land acknowledged), the contractual partnership provision was triggered and Mr. Accurso "was thereafter entitled to 50% of the [Company's] net income." Compl. ¶ 25.
At some point before March 28, 2008, Mr. Land "unilaterally hired his significant other, Defendant Strein, with whom he was then residing ..., and agreed to pay her based upon leads generated as well as a percentage of the net profits." Compl. ¶ 26. In 2008 and again in 2011, Mr. Land and Ms. Strein, insisting that they suspected Mr. Accurso of diverting business opportunities from the corporate Defendants, required Mr. Accurso to submit to polygraph examinations, and he complied. And in August 2011, Mr. Land and Ms. Strein "formed Defendant Roofing Dynamics Group, LLC, ... without the input and/or knowledge of Plaintiff Accurso," as part of their fraudulent conspiracy to "force Plaintiff Accurso out of the Company, in order to wrongfully deprive him of the vested partnership interest which he held, and to improperly divert to themselves those monies which were due and owing to Plaintiff Accurso, for their mutual personal benefit." Compl. ¶ 34.
Further, in late 2011, Mr. Land "made numerous comments" to Mr. Accurso about Mr. Accurso's "facial disfigurement which had been caused by [his] Bell's palsy, complained about its potential adverse impact upon customers, and openly joked about his condition with business customers and associates." Compl. ¶ 35. Finally, in January 2012, Richard Berlinger, then counsel for the Defendants-to-be, notified Mr. Accurso that his employment and business relationship with the Defendants was immediately terminated based on the Defendants' claim, which Mr. Accurso contends is false, that Mr. Accurso had improperly diverted business opportunities from the Defendants (see Compl. Ex. C, Docket No. 10-3).
In his Amended Civil Action Complaint (hereinafter "Complaint," Docket No. 10),
Arguing that they cannot be held personally liable for the actions of, or their actions as agents of, their corporations, Mr. Land and Ms. Strein now move for judgment on the pleadings with regard to Counts II (breach of contract), III (breach of partnership agreement), and VII (civil conspiracy) of Mr. Accurso's Complaint. The gravamen of these challenged Counts is that the Defendants breached the 2004 Contract between Mr. Accurso, on the one hand, and Defendants Infra-Red and Mr. Land, on the other; and, further, that Mr. Land and Ms. Strein conspired to deprive Mr. Accurso of the monies he was due under this Contract and the partnership agreement it created, as well as, presumably, intentionally inflict emotional distress through their "fraudulent representations" and "bad faith and outrageous conduct" involved in "wrongfully terminating [Mr. Accurso's] employment, partnership and business relationship." Compl. ¶ 80. Mr. Accurso responds that, for several reasons, he can sue Mr. Land and Ms. Strein individually.
The standard for evaluating a motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c) for failure to state a claim is the same as the familiar standard used for evaluating a motion to dismiss under Rule 12(b)(6). E.g., Turbe v. Gov't of V.I., 938 F.2d 427, 428 (3d Cir.1991); Revell v. Port Auth., 598 F.3d 128, 134 (3d Cir.2010) (citing Turbe, 938 F.2d at 428); Shelly v. Johns-Manville Corp., 798 F.2d 93, 97 n. 4 (3d Cir.1986). In fact, because "Rule 12(h)(2) provides that `[a] defense of failure to state a claim upon which relief can be granted' may be advanced in a motion for judgment on the pleadings under Rule 12(c)," the distinction between a motion under 12(b)(6) and a motion under 12(c) "is purely formal." Westcott v. City of Omaha, 901 F.2d 1486, 1488 (8th Cir.1990).
To survive a motion to dismiss — or a motion for judgment on the pleadings — the plaintiff's complaint must plead "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). Specifically, "[f]actual allegations must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555, 127 S.Ct. 1955. The question is not whether the claimant "will ultimately prevail ... but whether his complaint [is] sufficient to cross the federal court's threshold." Skinner v. Switzer, 562 U.S. 521, 131 S.Ct. 1289, 1296, 179 L.Ed.2d 233 (2011) (citation and internal quotation marks omitted). Thus, assessment of the sufficiency of a complaint (or pleading) is "a context-dependent exercise" because "[s]ome claims require more factual explication than others to state a plausible claim for relief." W. Penn Allegheny Health Sys., Inc. v. UPMC, 627 F.3d 85, 98 (3d Cir.2010).
In evaluating the sufficiency of a complaint (or pleading), the Court adheres to certain well-recognized parameters. For one, the Court "must consider only those facts alleged in the complaint and accept all of the allegations as true." ALA, Inc. v. CCAIR, Inc., 29 F.3d 855, 859 (3d Cir. 1994); see also Twombly, 550 U.S. at 555, 127 S.Ct. 1955 (stating that courts must "assum[e] that all the allegations in the complaint are true (even if doubtful in fact)"). The Court may consider undisputedly authentic exhibits attached to the complaint (or pleading) for this purpose. E.g., Pension Ben. Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir.1993); Mayer v. Belichick, 605 F.3d 223, 230 (3d Cir.2010) ("[A] court must consider only the complaint, exhibits attached to the complaint, matters of public record, as well as undisputedly authentic documents if the complainant's claims are based upon these documents."). The Court must also accept as true all reasonable inferences emanating from the allegations, and view those facts and inferences in the light most favorable to the nonmoving party. Rocks v. City of Philadelphia, 868 F.2d 644, 645 (3d Cir.1989); see also Revell, 598 F.3d at 134; Jablonski v. Pan Am. World Airways, Inc., 863 F.2d 289, 290-91 (3d Cir.1988). But that admonition does not demand that the Court ignore or discount reality. The Court "need not accept as true unsupported conclusions and unwarranted inferences," Doug Grant, Inc. v. Greate Bay Casino Corp., 232 F.3d 173, 183-84 (3d Cir.2000) (citations and internal quotation marks omitted), and "the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice," Ashcroft, 556 U.S. at 678, 129 S.Ct. 1937; see also Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir.1997) (explaining that a court need not accept a plaintiff's "bald assertions" or "legal conclusions" (citations omitted)).
The courts in the cases Defendants cite did not hold (or even suggest) otherwise. Those courts simply observed that the district courts below had dismissed the pleadings with prejudice, not that such outcomes were or are categorically required.
Mr. Land and Ms. Strein's basic position is that they cannot be held personally liable for the actions of the corporate Defendants for any breach, by the latter, of a contract or partnership agreement with Mr. Accurso. And, further, Mr. Land and Ms. Strein argue, absent valid breach of contract or partnership claims against them, Mr. Accurso cannot maintain his civil conspiracy claim against them. Additionally, they assert that Mr. Accurso's civil conspiracy claim must fail because agents of the same corporation cannot, as a matter of law, conspire amongst themselves. But in their Motion, Mr. Land and Ms. Strein have not challenged Mr. Accurso's claims, ostensibly leveled at all Defendants, for violation of the federal Employee Polygraph Protection Act (Count I), violation of the Pennsylvania Wage Payment and Collection Law (Count IV), unjust enrichment (Count V), or intentional infliction of emotional distress (Count VI).
Mr. Accurso counters that he seeks to hold Mr. Land and Ms. Strein liable for the alleged breaches of contract and partnership agreement not individually, but, rather, on any and all of the theories that (1) Mr. Land voluntarily "undertook [the Contract's] legal obligations from the outset — as evidenced by his own words in an Agreement which he prepared," Mem. Opp. 10 (Docket No. 17); (2) Mr. Land and Ms. Strein "participated" in the breaches; and/or (3) the corporate veil should be pierced to allow his claims of breach to reach Mr. Land and Ms. Strein.
For the following reasons, the Court will grant Defendants' Motion in part and deny it in part. The Court will dismiss Mr. Accurso's breach of contract and breach of partnership claims without prejudice to revive them with viable corporate veil-piercing allegations, but will, for present purposes, permit Mr. Accurso's civil conspiracy claim to proceed as based, potentially, on his as — yet unchallenged claim of intentional infliction of emotional distress.
As explained below, the Court holds that Mr. Accurso cannot proceed with his breach of contract or breach of partnership agreement claims under any of the theories he advances. His voluntary undertaking and "participation theory" arguments for Mr. Land and Ms. Strein's individual liability must be dismissed with prejudice, because amendment would be futile, but the Court will permit Mr. Accurso to seek leave to amend his Complaint with respect to his veil piercing allegations.
As the Court noted above and earlier in this litigation, see Feb. 10, 2014 Order 2 n.
These observations were then, as they are reaffirmed now, based on basic contract law principles: "It is fundamental contract law" in Pennsylvania "that one cannot be liable for a breach of contract unless one is a party to that contract." Electron Energy Corp. v. Short, 408 Pa.Super. 563, 597 A.2d 175, 177 (1991), aff'd, 533 Pa. 66, 618 A.2d 395 (1993). Even "[i]f the alleged contract is in the name of the agent, [if] the name of the principal is disclosed, there exists a strong presumption that it is the intention of the contracting parties that the principal and not the agent should be a party to the contract." Viso v. Werner, 471 Pa. 42, 369 A.2d 1185, 1187 (1977); see also, e.g., Daniel Adams Assocs., Inc. v. Rimbach Pub., Inc., 360 Pa.Super. 72, 519 A.2d 997, 1000-01 (1987) ("Where a party contracts with a corporation through a corporate agent who acts within the scope of his authority and reveals his principal, the corporate principal alone is liable for breach of the contract."). Even without more, these principles suggest that the Contract bound only Infra-Red, and not Mr. Land, individually, as well.
Mr. Accurso's suggestion, in turn, is really that, by naming Mr. Land in the Contract, the parties did intend to bind him individually. But at a minimum, then, the Contract must be ambiguous as to whether it binds only Infra-Red, or whether it also reaches Mr. Land. In the case of ambiguity, the Court would be required to admit parol evidence for assessment by the factfinder. The "ambiguity of a contract and its interpretation," however, are threshold "questions of law" for the court. If a court finds a contract "unambiguous, the intent of the parties is to be determined by the words used in the contract," without resort to evaluation by the factfinder. In re Estate of Duran, 692 A.2d 176, 179 (Pa.Super.Ct.1997); accord, e.g., Allegheny Int'l, Inc. v. Allegheny Ludlum Steel Corp., 40 F.3d 1416, 1424 (3d Cir.1994) ("Under Pennsylvania law, ambiguous writings are interpreted by the fact finder and unambiguous writings are interpreted by the court as a question of law." (citation omitted)). And under this paradigm, whether an agent contracting for a disclosed principal may be found personally liable depends on whether "he or she either executes a contract in his or her own name or voluntarily incurs a personal responsibility." Duran, 692 A.2d at 179 (citation and internal quotation marks omitted).
Mr. Accurso's contention that his later correspondence with Mr. Land evinces Mr. Land's understanding that Mr. Land is personally bound by the Contract, by its nature, relies on parol evidence and thus puts the cart before the horse: the Court must first ask whether the Contract is ambiguous as to who it binds, Allegheny Int'l, 40 F.3d at 1424; Sanford Inv. Co., Inc. v. Ahlstrom Mach. Holdings, Inc., 198 F.3d 415, 421 (3d Cir.1999) — and it is not.
Metzger v. Clifford Realty Corp., 327 Pa.Super. 377, 476 A.2d 1, 5 (1984) (citation and alteration omitted).
To determine whether the relevant language is ambiguous, "the court must assess the writing as a whole and not in discrete units." DiFabio v. Centaur Ins. Co., 366 Pa.Super. 590, 531 A.2d 1141, 1143 (1987); cf. also, e.g., CTF Hotel Holdings, Inc. v. Marriott Int'l, Inc., 381 F.3d 131, 137 (3d Cir.2004) ("When interpreting contracts, we are required to read contract language in a way that allows all the language to be read together, reconciling conflicts in the language without rendering any of it nugatory if possible." (Delaware law)). Further, because "it may not be apparent whether a contract is ambiguous without an examination of the context in which the contract was made," courts "may consider, among other things, the words of the contract, the alternative meaning suggested by counsel, and the nature of the objective evidence to be offered in support of that meaning." Sanford Inv. Co., 198 F.3d at 421 (internal quotation marks and citation omitted). In other words, courts themselves may look to extrinsic evidence if it "will aid in the resolution of ambiguities," and "[i]f, moreover, the extrinsic evidence raises disputed issues of material fact, the court must refer those issues to the fact finder." DiFabio, 531 A.2d at 1142-43 (citing Hutchison, 519 A.2d 385); accord Langer v. Monarch Life Ins. Co., 879 F.2d 75, 81 n. 8 (3d Cir.1989) ("Thus, an ambiguity may be revealed by extrinsic evidence not barred by the parol evidence rule and once so demonstrated, evidence of intent which would otherwise be barred by the parol evidence rule is admissible.").
But if, on the other hand, a court finds the pertinent "language ... unambiguous, [its] analysis ends," Bowersox v. Progressive Cas. Ins. Co., 781 A.2d 1236, 1239 (Pa.Super.Ct.2001): "Where ... the language of the contract is clear and unambiguous, a court is required to give effect to that language." Gene & Harvey Builders, Inc. v. Pa. Mfrs. Ass'n Ins. Co., 512 Pa. 420, 517 A.2d 910, 913 (1986) (citation omitted).
Mr. Accurso's strongest argument for ambiguity may be the Contract's prefatory language, which references Mr. Land explicitly by name:
Contract 1.
But while "Brian Land / Infra Red Services Co." is an undeniably sloppy way to refer to the corporation, the Contract nevertheless does just that: it strains reason to argue that "Company" or "a Pennsylvania corporation" can refer to Mr. Land individually, and "[c]ourts should not... distort the meaning of the language or strain to find an ambiguity," Regents of Mercersburg Coll. v. Republic Franklin Ins. Co., 458 F.3d 159, 172 (3d Cir.2006) (citing Steuart v. McChesney, 498 Pa. 45, 444 A.2d 659, 663 (1982)); accord, e.g., Canal Ins. Co. v. Underwriters at Lloyd's London, 435 F.3d 431, 435 (3d Cir.2006); Madison Const. Co. v. Harleysville Mut. Ins. Co., 557 Pa. 595, 735 A.2d 100, 106 (1999) (citing Steuart, 444 A.2d at 663 (Pa. 1982)); rather, courts should read contracts "to avoid ambiguities if possible," Nationwide Mut. Ins. Co. v. Chiao, 186 Fed.Appx. 181, 185 (3d Cir.2006) (quoting St. Paul Fire & Marine Ins. Co. v. U.S. Fire Ins. Co., 655 F.2d 521, 525 (3d Cir. 1981)).
Here, the Contract's operative language lays out obligations only between Mr. Accurso and the "Company." See generally Contract. The question thus becomes whether "Company," the entity subject to the Contract's obligations, is "reasonably susceptible," Hutchison, 519 A.2d at 390, of being understood as including Mr. Land separately and personally. And as a "[w]ord[] of `common usage'... to be construed in [its] natural, plain, and ordinary sense," Wall Rose Mutual Ins. Co. v. Manross, 939 A.2d 958, 962 (Pa.Super.Ct.2007), "Company" cannot be so understood: a court cannot, as would be required to accept Mr. Accurso's construction, "modify the plain meaning of the words under the guise of `interpreting' the [contract]," id.; accord Genaeya Corp. v. Harco Nat. Ins. Co., 991 A.2d 342, 347 (Pa.Super.Ct.2010) — especially when "Company" clearly appears to refer to "Infra Red Services Co.," Contract 1 (emphasis added).
Finally, the Contract closes:
Contract 6 (emphasis added).
Thus, when the Court "consider[s] the entire document," Com. of Pa., Dep't of Transp. v. Manor Mines, Inc., 523 Pa. 112, 565 A.2d 428, 433 (1989); accord Ready Food Prods., Inc. v. Great N. Ins. Co., 417 Pa.Super. 643, 612 A.2d 1385, 1387 (1992), the Court finds that "reasonably intelligent persons, considering" the meaning of "the Company" "in the context of the whole [contract]," would not "differ regarding its meaning," Musisko v. Equitable Life Assurance Soc., 344 Pa.Super. 101, 496 A.2d 28, 31 (1985), as referring only to Infra-Red Services, Inc., and not also to Mr. Land individually and personally.
Mr. Accurso's reference to subsequent correspondence in which Mr. Land referred to the Contract that Mr. Accurso signed "with me" does not alter the Court's conclusion.
The Contract here is clear on its face that the parties — Infra-Red Services and Peter Accurso — intended to bind each other, and not Mr. Land individually. Infra-Red was the disclosed principal, and Mr. Land's inclusion in the Contract's prefatory language, which refers to a "Company" and a "corporation," without some plausible indication — and there is none — that a "company" or "Pennsylvania corporation" means a corporation plus an individual, does not allow the Court to interpret the Contract as ambiguous as to whether Mr. Land is personally bound. E.g., Banks Eng'g Co., Inc. v. Polons, 697 A.2d 1020, 1023 (Pa.Super.Ct.1997) ("Additionally, because we find that the clear language of the contract controls, we cannot accept appellant's invitation to construe it against the drafter, or to look to the parties' conduct to determine what they intended.").
The foregoing discussion should suggest that an individual not bound by a contract cannot breach it; thus, no individual not
"Participation theory" applies only in tort, not contract. The excerpt from the case Mr. Accurso quotes, Wicks v. Milzoco Builders, 503 Pa. 614, 470 A.2d 86 (1983), establishes that "[t]he general, if not universal, rule is that an officer of a corporation who takes part in the commission of a tort by the corporation is personally liable therefor...." Id. at 90 (emphasis added) (citation omitted). The nonapplicability of the participation theory to the contract context has been made explicit by the Third Circuit Court of Appeals: "Unless the corporate officer extends promises in his individual capacity, the participation theory does not apply in the context of an action breach of contract." Walsh v. Alarm Sec. Grp., Inc., 95 Fed.Appx. 399, 402 (3d Cir.2004) (citation and internal quotation marks omitted). In essence, then, "participation theory" in the breach of contract context does not exist because it would add nothing to the rules discussed above — i.e., that an agent for the corporation to be held personally liable, he must have "made promises ... while acting in [his] individual capacity" — that is, intending to bind himself personally. Id. (citing Bala Corp. v. McGlinn, 295 Pa. 74, 144 A. 823, 824 (1929); Loeffler v. McShane, 372 Pa.Super. 442, 539 A.2d 876, 879-80 (1988)).
Oliver Wendell Holmes, Jr., The Common Law 271-73 (Belknap 2009) (1881) (footnote omitted). Similarly:
Richard A. Posner, Economic Analysis of Law 175 (8th ed.2011).
The implications of contending that participation theory applies to breaches of contract are alarming. Not only would such application of participation theory render the concept of voluntary contract unrecognizable by holding non-promisors liable,
The corporate form may be disregarded, however, when a party shows that the corporate veil should be pierced. While
Ashley v. Ashley, 482 Pa. 228, 393 A.2d 637, 641 (1978); see also, e.g., Kellytown Co. v. Williams, 284 Pa.Super. 613, 426 A.2d 663, 668 (1981).
Mr. Accurso argues that in this case, "where the corporate Defendants essentially have no assets, the entities should not be used as a shield for wrongful conduct." Mem. Opp. 11. He contends that
Mem. Opp. 9-10. These factors are sufficient, he implies, to render "piercing the corporate veil ... appropriate to prevent fraud, illegality, or injustice." Mem. Opp. 12.
But the standard a party must meet to persuade a court to pierce the corporate veil is a stringent one. See, e.g., Pearson v. Component Tech. Corp., 247 F.3d 471, 485 (3d Cir.2001) ("Such a burden is notoriously difficult for plaintiffs to meet."). Pennsylvania courts presume the legitimacy of the corporate form and will not pierce the veil unless exceptional circumstances warrant such an exceptional remedy. E.g., Lumax Indus., Inc. v. Aultman, 543 Pa. 38, 669 A.2d 893, 895 (1995). Factors relevant to whether the corporate veil should be pierced include "undercapitalization, failure to adhere to corporate formalities, substantial intermingling of corporate and personal affairs and use of the corporate form to perpetrate a fraud." Id. (citing Dep't of Envtl. Res. v. Peggs Run Coal Co., 55 Pa.Cmwlth. 312, 423 A.2d 765 (1980)); see also, e.g., Pearson, 247 F.3d at 484-85 ("The Third Circuit alter ego test is fairly typical of the genre. It requires that the court look to the following factors: gross undercapitalization, failure to observe corporate formalities, nonpayment of dividends, insolvency of debtor corporation, siphoning of funds from the debtor corporation by the dominant stockholder, nonfunctioning of officers and directors, absence of corporate records, and whether the corporation is merely a facade for the operations of the dominant stockholder."); E. Minerals & Chems. Co. v. Mahan, 225 F.3d 330, 333 n. 7 (3d Cir. 2000) ("Factors considered under Pennsylvania law, for example, with respect to the alter ego theory include, but are not limited to, the following...."); Plastipak Packaging, Inc. v. DePasquale, 75 Fed. Appx. 86, 88 (3d Cir.2003) (per curiam). Under the "alter ego" veil piercing subtheory — which is "applicable when `"the individual or corporate owner controls the corporation to be pierced and the controlling owner is to be held liable,"'" Advanced Tel. Sys., Inc. v. Com-Net Prof'l Mobile Radio, LLC, 846 A.2d 1264, 1278 (Pa.Super.Ct.2004) (quoting Good v. Holstein, 787 A.2d 426, 430 (Pa.Super.Ct.2001) (quoting Miners, Inc. v. Alpine Equip. Corp., 722 A.2d 691, 695 (Pa.Super.Ct.1998))) — the party that seeks to
Although veil-piercing is not a separate cause of action, but rather a basis for a cause of action against particular individuals, on a motion to dismiss (or motion for judgment on the pleadings), a court "must examine ... whether the facts pleaded ... state a cause of action on a theory of piercing the corporate veil." Lumax, 669 A.2d at 895. "[A]verments reciting elements of the veil-piercing test, without any supporting facts, constitute legal conclusions. Even under a notice pleading standard, as interpreted in Twombly, such averments cannot support a veil-piercing claim." Cent. Transp., LLC v. Atlas Towing, Inc., 884 F.Supp.2d 207, 217 (E.D.Pa. 2012) (quoting Shenango Inc. v. Am. Coal Sales Co., No. 06-149, 2007 WL 2310869, at *4 (W.D.Pa. Aug. 9, 2007) (citing Lumax, 669 A.2d at 895-96)).
Here, Mr. Accurso has not alleged sufficient facts to allow his Complaint to give rise to a plausible theory of veil piercing. The fact that office addresses may have been shared by individuals and corporations, or may have been post office boxes, see Compl. ¶¶ 7-9-a common occurrence, one might suppose, with small corporations — or that Mr. Land spoke in the first person regarding Mr. Accurso's alleged obligations to his corporations, e.g., Compl. ¶ 28, or even that Mr. Land wore many hats, see Compl. ¶ 10, is not enough.
None of Mr. Accurso's theories — individual intent to be bound, participation, or corporate veil-piercing — can sustain Count II, for breach of contract, against Mr. Land or Ms. Strein. Count II is therefore dismissed as to Mr. Land and Ms. Strein with prejudice as to Mr. Accurso's individual intent and participation theories, and without prejudice as to his corporate veil-piercing theory; amendment of the Complaint as to the former would be futile, but not, necessarily, as to the latter (especially given Mr. Accurso's averments, located improperly in his briefing). See Phillips, 515 F.3d at 228.
For these same reasons, Count III, for breach of partnership agreement, must also fail. This claim is based, as pleaded, on Mr. Accurso's Contract with Infra-Red Services, see Compl. ¶ 62, and thus, in the absence of a basis for a binding partnership between Mr. Accurso and Mr. Land separate from the Contract, which, as the Court has explained, does not bind Mr. Land personally, the Court must dismiss Count III (likewise, for the similar reasons, without prejudice).
Defendants, arguing that "the actions identified as the basis for [Mr. Accurso's] civil conspiracy claim [Count VII] are the very same actions identified as the basis for [Mr. Accurso's] breach of contract and breach of partnership agreement claims," Mot. 13, contend that without a "viable breach of contract or breach of partnership agreement claim ..., the civil conspiracy claim must fail," Mot. 14. The Court agrees with the second premise, namely, that without a viable underlying substantive claim, a civil conspiracy claim may not lie. But Defendants' conclusion does not necessarily follow from their premise, because Mr. Accurso's civil conspiracy claim might be based on another cause of action.
Pennsylvania law mandates that "absent a civil cause of action for a particular act, there can be no cause of action for civil conspiracy to commit that act." Goldstein v. Phillip Morris, Inc., 854 A.2d 585, 590 (Pa.Super.Ct.2004) (quoting McKeeman v. Corestates Bank, 751 A.2d 655, 660 (Pa.Super.Ct.2000)). A plaintiff charging civil conspiracy must therefore "plead or develop a[] separate underlying intentional or criminal act that can support a civil conspiracy claim." Id.
Mr. Accurso seems to ignore this point in both his Complaint and in his briefing. Mr. Accurso's Complaint alleges that
Compl. ¶ 82. Similarly, at several places in his papers, Mr. Accurso argues that Mr. Land and Ms. Strein formed "a conspiracy to benefit themselves individually and harm Plaintiff personally." Mem. Opp. 6; see id. 7, 12-13 ("[I]t is specifically averred that Defendant Land and Defendant Strein committed overt acts in pursuit of their common purpose with an intent to injure Accurso."). But nowhere does Mr. Accurso make clear just what tortious activity Mr. Land and Ms. Strein allegedly conspired to do, although the allegations seem to suggest that some sort of a conversion claim was what was intended.
Although the Court doubts that Mr. Accurso could base his civil conspiracy claim on a breach of contract or breach of partnership agreement claim, because such wrongs, even if proven, are not tortious, the Court need not reach that question because it is dismissing those claims. See Nix, 596 A.2d at 1137 (quoting Pelagatti v. Cohen, 370 Pa.Super. 422, 536 A.2d 1337, 1342 (1987)); see also, e.g., Boyanowski v. Capital Area Intermediate Unit, 215 F.3d 396, 405-06 (3d Cir.2000) ("[W]e are unaware of any jurisdiction that recognizes civil conspiracy as a cause of action requiring no separate tortious conduct." (quoting In re Orthopedic Bone Screw Prods. Liab. Litig., 193 F.3d 781, 789 (3d Cir.1999))).
But Mr. Accurso still has an intentional infliction of emotional distress claim against the Defendants. Mr. Land and Ms. Strein's Motion for Judgment on the Pleadings does not address this potential predicate tort, but instead argues generally that "to the extent [that Mr. Accurso's] conspiracy allegations encompass actions that Mr. Land and Ms. Strein took in their roles as principals and/or officers" of the corporate Defendants, no civil conspiracy claim can lie because "`agents of a single entity cannot conspire among themselves.'" Mot. 14 (quoting Grose v. Procter & Gamble Paper Prods., 866 A.2d 437, 441 (Pa.Super.Ct.2005) (quoting Rutherfoord v. Presbyterian-Univ. Hosp., 417 Pa.Super. 316, 612 A.2d 500, 508 (1992))). And, indeed, this "intracorporate conspiracy doctrine" generally bars conspiracy claims against agents and their principals. E.g., Gen. Refractories Co. v. Fireman's Fund Ins. Co., 337 F.3d 297, 313 (3d Cir. 2003) (citing Heffernan v. Hunter, 189 F.3d 405, 413 (3d Cir.1999)).
Mr. Accurso retorts that Mr. Land and Ms. Strein were not conspiring as agents of one of their alleged corporate forms, but rather "as individuals in a significant other relationship," and that "[i]t is certainly a reasonable inference that Defendant Land and Defendant Strein acted for their own personal benefit and not for any alleged corporate benefit." Mem. Opp. 12-13. Although he does not cite any authorities on this specific point, Mr. Accurso's argument is, in essence, an assertion of an exception to the intracorporate conspiracy doctrine for situations in which an officer "act[ed] in a personal, as opposed to official, capacity. That is, an exception exists `when the employees have acted for their sole personal benefit.'" Gen. Refractories Co., 337 F.3d at 313-14 (citations omitted) (quoting Heffernan, 189 F.3d at 412).
This personal benefit exception to the intracorporate conspiracy doctrine is poorly defined, if in fact it exists. As noted in the margin, the Third Circuit Court of Appeals has addressed the exception largely by analogy, through the 42 U.S.C. § 1985 and attorney-client relationship contexts. In a holding in the core corporate context, in Johnston v. Baker, 445 F.2d 424 (3d Cir.1971), the Third Circuit Court of Appeals summarily rejected the "contention ... that a corporation may not be guilty of a conspiracy with its officers and agents" when the conspiracy complained of "consisted of acts done by the corporation," two employees who, "testimony indicat[ed, had] acted as a result of personal motives," and a nonemployee. Id. at 426-27. As at least one district court has since observed, Johnston proposes that "a corporation can conspire with its agents or employees if the agents or employees are acting not for the corporation, but for personal reasons and one of the parties to the conspiracy is not an agent or employee of the corporation," and Johnston's "rule has been liberally construed... so as to allow a civil conspiracy claim
At the same time, at least one panel of the Pennsylvania Superior Court, in a nonprecedential decision, has opined that no such "exception" to the intracorporate conspiracy doctrine "is recognized by Pennsylvania state courts." Lilly v. Boots & Saddle Riding Club, No. 57 C.D. 2009, 2009 WL 9101459, at *6 (Pa.Commw.Ct. July 17, 2009).
For several reasons, then — including the indicated indeterminacy of the case law — Mr. Accurso's civil conspiracy claim should be permitted to proceed, at least for now. Bad facts make bad law, and while a determination that Mr. Accurso categorically cannot establish that he has raised a viable predicate cause of action for his conspiracy claim that might fall into the private benefit exception to the intracorporate conspiracy doctrine (if one exists) might eventually be vindicated, little harm results to the Defendants from allowing the count to proceed. After all, as should be clear from the principles laid out above, "[s]ince liability for civil conspiracy depends on performance of some underlying tortious act, the conspiracy is not independently actionable; rather, it is a means for establishing vicarious liability for the underlying tort." Beck v. Prupis, 529 U.S. 494, 503, 120 S.Ct. 1608, 146 L.Ed.2d 561 (2000) (parenthetically quoting Halberstam v. Welch, 705 F.2d 472, 479 (D.C.Cir.1983)); accord Boyanowski, 215 F.3d at 407; Orthopedic Bone Screw Prods., 193 F.3d at 788-90 & n. 7. Defendants
At the same time, the Court reemphasizes the limited basis for its holding allowing Mr. Accurso's civil conspiracy claim to proceed: his intentional infliction of emotional distress claim plus allegations of the character that Mr. Land and Ms. Strein "formed Defendant Roofing Dynamics Group, LLC, ... without the input and/or knowledge of Plaintiff Accurso," as part of their fraudulent conspiracy to "force Plaintiff Accurso out of the Company, in order to wrongfully deprive him of the vested partnership interest which he held, and to improperly divert to themselves those monies which were due and owing to Plaintiff Accurso, for their mutual personal benefit," Compl. ¶ 34, because of their potential for bringing Mr. Land and Ms. Strein outside the bounds of the intracorporate conspiracy doctrine. But the Court will also note the serious question that arises as to whether such allegations and Mr. Accurso's predicate intentional infliction of emotional distress claim align — indeed, whether intentional infliction of emotional distress (and breach of contract and partnership agreement) is even the correct cause of action based on Mr. Accurso's conception of what occurred.
Finally, the Court need not reach the question of whether a civil conspiracy claim could be founded upon Mr. Accurso's other remaining claims, namely, for unjust enrichment and for violation of the federal Employee Polygraph Protection Act ("EPPA") and the Pennsylvania Wage Payment and Collection Law ("WPCL"). The parties did not brief this issue, and the Court, upon cursory review of the case law, did not find the issue directly addressed. Cf., e.g., Alpha Pro Tech, Inc. v. VWR Int'l LLC, 984 F.Supp.2d 425, 449, 2013 WL 6179065, at *20 (E.D.Pa.2013) ("APT cannot base its tortious interference claim on its unjust enrichment claim as an
For the foregoing reasons, the Court will grant in part and deny in part Mr. Land and Ms. Strein's Motion to Dismiss. The Court will dismiss Mr. Accurso's claims against Mr. Land and Ms. Strein for breach of contract and breach of partnership agreement without prejudice to Mr. Accurso to attempt properly to plead a corporate veil-piercing theory. The Court will permit Mr. Accurso's civil conspiracy claim to proceed based on his unchallenged intentional infliction of emotional distress claim.
An Order consistent with this Memorandum follows.
AND NOW, this 28th day of May, 2014, upon consideration of Mr. Land and Ms. Strein's Joint Motion for Partial Judgment on the Pleadings (Docket No. 14), Mr. Accurso's Memorandum of Law in Opposition thereto (Docket No. 17), Mr. Land and Ms. Strein's Motion for Leave to File a Reply Brief (Docket No. 18), and the Reply Brief attached to that Motion (Docket No. 18-1),
1. The Motion for Leave to File a Reply Brief is GRANTED;
2. The Joint Motion for Partial Judgment on the Pleadings is
The resolution of a motion for judgment on the pleadings might also be with prejudice, for instance, if the plaintiff, who, having pleaded all three elements, (a), (b), and (c), of a cause of action, moves for judgment on the pleadings and contends that the defendant has admitted (a), (b), and (c) in his answer and raises no affirmative defenses. But the fact that resolution of a motion for judgment on the pleadings might be with prejudice in certain circumstances does not logically mean that it must always be so, as Defendants here seem to believe or at least urge.
The Court further observes, in the spirit of encouraging professional excellence, that this type of mistake of law can often be avoided by careful surveying of the case law rather than targeted (and tempting) quote-mining. Cf., e.g., United States v. Detroit Timber & Lumber Co., 200 U.S. 321, 336-37, 26 S.Ct. 282, 50 L.Ed. 499 (1906) ("Counsel also say that the question is settled by the decision in Hawley v. Diller, [178 U.S. 476, 20 S.Ct. 986, 44 L.Ed. 1157 (1900)] supra, relying upon the second paragraph in the headnotes.... There are two or three answers to this contention. In the first place, the headnote is not the work of the court, nor does it state its decision ... It is simply the work of the reporter, gives his understanding of the decision, and is prepared for the convenience of the profession in the examination of the reports.... And finally, the headnote is a misinterpretation of the scope of the decision.").
Contract ¶ 22.
Parker Oil Co. v. Mico Petro & Heating Oil, LLC, 979 A.2d 854, 856-57 (Pa.Super.Ct.2009); see also, e.g., Electron Energy, 597 A.2d at 178-79 ("If one is not a party to the contract, one cannot breach it. Therefore, liability for negligent or wrongful acts of a non-party to the contract would have to lie in tort."); Martin Petrin, The Curious Case of Directors' and Officers' Liability for Supervision and Management: Exploring the Intersection of Corporate and Tort Law, 59 Am. U.L.Rev. 1661, 1696 (2010) ("[T]he principle of limited liability ... restricts shareholders' personal liability for the debts and liabilities of the corporation to the extent of their investment and insulates corporate agents from contractual claims." (footnotes omitted)). Rather than referring to a "breach of contract" or "breach of partnership agreement" in his discussion of participation theory, Mr. Accurso uses phrases such as "personally liable for harm visited upon Plaintiff because of overt actions" and "wrongful acts." Mem. Opp. 10-11. The irony is that even though these words are remarkably vague, they still sound in tort rather than contract. Moreover, the Court has now twice undertaken to remind the parties about the importance of precision. See Feb. 10, 2014 Order 4 n. 4 ("The ... Strein Motion to Dismiss and Mr. Accurso's Response thereto cite very little case law and rely, instead, on citations to the broadest of principles and entire statutory schemes, without explaining how they apply to the alleged facts and parties in question." (citation omitted)).
Mr. Accurso's other theory, supported by the January 4, 2012 letter attached to his Complaint (Ex. C, Docket No. 10-3), is of Roofing Dynamics, Inc.'s, and Roofing Dynamics Group, LLC's successor liability. These corporate Defendants have not challenged the breach of contract claims and, indeed, would be hard-pressed to do so given the Counterclaim they have filed relying on the very Contract itself.
None of this is to say that all the relevant factors must be pleaded, either. See, e.g., ASD Specialty Healthcare Inc. v. New Life Home Care Inc., No. 11-068, 2011 WL 5984024, at *4 (M.D.Pa. Nov. 29, 2011) ("[At the motion to dismiss stage], ASD has adequately established that it may be appropriate to pierce the corporate veil and hold Mr. Malia liable for New Life's debts. Although it does not satisfy every factor of the veil-piercing test, ASD's amended complaint asserts that Mr. Malia siphons funds from New Life for his own personal use, that he has total control over the decisions of New Life, and that New Life is insolvent. These allegations are sufficient to withstand a motion to dismiss."). Nor is any of it to say, for instance, that Mr. Land's correspondence with Mr. Accurso is not relevant to the veil piercing question.
Posner, supra, at 182. The Court offers no opinion as to whether such claims would be "otherwise appropriate," but offers the discussion simply to illustrate the deficiencies apparent in the way Mr. Accurso's Complaint is pleaded. (Further, Mr. Accurso's attempt to invoke what is ostensibly the alter ego theory of corporate veil-piercing would seem to suggest he perceives that he has been harmed by the Defendants' fraud.) But see, e.g., Stein v. Fenestra Am., L.L.C., No. 09-5038, 2010 WL 816346, at *7 (E.D.Pa. Mar. 9, 2010) ("Despite the window dressing, this Court sees right through the Steins' tort claims and recognizes this case for what it is: a breach of contract action.").
Moreover, it would make little sense to allow a civil conspiracy claim to be based on breach of contract: civil conspiracy is a means of establishing vicarious liability, but, generally, the only entities potentially liable for breach of contract are those who are (a) parties to the contract and (b) breached some material term of that contract. In other words, the concept of vicarious liability is itself in tension with the breach of contract cause of action, and saying that two entities that breached a contract conspired to do so is a rather meaningless argument given that both would be directly liable. Cf. supra subsections III.A.1 & .2; infra note 23.
Lilly, 2009 WL 9101459, at *6 (citation and footnote omitted).
Feb. 10, 2014 Order 2-3 n. 3 (alteration removed). A civil conspiracy overlay either would seem to flout the purpose of the WPCL as described in the case law by allowing those without "an active role in decision making" to conspire to do something that they lack corporate power to do, or, alternatively, would seem nugatory by enabling a plaintiff to hold vicariously liable someone who is already directly liable.
Feb. 10, 2014 Order 3 n. 3.
