DALZELL, District Judge.
Plaintiff Asteria Vives ("Asteria") sues defendants Frank ("Frank") and Miguelina ("Miguelina") Rodriguez,
Miguelina filed what she styled a "motion for summary judgment" last year, as to which Asteria filed a response in opposition and Frank filed a memorandum in support.
Notwithstanding the manner in which it is styled, we will construe Miguelina's submission as a motion to dismiss predicated on plaintiff's failure to state a claim and this Court's lack of subject matter jurisdiction, and will evaluate it pursuant to Fed. R.Civ.P. 12(b)(1) and (6). For the reasons enunciated below, we will grant this motion
In ruling on a motion to dismiss under Rule 12(b)(6),
According to Asteria, she is a resident of Historic LaMott, Pennsylvania, while Frank and Miguelina reside in Orlando, Florida. Pl.'s Compl. ¶¶ 4-5. Asteria entered into an agreement with Frank and Miguelina on June 1, 2006, in which Frank and Miguelina agreed to serve as the straw purchasers of 7322 Butcher Street, LaMott, Pennsylvania (the "property") on Asteria's behalf. The agreement provided that: (1) Asteria would provide all funds for purchasing the property and pay for all rehabilitation costs and tax and insurance obligations arising out of the transaction; (2) Frank and Miguelina would pay the net proceeds to Asteria after the property's eventual re-sale; and (3) Asteria would pay Frank and Miguelina a fee of $500.00 upon this sale. Id. ¶¶ 9-10. Frank purchased the property on June 14, 2006 for $55,000, with funds Asteria provided. Id. ¶¶ 11-12. On August 7, 2006, Frank and Miguelina agreed to act as straw sellers of the property for Asteria, and sold the property on August 10, 2006 for $95,000.00. Id. ¶¶ 13-14.
Asteria alleges that between October 26, 2006 and May 27, 2007, she repeatedly demanded — by telephone, e-mail, and mail — that Frank and Miguelina "tender the remaining balance from the sale." Id. ¶ 15. Frank and Miguelina responded with a series of excuses for their inability to turn over this balance, finally stating on May 20, 2007 that they would issue a secured payment of $35,000.00 to Asteria if she would provide them with an affidavit stating that she was no longer "using Defendant Frank Rodriguez's power of attorney." Id. ¶¶ 17-18. On May 22, 2007, Asteria provided Frank with an affidavit stating that his "power of attorney [had been] terminated". Nonetheless, Frank and Miguelina continued to ignore Asteria's demands for payment and have not tendered the net balance from the sale of the property, which Asteria contends amounts to $37,159.60. Id. ¶¶ 19-21.
Asteria claims that shortly after Frank and Miguelina received payment for the August 10, 2006 sale of the property, they satisfied the mortgage on their Florida home in large part using the net proceeds from the sale. Id. ¶ 27. According to Asteria, "Frank and Miguelina Rodriguez's promise to immediately and promptly turn over the balance of the sale of 7322 Butcher Street, Historic LaMott, Pennsylvania 19027 to Plaintiff was a material misrepresentation, with scienter, that was part and parcel of a fraudulent scheme to unlawfully
Asteria seeks compensatory damages of $37,159.60 on her claims for breach of contract, unjust enrichment, conversion, and fraud. Id. at 4-6. She also seeks punitive damages of $371,000.00 under Count IV for fraud, and punitive damages of $250,000.00 and compensatory damages of $250,000.00 under Count V for intentional infliction of emotional distress. Id. at 7.
Section 1332(a)(1) provides that "[t]he district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between — (1) citizens of different States," and Rule 12(b)(1) states that "a party may assert the following defenses by motion: (1) lack of subject-matter jurisdiction." Our Court of Appeals has explained that when a challenge is made to diversity jurisdiction based on failure to satisfy § 1332's amount-in-controversy requirement,
Chrin v. Ibrix, Inc., 293 Fed.Appx. 125, 127 (3d Cir.2008) (citing St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 58 S.Ct. 586, 82 L.Ed. 845 (1938)).
When a court considers a motion to dismiss pursuant to Rule 12(b)(6), on the other hand, the test "`is whether, under any reasonable reading of the pleadings, the plaintiff may be entitled to relief.'" Kundratic v. Thomas, 407 Fed.Appx. 625, 627 (3d Cir.2011) (quoting Holder v. City of Allentown, 987 F.2d 188, 194 (3d Cir. 1993)) (brackets in original). A plaintiff may not pass this test merely by offering "labels and conclusions" in the complaint, Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), and similarly "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice," Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). Instead, a complaint's "[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, so that there is "more than a sheer possibility that a defendant has acted unlawfully." Iqbal, 129 S.Ct. at 1949. Essentially, a plaintiff must provide "enough fact[s] to raise a reasonable expectation that discovery will reveal evidence of" the necessary element. Twombly, 550 U.S. at 556, 127 S.Ct. 1955.
Miguelina advances six arguments in her motion, to wit: (1) once Asteria's legally insufficient claims are removed from consideration, we lack subject matter jurisdiction over this action; (2) there is no cause of action against her; (3) the gist of the action doctrine bars Asteria's fraud and intentional infliction of emotional distress claims; (4) the fraud and intentional infliction of emotional distress claims against Miguelina are insufficiently stated; (5) Asteria has not stated a claim for punitive damages; and (6) this Court should abstain from exercising jurisdiction over this matter under the Colorado River doctrine. We will consider each argument in turn.
Miguelina suggests that "[t]his Court lacks subject-matter jurisdiction over this case because, when Vives' legally-deficient claims for fraud, intentional infliction of emotional distress, and punitive damages are removed from consideration, the amount in controversy does not exceed the amount required by 28 U.S.C. § 1332." Miguelina's Mem. in Supp. of Mot. ("Miguelina Mem.") at 3. Asteria responds that "each of Plaintiff's substantive claims are meritorious and greatly exceed the $75,000.00 minimum amount necessary to satisfy the requirements of 28 U.S.C. Section 1332." Pl.'s Resp. at 5.
As noted above, where the "underlying jurisdictional facts are not in dispute," a court generally resolves a challenge to diversity jurisdiction by determining "whether it appears to a `legal certainty' that the plaintiff is not entitled to recover an amount exceeding the jurisdictional requirement." Chrin, 293 Fed. Appx. at 127. This situation is somewhat different from the ordinary context in which a Rule 12(b)(1) motion is asserted, however, in that Miguelina claims that we lack jurisdiction in part because Asteria's claimed damages are legally unavailable and in part because her claims are legally insufficient.
As Judge Joyner some time ago explained,
McNulty v. Travel Park, 853 F.Supp. 144, 146 (E.D.Pa.1994) (citations omitted). Thus, our Court of Appeals has noted that "a judgment dismissing one claim, and leaving only another claim by itself below the jurisdictional minimum amount in controversy, does not affect subject matter jurisdiction, as it is pegged at the time the complaint was filed." B & P Holdings I, LLC v. Grand Sasso, Inc., 114 Fed.Appx. 461, 464 (3d Cir.2004). See also Suber v. Chrysler Corp., 104 F.3d 578, 583 (3d Cir. 1997) ("[T]he `legal certainty' standard is a threshold matter that should involve the court in only minimal scrutiny of the plaintiff's claims. The court should not consider in its jurisdictional inquiry the legal sufficiency of those claims or whether the legal theory advanced by the plaintiffs is probably unsound.").
To be sure, our Court of Appeals has also observed that "[i]n an action originated in federal court, the court must strike a difficult balance where unliquidated damages are involved: a plaintiff's frivolous claim cannot be decisive to establish the jurisdiction of the court, yet jurisdiction cannot be made to depend on the final outcome of the case." Albright v. R.J. Reynolds Tobacco Co., 531 F.2d 132, 134 (3d Cir.1976). More recently, our Court of Appeals has instructed that "whether the claims are for less than the jurisdictional amount depends on what damages a plaintiff could conceivably recover under state law," and that "when a claim for punitive damages is frivolous ... that claim must be stricken from the amount in controversy." Onyiuke v. Cheap Tickets, Inc., 435 Fed.Appx. 137, 139 (3d Cir.2011) (internal quotation marks omitted). See also, e.g., Packard v. Provident Nat'l Bank, 994 F.2d 1039, 1046 (3d Cir.1993) ("[W]hen a claim for punitive damages is patently frivolous and without foundation because such damages are unavailable as a matter of law,
Based on this jurisprudence, we conclude that a plaintiff may fail to satisfy the amount in controversy requirement of § 1332 despite claiming damages in excess of the minimum amount either because (1) she has asserted claims that are so legally insufficient as to be frivolous, or (2) some of her claims for damages are frivolous under the applicable law. Here, while we ultimately conclude that Asteria has fallen far short of stating a claim for intentional infliction of emotional distress, we will dismiss her claim for fraud based on a close reading of conflicting case law regarding the gist of the action doctrine and, secondarily, due to her failure to plead a requisite element of fraud. Under these circumstances, her fraud claim is not so weak as to descend to the level of frivolity.
For us to conclude that we lack subject matter jurisdiction over this case, we would have to find that Asteria's claim for punitive damages based upon her fraud claim is frivolous, so that — after removing from consideration her frivolous IIED claim and frivolous claim for punitive damages based upon fraud — she would be left with only a valid claim for compensatory damages in the amount of $37,159.60. We cannot find such frivolity, though Miguelina argues that "Vives' claim for punitive damages is not sufficiently stated." Miguelina Mem. at 10 (capitalization omitted).
The Pennsylvania Superior Court has explained that "[t]he rule of punitive damages set forth in the Restatement (Second) of Torts § 908 has been adopted in Pennsylvania," Moran ex rel. Moran v. G & W.H. Corson, Inc., 402 Pa.Super. 101, 586 A.2d 416, 422 (Pa.Super.1991), under which "`[p]unitive damages may be awarded for conduct that is outrageous, because of the defendant's evil motive or his reckless indifference to the rights of others.'" Id. (quoting Restatement (Second) of Torts § 908(2)). In the particular case of fraud, "[t]he rule ... is that for punitive damages to be awarded there must be acts of malice, vindictiveness and a wholly wanton disregard of the rights of others." Smith v. Renaut, 387 Pa.Super. 299, 564 A.2d 188, 193 (1989). However, "though this rule seems to require the plaintiff to meet an additional burden, it is difficult to picture a fact pattern which would support a finding of intentional fraud without providing proof of `outrageous conduct' to support an award of punitive damages." Delahanty v. First Pennsylvania Bank, N.A., 318 Pa.Super. 90, 464 A.2d 1243, 1263 (1983).
In this case, Asteria alleges that Frank and Miguelina entered into their agreement with her as "part and parcel of a fraudulent scheme to unlawfully secure capitalization for the satisfaction of their Florida mortgage." Pl.'s Compl. ¶ 28. Though we ultimately find that Asteria has failed to state a claim for fraud, and that it would be futile to permit her to amend the complaint in light of the operation of the gist of the action doctrine, we cannot conclude that her claim for punitive damages based upon Frank and Miguelina's alleged intentional fraud is so frivolous that it should not be aggregated with her other damages claims to determine the amount in controversy. Thus, when Asteria's non-frivolous claims are summed, we are left with an amount in controversy of $408,159.60 — leaving us with subject matter jurisdiction over this case under § 1332.
Turning to Miguelina's attacks on Asteria's claims, she first argues that "Plaintiff's Complaint on its face does not state a cause of action against Miguelina Rodriguez," Miguelina Mem. at 19, and that "[o]ther than bare allegations of alleged
We will consider Asteria's fraud, conversion, and intentional infliction of emotional distress claims against Miguelina in greater detail below, and will now examine only her claims for breach of contract and unjust enrichment. Miguelina's challenge to these claims has a hybrid character, as she asserts not only that Asteria has failed to state these claims, but that she has adduced no evidence in support of these claims. As we have already noted, the parties have not yet engaged in discovery in this matter, so we will not rule on Miguelina's challenge to the sufficiency of the evidence supporting Asteria's claims.
With respect to whether Asteria has stated these claims, we note that to make a breach of contract claim under Pennsylvania law a plaintiff must allege "(1) the existence of a contract, including its essential terms, (2) a breach of a duty imposed by the contract and (3) resultant damages." Omicron Systems, Inc. v. Weiner, 860 A.2d 554, 564 (Pa.Super.2004) (brackets and internal quotation marks omitted). In her complaint, Asteria alleges that "[o]n June 1, 2006, the Plaintiff, Asteria Vives, entered into an agreement with the Defendants, Frank and Miguelina Rodriguez," which provided that Frank and Miguelina would act as straw purchasers and re-sellers of the 7322 Butcher Street property and pay the net proceeds of the re-sale to Asteria. Pl.'s Compl. ¶¶ 9-10. Asteria alleges that these defendants "breached the agreement by failing to tender the remaining net balance of sale of the property." Id. ¶ 20. Notwithstanding these allegations, Miguelina asserts that "all of the Agreements that are attached to the Complaint speak only to a potential relationship between the Plaintiff and Frank Rodriguez." Miguelina Mem. at 20. Though Asteria claims in her complaint to have attached the June 1, 2006 agreement as Exhibit A, our examination reveals that this exhibit is missing, and neither party has attached the agreement to more recent submissions. Under these circumstances,
As for the unjust enrichment claim,
Miguelina next asserts that "Vives' claims for fraud and intentional infliction of emotional distress are barred by the gist-of-the-action doctrine because the conduct from which the alleged liability arises really stems from a breach of contractual duties," Miguelina Mem. at 5 (emphasis in original), and that "[f]or all the reasons stated herein, the gist-of-the-action doctrine also bars Vives' conversion claim." Id. at n. 4. Asteria responds that "the gravamen of Plaintiff's fraud calim [sic] involves Defendants' Miguelina and Frank Rodriguez's fraudulent inducemnt [sic] of Plaintiff into the [sic] agreement, wherein they misrepresented their intention to be straw purchasers and sellers, not the contract itself." Pl.'s Resp. at 13. She adds that with respect to her conversion and IIED claims, "Defendants' egregious misconduct in violating the sacred trust of family and outright stealing funds that he [sic] was entrusted are breaches of social policy and fundamental morality which are separate and apart from the terms of his [sic] agreement with Plaintiff, and therefore collateral to his [sic] breach of contract." Id. at 16-17.
As Judge McVerry noted last year, "[t]he Pennsylvania Supreme Court has not expressly adopted the gist of the action doctrine," though "both the United States Court of Appeals for the Third Circuit and the Pennsylvania Superior Court have predicted it would do so." PPG Indus., Inc. v. Generon IGS, Inc., 760 F.Supp.2d 520, 527 n. 1 (W.D.Pa.2011). Generally speaking, "the `gist of the action' doctrine ... operates to preclude a plaintiff from re-casting ordinary breach of contract claims into tort claims." Hart v. Arnold, 884 A.2d 316, 339 (Pa.Super.2005). With respect to Asteria's conversion claim, both Pennsylvania intermediate courts and courts of this Circuit have made clear that where a tortious claim for conversion is based solely on the failure to perform under a contract, it is barred by the gist of the action doctrine. See, e.g., Pittsburgh Constr. Co. v. Griffith, 834 A.2d 572, 584 (Pa.Super.2003) ("[T]he basis of the duty allegedly breached by [defendants], their duty to pay [plaintiff] according to the draw schedule, was created by and defined by the contract itself.... [W]e will not permit [plaintiff] to interject a claim for tortious conversion into an action that is decidedly contractual."); Brown & Brown, Inc. v. Cola, 745 F.Supp.2d 588, 623-24 (E.D.Pa.2010) (Buckwalter, J.) (applying gist of the action doctrine to bar conversion
Since Asteria's conversion claim is predicated exclusively upon Frank and Miguelina's failure to restore to Asteria "the balance of the sale of the property" under the alleged agreement, Pl.'s Compl. ¶ 25, we will grant Miguelina's request to dismiss Count III of the complaint. As for Asteria's IIED claim, the rationale underlying the gist of the action doctrine (to which we turn in a moment) suggests that it might act to bar this claim — but we have found little case law from either Pennsylvania or Third Circuit courts on this point. See, e.g., Legion Ins. Co. v. Doeff, 2001 WL 1807931, at *3 (Pa.Com.Pl.2001) (finding that gist of the action doctrine did not bar intentional infliction of emotional distress claim); Russo v. Diocese of Greensburg, 2010 WL 3656628, at *3 (W.D.Pa.2010) (Lancaster, C.J.) (permitting intentional infliction of emotional distress to proceed to discovery notwithstanding gist of the action doctrine). Because our analysis below in Section II.D demonstrates that Asteria has in any case failed to state an intentional infliction of emotional distress claim, we will decide this point on that basis, instead.
We thus come to the essential (and thorny) question we must confront in applying the gist of the action doctrine to the facts of this case: whether (and when) the gist of the action doctrine applies to bar fraudulent inducement claims. The Pennsylvania Supreme Court has not discussed this issue, and state intermediate courts and courts from within this Circuit have not spoken on it with one voice.
In the seminal case applying the gist of the action doctrine to fraud claims in Pennsylvania courts, the Superior Court of Pennsylvania drew on precedent from both the Superior Court and federal courts within this Circuit to explain that
eToll, Inc. v. Elias/Savion Adver., Inc., 811 A.2d 10, 14 (Pa.Super.2002) (internal quotation marks, citations and brackets omitted). Observing that "[t]o date, no Pennsylvania state appellate case has addressed the interplay between fraud and the gist of the action doctrine," id. at 15-16, the Court canvassed federal cases on the subject before summarizing them thusly: "the cases seem to turn on the question of whether the fraud concerned the performance of contractual duties. If so, then the alleged fraud is generally held to be merely collateral to a contract claim for breach of those duties. If not, then the gist of the action would be the fraud, rather than any contractual relationship between the parties." Id. at 19. The Superior Court consequently concluded that "until our Supreme Court holds otherwise, the gist of the action doctrine should apply to claims for fraud in the performance of a contract." Id. at 20. Importantly, eToll noted that Judge Van Antwerpen, then of this District, had "suggested that fraud in the inducement of a contract would not necessarily be covered by [the] doctrine because fraud to induce a person to enter into a contract is generally collateral to (i.e., not `interwoven' with) the terms of the contract itself." Id. at 17 (emphasis in original) (citing Foster v. Northwestern Mutual Life, 2002 WL 31991114, at *17 (E.D.Pa. 2002)).
Not long after eToll, our Court of Appeals similarly concluded that "[a]lthough the Pennsylvania Supreme Court has not expressly adopted this doctrine, we predict that the state supreme court would adopt the doctrine as set out in the Superior Court's cases," Williams v. Hilton Group PLC, 93 Fed.Appx. 384, 385 (3d Cir.2004), though the Court stressed that "the `gist of the action' doctrine cannot be captured by any precisely worded test. Instead, the doctrine appears to call for a fact-intensive judgment as to the true nature of a claim." Id. at 386. Our Court of Appeals then concluded that although the plaintiff "contend[ed] that his fraud claims are not for fraud in the performance of a contract but are akin to claims for fraud in the inducement because [the defendant] `induced [the plaintiff] into signing the Letter of Intent and dealing with [the defendant] by lying about its intent to honor the agreement,'" id. (quoting Appellant's Br.), it was nonetheless true that "the `gist' of Williams's claims sounds in contract, not tort." Id. at 387. Judge Becker dissented, asserting that "where, as here, there was fraudulent intent, i.e. a subjective and undisclosed intent not to perform, a fraud claim is stated." Id. at 389-90.
In the years since Williams, a number of district courts in this Circuit have concluded that the gist of the action doctrine may apply to bar not only claims relating to the fraudulent performance of a contract, but fraudulent inducement to enter into such a contract where the false representation concerned duties later enshrined in the contract — which would necessarily include representations as to the defendant's intent to perform. See, e.g., Integrated Waste Solutions, Inc. v. Goverdhanam, 2010 WL 4910176, at *11 (E.D.Pa.2010) (Buckwalter, J.) ("Where the precontractual statements that are the basis for the fraudulent inducement claim concern specific duties that the parties later
In 2004, however — almost a year after our Court of Appeals decided Williams, and two years after eToll — the Pennsylvania Superior Court concluded that "the law appears to permit fraud in the inducement claims in disputes involving contractual obligations, notwithstanding that the gist of the action doctrine would bar claims of fraudulent (non)performance." The Brickman Grp., Ltd. v. CGU Ins. Co., 865 A.2d 918, 928 (Pa.Super.2004). That court left unclear, however, whether it considered the gist of the action doctrine to be inapplicable to all fraudulent inducement claims or only some, and ultimately dismissed the claims at issue on different grounds.
A few months later, the Superior Court examined fraudulent inducement claims once again, in a context where "Appellant alleged that Appellee fraudulently and/or negligently agreed to perform obligations that it never intended to perform in order to induce Appellant to agree to the proposed changes to his compensation package and to forgo an immediate resignation." Sullivan v. Chartwell Inv. Partners, LP, 873 A.2d 710, 719 (Pa.Super.2005). After noting that "[the eToll court] observed that the gist-of-the-action doctrine would not necessarily bar a fraud claim stemming from the fraudulent inducement to enter into a contract," the Superior Court concluded that "since Appellant's tort claims relate to the inducement to contract, they are collateral to the performance of the contracts and therefore, are not barred by the gist-of-the action doctrine." Id.
And just two years ago the Superior Court confronted a case in which "the facts demonstrate[d] that [the defendant] never intended to perform the duties he agreed to." Mirizio v. Joseph, 4 A.3d 1073, 1087 (Pa.Super.2010). Citing Sullivan, the court concluded that the defendant's "actions constituted fraud in the inducement, and therefore, the claim for fraud and misrepresentation was not barred by the gist of the action doctrine," id. at 1085, since "the performance of [the defendant's] duties under the agreement was collateral to this fraudulent scheme." Id. at 1087.
In light of Sullivan, Judge Lenihan has revisited our Court of Appeals's ruling in Williams, concluding that
Digital Encoding Factory, LLC v. Iron Mountain Info., 660 F.Supp.2d 608, 623 (W.D.Pa.2009) (quoting Williams, 93 Fed. Appx. at 390 (Becker, J., dissenting)). But our Court of Appeals has had the opportunity to revisit this question following Brickman, Sullivan, and Digital Encoding Factory. Just six days before Mirizio, in a case in which the court below "concluded that `the misrepresentation here was with respect to fraud in the inducement,'" our Court of Appeals explained that
Pediatrix Screening, Inc. v. TeleChem Int'l, Inc., 602 F.3d 541, 550 (3d Cir.2010) (internal citation omitted). The Pediatrix panel was not unaware of Sullivan, observing parenthetically that the Superior Court in that case held that "separate fraud claim not barred when defendant `fraudulently ... agreed to perform obligations that it never intended to perform in order to induce' plaintiff into entering into contract." Id. at 549 (ellipsis in original).
We are thus left in a quandary. Courts of this Circuit, including our Court of Appeals, have predicted that the Pennsylvania Supreme Court would apply the gist of the action doctrine to bar fraudulent inducement claims where the misrepresentations in question concern duties later incorporated into a contract. Furthermore, these courts have warned against relying on the distinction between fraudulent inducement and fraudulent performance claims to determine whether to apply the doctrine. The foundational Pennsylvania Superior Court case on the subject — eToll — held only that "the gist of the action doctrine should apply to claims for fraud in the performance of a contract," 811 A.2d at 20, and supplied no express holding as to fraudulent inducement claims. But recent Superior Court decisions have apparently concluded that all fraudulent inducement claims are left unbarred by the doctrine.
We ultimately side with the authority from our Circuit, and predict that the Pennsylvania Supreme Court would find fraudulent inducement claims predicated upon misrepresentations as to a party's intent to perform under a contract to be barred by the gist of the action doctrine. To begin, language from eToll — which, since it was decided, has served as the Urtext in both federal and state court for essentially all cases applying the gist of the action doctrine under Pennsylvania law — explains that application of the doctrine should "turn on the question of whether the fraud concerned the performance of contractual duties," whereupon "the alleged fraud is generally held to be
eToll further suggests that the gist of the action doctrine bars claims "arising solely from a contract between the parties" where "the liability stems from a contract" or "the tort claim essentially duplicates a breach of contract claim." Id. (internal quotation marks omitted). As the Pennsylvania Superior Court has explained, "[t]he elements of fraudulent misrepresentation are as follows: (1) A representation (2) which is material to the transaction at hand; (3) made falsely, with knowledge of its falsity or recklessness as to whether it is true or false; (4) with the intent of misleading another into relying on it; (5) justifiable reliance on the misrepresentation; and, (6) the resulting injury was proximately caused by the reliance." Ira G. Steffy & Son, Inc. v. Citizens Bank of Pa., 7 A.3d 278, 290 (Pa.Super.2010). We have already rehearsed the elements of a cause of action for breach of contract: "(1) the existence of a contract, including its essential terms, (2) a breach of a duty imposed by the contract and (3) resultant damages." Omicron Systems, 860 A.2d at 564 (brackets and quotation marks omitted). If a plaintiff can demonstrate that the defendant knew, at the time a contract was entered, that he did not intend to perform under that contract — thus satisfying the third element of a fraudulent misrepresentation claim — then success in proving the elements of a claim for breach would necessarily produce success in prosecuting a fraud claim.
This conclusion is consonant with decisions from this Circuit explaining that misrepresentations as to duties later enshrined in a contract are barred by the doctrine. While it is true that these decisions conflict with recent Superior Court rulings holding that fraudulent inducement claims may be predicated upon a party's intent not to perform, those rulings appear to be based on a blanket exemption of all fraudulent inducement claims from the scope of the gist of the action doctrine. This categorical exception does not accord well with the measured tones of eToll — which, as the Sullivan court itself noted, merely "observed that the gist-of-the-action
We thus conclude that the Pennsylvania Supreme Court would likely hold that fraudulent inducement claims based upon a party's alleged misrepresentation as to its intent to perform under a contract are barred by the gist of the action doctrine. As a result, we will grant Miguelina's motion insofar as it seeks dismissal of Count IV of Asteria's complaint.
Miguelina argues that "[e]ven if Vives' fraud and intentional-infliction-of-emotional-distress claims are not barred by the gist-of-action doctrine, they are still legally deficient because they are not sufficiently stated." Miguelina Mem. at 8. Asteria responds that her "fraud claim meets the particularity requirement of Rule 9(b)," since her "Complaint states the dates upon which Co-Defendant Frank Rodriguez, under false pretenses, agreed to act as straw buyer and seller, thereby specifying the time, speaker and content of the alleged misrepresentations." Pl.'s Resp. at 11. Asteria suggests, regarding her IIED claim, that "Miguelina and Frank Rodriguez, who swindled Plaintiff out of the proceeds of the sale of 7322 Butcher Street, LaMott, Pennsylvania are Plaintiff's brother-in-law [sic] and brother, respectively. Certainly, to exploit the inherent trust arising out of a sibling relationship for pecuniary gain is atrocious and utterly intolerable in a civilized society." Id. at 15.
We have already explained that the gist of the action doctrine bars Asteria's fraud claim, and thus have dismissed Count IV of the complaint. As Miguelina correctly notes, however, we could alternatively dismiss this count due to Asteria's failure to state a claim. Asteria claims that she has concretely alleged the time, content, and speaker of the misrepresentations that allegedly give rise to her fraud claim, but with respect to the third element of such a claim — that a misrepresentation was "made falsely, with knowledge of its falsity or recklessness as to whether it is true or false," Ira G. Steffy, 7 A.3d at 290 — Asteria merely asserts that defendants' "promise to immediately and promptly turn over the balance of the sale of [the property] to Plaintiff was a material misrepresentation, with scienter." Pl.'s Compl. ¶ 28.
While Fed.R.Civ.P. 9(b) provides only that "[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person's mind may be alleged generally," the Supreme Court explained in Iqbal, 129 S.Ct. at 1954, that
Asteria's bald allegation that Frank and Miguelina's promise to perform was "a
As for Asteria's IIED claim, a plaintiff may recover for such a claim only if a defendant's conduct was "`so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized society.'" Cox v. Keystone Carbon Co., 861 F.2d 390, 395 (3d Cir.1988) (quoting Buczek v. First National Bank of Mifflintown, 366 Pa.Super. 551, 531 A.2d 1122, 1125 (1987)). Outrageousness occurs only where "the case is one in which the recitation of the facts to an average member of the community would arouse his resentment against the actor, and lead him to exclaim, `Outrageous!'" Hunger v. Grand Cent. Sanitation, 447 Pa.Super. 575, 670 A.2d 173, 177 (1996). Quite simply, Frank and Miguelina's alleged failure to return nearly $40,000 to Asteria pursuant to a contractual arrangement falls far short of the outrageousness that Hunger requires. We understand that Asteria's distress in this case is intensified by her familial relationship with the defendants, but it is hard for us to imagine any situation in which the simple failure to transfer funds under a contract would support an IIED claim. We will thus dismiss Count V of her complaint for failure to state a claim.
We are therefore left only with Asteria's breach of contract and unjust enrichment claims against Frank and Miguelina. Asteria makes no claim for punitive damages under these counts, but in the interests of thoroughness we stress that under Pennsylvania law "punitive damages ... are not available for breach of contract claims and quantum meruit claims." Sunburst Paper, LLC v. Keating Fibre Int'l, Inc., 2006 WL 3097771, at *4 (E.D.Pa. 2006) (Padova, J.) (citations omitted).
Miguelina urges that "in light of the almost-identical State Action that is currently pending in the Montgomery County
In Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976), the Supreme Court observed that "`the pendency of an action in the state court is no bar to proceedings concerning the same matter in the Federal Court having jurisdiction,'" id. at 817, 96 S.Ct. 1236 (quoting McClellan v. Carland, 217 U.S. 268, 282, 30 S.Ct. 501, 54 L.Ed. 762 (1910)), and noted that "the virtually unflagging obligation of the federal courts [is] to exercise the jurisdiction given them." Id. The Court explained that "the circumstances permitting the dismissal of a federal suit due to the presence of a concurrent state proceeding for reasons of wise judicial administration are considerably more limited than the circumstances appropriate for abstention," but allowed that these "exceptional" circumstances "do nevertheless exist." Id. at 818, 96 S.Ct. 1236.
As our Court of Appeals has explained, "[w]hether abstention is appropriate [under Colorado River] is a two-part inquiry." Nationwide Mut. Fire Ins. Co. v. George V. Hamilton, Inc., 571 F.3d 299, 307 (3d Cir.2009). "The threshold requirement for a district court to even entertain abstention is a contemporaneous parallel judicial proceeding. For judicial proceedings to be parallel, there must be identities of parties, claims, and time.... We have never required complete identity of parties for abstention." IFC Interconsult, AG v. Safeguard Int'l Partners, LLC, 438 F.3d 298, 306 (3d Cir.2006).
While neither party has bothered to supply us with the complaint in the state action involving these parties,
Under this second prong, courts "look to a multi-factor test to determine whether `extraordinary circumstances' meriting abstention are present": "`(1) [in an in rem case,] which court first
Miguelina argues that this test favors abstention, explaining that "[t]he first three factors are neutral," Miguelina Mem. at 17, and that "[t]he remaining three factors ... weigh in favor of abstention." Id. at 18. While it is true that (1) Asteria initiated the state action at issue before this federal action, (2) state law controls, and (3) we have no doubt that the Pennsylvania state court will adequately protect the parties' interests, this by itself does not suggest that abstention is warranted under Colorado River. As the Supreme Court explained in Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983), "our task in cases such as this is not to find some substantial reason for the exercise of federal jurisdiction by the district court; rather, the task is to ascertain whether there exist `exceptional' circumstances, the `clearest of justifications,' that can suffice under Colorado River to justify the surrender of that jurisdiction." As the Court emphasized, "[b]y far the most important factor in [Colorado River] was the `clear federal policy ... [of] avoidance of piecemeal adjudication of water rights in a river system.'" Id. at 16, 103 S.Ct. 927 (quoting Colorado River, 424 U.S. at 819, 96 S.Ct. 1236) (ellipsis, brackets and emphasis in original). Our Court of Appeals has clarified that "the `avoidance of piecemeal litigation' factor is met... only when there is evidence of a strong federal policy that all claims should be tried in the state courts." Ryan v. Johnson, 115 F.3d 193, 197-98 (3d Cir.1997). Since there is undoubtedly no such federal policy applicable to this case, the third and paramount Colorado River factor is not met here, which strongly militates against abstention.
As for the factors that Miguelina points to as favoring abstention, our Court of Appeals has emphasized that "abstention cannot be justified merely because a case arises entirely under state law," id. at 199, and that "the mere fact that the state forum is adequate does not counsel in favor of abstention." Id. at 200. With respect to the fourth Colorado River factor, "when a judgment sought is strictly in personam, both state and federal courts with concurrent jurisdiction may proceed until judgment is obtained in one of them," Marshall v. Lauriault, 372 F.3d 175, 183 (3d Cir.2004), whereupon "principles of res judicata resolv[e] the effect of a judgment in one court upon the other." Id. (citing In re Diet Drugs, 282 F.3d 220, 234 (3d Cir.2002)). As a result, none of the three factors that Miguelina identifies tips strongly in favor of abstention, and certainly not so powerfully as to constitute "exceptional" circumstances that furnish "the clearest of justifications" in favor of abstention.
We will thus decline to abstain from exercising jurisdiction over this case pursuant to Colorado River.
And now, this 31st day of January, 2012, upon consideration of plaintiff Asteria Vives's complaint (docket entry # 10), defendant Miguelina Rodriguez's motion for summary judgment (docket entry # 32), plaintiff's response in opposition thereto and exhibits in support thereof (docket entries # 37, 38, and 39), and defendant Frank Rodriguez's response to Miguelina Rodriguez's motion and memorandum in support thereof (docket entry # 43), and upon the analysis set forth in the accompanying Memorandum, it is hereby ORDERED that:
1. Defendant Miguelina Rodriguez's motion for summary judgment (docket entry # 32) is GRANTED IN PART;
2. Counts III, IV, and V of plaintiff's complaint (docket entry # 10) are DISMISSED WITH PREJUDICE; and
3. The parties shall CONVENE in Chambers (Room 15613) on February 14, 2012 at 11:00 a.m. for a Rule 16 Conference.
