land on which to construct a Two Guys store. Plaintiffs support this allegation by asserting that defendant was negotiating to sell all of the Two Guys stores in the Philadelphia area. Thus, plaintiffs contend that defendant filed the lis pendens solely to harass, injure, and interfere with the development by plaintiffs of Whitman Plaza. As a result, plaintiffs claim ten million dollars in damages due to lost rentals, added construction costs, mortgage commitments, and attorneys' fees, as well as five hundred thousand dollars in punitive damages due to plaintiffs' alleged bad faith in filing the lis pendens.
When adjudicating a case on the pleadings, the court must apply strict standards. First, "[a] court may not dismiss a claim on the pleadings unless no set of facts could be adduced to support the plaintiff's claim for relief." Bryson v. Brand Insulations, Inc., 621 F.2d 556, 559 (3d Cir. 1980), citing Conley v. Gibson, 355 U.S. 41, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957). Second, a court must "view the facts presented in the pleadings and the inferences to be drawn therefrom in the light most favorable to the non-moving party." Grant v. Erie Insurance Exchange, 542 F. Supp. 457, 467 (M.D. Pa. 1982); Alken v. Lerner, 485 F. Supp. 871, 873 (D.N.J. 1980), citing 5 C. Wright and A. Miller, Federal Practice and Procedure § 1368 (1969). We must analyze the parties' contentions from this perspective.
I. Malicious Prosecution
Where, as here, a federal court exercises diversity jurisdiction, it must apply the substantive law that the forum state would follow. Erie R.R. Co. v. Tompkins, 304 U.S. 64, 82 L. Ed. 1188, 58 S. Ct. 817 (1938). Under Pennsylvania law, the elements of an action for wrongful use of civil proceedings are the initiation by defendant of prior legal proceedings without probable cause, which resulted in the seizure of plaintiffs' property and terminated in plaintiffs' favor. See Publix Drug Co. v. Breyer Ice Cream Co., 347 Pa. 346, 32 A.2d 413 (1943). The disputed elements in this case are whether plaintiffs Breslin, Hantgan and Center Associates have standing to bring the action and whether plaintiffs' property was seized.
Defendant contends that Breslin, Hantgan and Center Associates lack standing to bring this action because Breslin No. 3 Corp. was the only defendant in the 1976 breach of contract action. Plaintiffs, on the other hand, argue that they are Breslin No. 3 Corp. Defendant relies on cases from other jurisdictions which establish that only the original, named defendant has standing to bring an action for malicious prosecution.
While plaintiffs do not advance any case support, they contend that they were injured by defendant's action and that they transacted business with defendant interchangeably as individuals, as agents for Breslin No. 3 Corp., and as a partnership. They cite their complaint and portions of defendant's answer which acknowledge their personal participation in the joint venture which formed the basis of the breach of contract suit.
I believe that entry of judgment for defendant on this theory would be improper. Material factual issues remain which are sufficient to defeat defendant's motion on this ground. E.g., to what extent did the former action involve allegations against plaintiffs as individuals versus agents for the corporation? And to what extent are all plaintiffs in fact identical?
In support of its motion for judgment on the pleadings, defendant also asserts that plaintiffs failed to allege a necessary element of a malicious prosecution action: i.e., that a seizure of property or arrest of the person occurred in the prior action.
Specifically, it contends that the filing of a lis pendens is not a seizure of property. Plaintiffs disagree and argue that a loss of dominion and control over property, real or personal, is a sufficient seizure for purposes of an action for malicious use of process.
Plaintiffs cite Shannon v. Barrett where the court held that the filing of a lis pendens constitutes a seizure for purposes of malicious prosecution. 65 Pa. D. & C. 2d 446 (Del. Co. 1974). Plaintiffs, however, fail to appreciate the significance of the recent decision in Blumenfeld v. R.M. Shoemaker Co., 286 Pa. Super. 540, 429 A.2d 654 (Pa. Super. 1981), where the court rejected the minority rule stated in Shannon.3 In Blumenfeld, plaintiff filed a malicious prosecution action arising out of a lis pendens indexed against its property. In reversing the judgment of the lower court against defendant, the court stated:
Although a lis pendens may temporarily cloud someone's title and therefore make encumbrancing or conveyancing difficult, it is nevertheless clear that it does not even establish a lien upon the effected property. A fortiori, a lis pendens does not constitute a seizure of property within the purview of the English rule. Consequently, appellees failed to establish a cause of action for either malicious use of process or abuse of process.