The opinion of the court was delivered by: HARVEY BARTLE, III
This fourth in a series of lawsuits between the parties involves claims for indemnification, wrongful use of civil proceedings and abuse of process.
Defendant Salvatore Avena ("Avena") moves to dismiss the complaint for failure to state a claim upon which relief can be granted pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.
According to the complaint, plaintiffs AAA Waste Disposal Corporation ("AAA") and Woodland Realty, Inc. ("Woodland"), among other parties not relevant here, settled a previous action pursuant to the Racketeer Influenced and Corrupt Organizations Act which defendant Avena had brought in the Eastern District of Pennsylvania. See Avena v. Franco, C.A. No. 92-0640 (E.D. Pa. filed Jan. 31, 1992). Pursuant to the settlement agreement in that case, AAA and Woodland agreed to repurchase stock Avena owned in the two corporations. AAA and Woodland agreed to pay Avena an initial lump sum and then make monthly payments for four years. When AAA and Woodland defaulted on their monthly payments, Avena filed suit in a New Jersey state court seeking acceleration of payment pursuant to the agreement. See Avena v. Franco, No. L-1603-94 (N.J. Super. Ct. Law Div. filed Feb. 18, 1994). After the parties filed cross-motions for summary judgment, the New Jersey court granted in part and denied in part the relief Avena requested.
After AAA and Woodland defaulted on a subsequent monthly payment, Avena filed a second action in New Jersey against them. See Avena v. Franco, No. L-09717-94 (N.J. Super. Ct. Law Div. filed Oct. 21, 1994). Summary judgment was granted in Avena's favor in the second New Jersey suit on March 20, 1995. While the second New Jersey action was pending but before summary judgment was granted, Avena confessed judgment against AAA and Woodland in Pennsylvania pursuant to the terms of the settlement agreement. See Avena v. Franco, No. 2382 (C.P. Phila., December Term, 1994). Avena voluntarily discontinued the Pennsylvania action prior to the entry of summary judgment in his favor in the second New Jersey action.
AAA and Woodland's present suit arises under diversity jurisdiction. They first seek indemnification under the settlement agreement for legal fees and costs incurred as a result of the Pennsylvania confessions of judgment. AAA and Woodland further allege that Avena's filing of the confessions of judgment constituted wrongful use of civil proceedings and abuse of process.
Although AAA and Woodland did not include a copy of the settlement agreement with their complaint, Avena attached a copy to his motion to dismiss. "A court may consider an undisputedly authentic document that a defendant attaches as an exhibit to a motion to dismiss if the plaintiff's claims are based on the document .... Otherwise, a plaintiff with a legally deficient claim could survive a motion to dismiss simply by failing to attach a dispositive document on which it relied." Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993), cert. denied, 126 L. Ed. 2d 655, 114 S. Ct. 687 (1994).
A complaint should be dismissed pursuant to Rule 12(b)(6) only where "it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." Hishon v. King & Spalding, 467 U.S. 69, 73, 81 L. Ed. 2d 59, 104 S. Ct. 2229 (1984). All well pleaded factual allegations in the complaint are assumed to be true and are viewed in the light most favorable to the plaintiff. Jenkins v. McKeithen, 395 U.S. 411, 421, 23 L. Ed. 2d 404, 89 S. Ct. 1843 (1969).
Paragraph 5 of the settlement agreement states, in pertinent part:
If ... AAA and/or Woodland fail to make when due any payment required by ... this Agreement ... Avena ... may give written notice of default ... and, if the default is not cured within fifteen (15) days thereafter, Avena ... may elect to declare ... the entire balance of the Avena Purchase Price ... immediately due and payable, and pursue ... AAA and Woodland ... by any and all legal means to collect the same and interest thereon. As one such measure, and not in exclusion of the contemporaneous pursuit of any others, [Avena] may confess judgment against ... AAA and Woodland ....
Avena ... shall defend, indemnify and hold harmless ... each of the Corporations ... from, against, and in respect of any Loss ... which may accrue to, or be sustained by ... [AAA and Woodland] as a result of or in respect of any material breach of this Agreement by ... Avena. For the purposes of this paragraph, "Loss" shall include all losses, liabilities, costs, expenses, judgments, assessments, penalties, damages, including consequential damages, deficiencies, suits, actions, claims, proceedings, demands, causes of action and attorney's fees, expenses and court costs incident thereto.
AAA and Woodland contend that they suffered a "loss" in the form of costs and attorneys' fees in the Pennsylvania action for which they should be indemnified. AAA and Woodland allege that the Pennsylvania confession of judgment materially breached the contract because, in their view, their ...