("Desmond"), owner of McCorristin-Desmond (collectively "Defendants").
Plaintiffs' Amended Complaint alleges several claims against all or
some of the above Defendants. Among the claims alleged are breach of
contract/warranties; promissory estoppel; misrepresentation; negligence;
unfair trade practices; and breach of fiduciary duty. Presently before
the Court are five separate motions to dismiss pursuant to Fed.R.Civ.P.
12(b). Also before the Court is Plaintiffs' Motion to Transfer this case
to the District Court for the District of New Jersey. For the reasons
that follow, we will dismiss the claims against the Kanes, Cornell
Harbor, Stave, Carnuccio, McCorristin-Desmond, and Desmond for lack of
subject matter jurisdiction. Further, we will transfer Plaintiffs' claims
against Power Play, Gallagher, AREA, Soens, Pillar, and Galster to the
District of New Jersey.
The facts of this case are relatively simple. In December 1999,
Plaintiffs entered into an agreement of sale for a condominium unit
located in Avalon, New Jersey. The unit was part of a larger condominium
complex governed by Cornell Harbor. The individual unit at issue was
owned by Robert and Dorothy Kane. The closing on the sale of the property
occurred in January 2000.
Plaintiffs' purported causes of action all arise from various
Defendants' alleged material omissions, misrepresentations, and
non-disclosure about the condition of the property and surrounding
areas. Specifically, Plaintiffs claim that there were undisclosed defects
in the condominium's windows, needed repairs to the condominium complex's
bulkhead and docks, and several property code violations. As a result of
these conditions, Plaintiffs alleged they incurred certain costs which
they seek to recover in this action, along with punitive and treble
I. Legal Standard
In considering a motion to dismiss, a court must accept as true all
facts alleged in a complaint and view them in the light most favorable to
the plaintiff. See Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906
(3d Cir. 1997). A motion to dismiss may only be granted where the
allegations fail to state any claim upon which relief can be granted.
See id. Notwithstanding these standards, a court "need not credit a
complaint's bald assertions or legal conclusions." See In re Burlington
Coat Factory Secs. Litig., 114 F.3d 1410, 1429-30 (3d Cir. 1997)
(internal quotations omitted).
II. Subject-matter Jurisdiction
Federal courts have diversity jurisdiction over actions where "the
matter in controversy exceeds the sum or value of $75,000, exclusive of
interest and costs, and is between . . . citizens of different States .
. . ." 28 U.S.C. § 1332(a). This jurisdictional amount is generally
determined by the good faith allegations made by a plaintiff in his or
her complaint. See In re Life USA Holding, Inc., 242 F.3d 136, 143 (3d
Cir. 2001). The plaintiff bears the continuing burden to show that
jurisdiction is proper, and courts rigorously enforce this requirement.
See Packard v. Provident Nat'l Bank, 994 F.2d 1039, 1044-45 (3d Cir.
1993). Here, there is no question that Plaintiffs and the various
Defendants are diverse: Plaintiffs hail from Pennsylvania, the Kanes from
North Carolina, and all other Defendants from New Jersey. At issue is
whether Plaintiffs have satisfactorily established that the amount in
controversy in this case exceeds $75,000.
All parties agree that Plaintiffs have alleged actual damages of
$35,803.35. While that amount is well short of the $75,000 threshold
required under § 1332(a), Plaintiffs have also made claims under
Pennsylvania and New Jersey consumer protection acts, which can
potentially provide treble damages. In addition, Plaintiffs ask for common
law punitive damages. Plaintiffs argue that by virtue of these potential
other damages, they have satisfied the amount in controversy requirement
for subject-matter jurisdiction.
The long-held standard for determining whether a plaintiff has
satisfied the amount in controversy requirement was set out in St. Paul
Mercury Indemnity Co. v. Red Cab. Co., 303 U.S. 283, 58 S.Ct. 586, 82
L.Ed.2d 845 (1938), as follows:
The rule governing dismissal for want of
jurisdiction in cases brought in the federal court is
that, unless the law gives a different rule, the sum
claimed by the plaintiff controls if the claim is
apparently made in good faith. It must appear to a
legal certainty that the claim is really for less than
the jurisdictional amount to justify dismissal.
Id. at 288-89. The United States Court of Appeals for the Third Circuit
has further stated that "dismissal is appropriate only if the federal
court is certain that the jurisdictional amount cannot be met." Suber v.
Chrysler Corp., 104 F.3d 578, 583 (3d Cir. 1997) (quoting Columbia Gas
Transmission Corp. v. Tarbuck, 62 F.3d 538, 541 (3d Cir. 1995)). In cases
where punitive or treble damages are recoverable, these types of damages
are properly considered in determining whether the jurisdictional amount
is satisfied. See Suber, 104 F.3d at 586-87 (noting that, when
calculating amount in controversy, court should include treble damages);
Packard, 994 F.2d at 1046 (same, punitive damages). In addition, in cases
where a plaintiff has alleged "independent, several liability against
more than one defendant, plaintiff's claims against each defendant must
individually satisfy the amount in controversy requirement." C.D. Peacock
v. Neiman Marcus Group, Inc., No. CIV.A. 97-5713, 1998 WL 111738, at n. 2
(E.D.Pa. Mar. 9, 1998). In view of these principles, we must determine
whether it is a legal certainty that Plaintiffs' claims for actual,
treble and/or punitive damages in combination fall short of satisfying
the amount in controversy requirement for each Defendant.
A. Punitive Damages
Defendants argue that punitive damages are not available to Plaintiff
in this action. We agree.
When considering punitive damages claims, Pennsylvania courts follow
section 908(2) of the Restatement (Second) of Torts (1979), which states
punitive damages my be awarded for conduct that is
outrageous, because of the defendant's evil motive or
his reckless indifference to the rights of others. In
assessing punitive damages, the trier of fact can
properly consider the character of the defendant's
act, the nature and extent of the harm to the
plaintiff that the defendant caused or intended to
cause, and the wealth of the defendant.
Here, Plaintiff has alleged nothing that could conceivably be
considered an evil motive or even reckless indifference on the part of
any Defendant. This entire case arises from a breach of contractual
duties related to the sale of a property. It is well-established that
punitive damages are not available for breach of contract claims. See,
e.g., Iron Mountain Sec. Storage Corp. v. American Speciality Foods,
Inc., 457 F. Supp. 1158, 1165 n. 7 (E.D.Pa. 1978); Daniel Adams Assoc.
v. Rimbach Publishing,
Inc., 429 A.2d 726, 728 (Pa.Super. 1981).
Plaintiff's only response to Defendants' argument is that it is too early
in the proceedings to eliminate punitive damages and that, if he can
prove fraud at trial, the trier of fact "would likely . . . award punitive
damages." (Pl.'s Resp. at 10). We find this response unavailing; even
granting Plaintiffs every inference, their claim for punitive damages is
without foundation. Moreover, when punitive damages make up the bulk of
the amount necessary to confer subject matter jurisdiction, courts
properly give these claims close scrutiny. See Packard 994 F.2d at 1046.
And when punitive damages claims are not supported by facts alleged,
courts have refused to include those claims in the amount in
controversy. See, e.g., Flail v. Travelers Cos., No. CIV.A. 98-1254, 1998
WL 709296, *3 (E.D.Pa. Oct. 6, 1998); Lerch v. Maryland Ins. Group, No.
CIV.A. 94-5592, 1995 WL 30594, at *3 (E.D.Pa. Jan. 25, 1995); Singer v.
State Farm Mutual Auto. Ins. Co., 785 F. Supp. 510, 511 (E.D.Pa. 1992).
Because we find that under no set of facts could Plaintiffs recover
punitive damages, we will grant Defendants' Motions with respect to that
claim. Consequently, punitive damages are not available for purposes of
satisfying the amount in controversy required for subject matter
B. Treble Damages
1. Choice of law
Next, we must determine whether Plaintiffs' claims under state consumer
protection laws suffice to meet the amount in controversy requirement. In
doing so, the Court must first determine whether the Pennsylvania or New
Jersey statute applies by undertaking the appropriate choice of law
analysis. In a diversity action, "the choice of law rules of the forum
state [determine] which state law will be applied." Shuder v. McDonald's
Corp., 859 F.2d 266, 269 (3d Cir. 1988) (citing Klaxon Co. v. Stentor
Elec. Mfg. Co., Inc., 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477
(1941)). Accordingly, we will apply the choice of law rules of
Pennsylvania's choice of law analysis has two parts. First, the court
must ascertain whether a "false conflict" exists. See LeJeune v.
Bliss-Salem, Inc., 85 F.3d 1069, 1071 (3d Cir. 1996). A false conflict is
one where "only one jurisdiction's governmental interests would be
impaired by the application of the other jurisdiction's law." Id.
(internal quotation omitted). If, however, a true conflict exists, the
court must then determine which state has the greater interest in the
application of its law. Id. at 1071. This process involves a qualitative
weighing of the contacts each state has with the dispute, and only those
contacts that relate to the policies and interest underlying the issue
before the court are relevant. Id. at 1072.
In this case, both New Jersey and Pennsylvania's consumer protection
statutes are intended to protect purchasers from predatory sellers.
However, the statutes differ somewhat in that treble damages are
mandatory under the New Jersey statute but are discretionary under the
Pennsylvania law. Compare N.J.S.A. 56:8-19 with 73 P.S. 201-9.2. The
statutes also appear to differ in their scope; the Pennsylvania statute
applies to private, non-commercial sales whereas the New Jersey statute
only applies to professionals engaged or involved in sales to consumers.
Compare Six v. Cole, 8 Pa. D. & C. 4th 625 (1991) with DiBernardo v.
Mosley, 502 A.2d 1166, 1168 (N.J. Super. Ct. 1986). While the two statutes
offer similar approaches to addressing the same problem, we cannot say
that there is no conflict between them in this case. The issue
immediately before the Court is whether the amount in controversy
requirement is met. The differing scope and damages potentially
available under each statute bear directly on that question and could change
the outcome. As such, we believe that a conflict exists and, therefore, turn
to examining the contacts each state has with the present dispute.
It is uncontested that the property in question, the condominium
association, the home inspectors, and both the buyers' and sellers'
realtors are in New Jersey. All of the material actions in this case,
including the inspection of the property, signing of the contract, and
communications between the parties either occurred in or emanated from
New Jersey. Plaintiffs point out that they were in Pennsylvania when they
received some of the information about the property, and that
Pennsylvania has an interest in protecting its citizens from fraud. While
that may be true, we believe that interest is outweighed by the interest
of New Jersey in ensuring business transactions occurring in New Jersey.
Thus, we find that the New Jersey statute will apply to this case.
2. New Jersey Unfair Trade Practices Act
The New Jersey Unfair Trade Practices Act ("NJUTPA") provides that:
The act, use or employment by any person of any
unconscionable commercial practice, deception, fraud,
false pretense, false promise, misrepresentation, or
the knowing concealment, suppression, or omission in
connection with the sale or advertisement of any
merchandise or real estate or with the subsequent
performance of such person as aforesaid, whether or
not any person has in fact been misled, deceived or
damaged thereby, is declared to be an unlawful
N.J.S.A. § 56:8-2. If a defendant is found to have committed an
unconscionable commercial practice, the statute imposes mandatory
treble damages. Id. 56:8-19.
New Jersey courts have held that this provision of the statute is to
"be liberally construed in favor of consumers." Gennari v. Weichert
Realtors, 672 A.2d 1190, 1205 (N.J. Super. App. Div. 199 6). The New
Jersey courts have also held that this provision of the statute does not
apply to "the isolated sale of a single family residence by its owner."
DiBernardo v. Mosley, 502 A.2d 1166, 1168 (N.J. Super. App. Div. 1986).
However, the Act has been held to apply to professional real estate
brokers, agents, and salespersons who represent non-professional
sellers. See Byrne v. Weichert Realtors, 675 A.2d 235, 240 (N.J. Super.
App. Div. 1996); see also Neveroski v. Blair, 358 A.2d 473, 481-82
(N.J. Super. App. Div. 1976) (statute's provisions applied to exterminator
who gave a report upon which the buyer's of real property relied in
making their decision to purchase a home), abrogated on other grounds,
Arroyo v. Arnold-Baker & Associates, Inc., 502 A.2d 106 (N.J. Super.
To satisfy the $75,000 jurisdictional amount necessary for diversity
jurisdiction in this case, Plaintiffs must properly allege that each of
the Defendants violated the NJUTPA, which provides for treble damages.
See 28 U.S.C. § 1332(a)(diversity jurisdiction requires that the
amount in controversy exceed $75,000); see also N.J.S.A. 56:8-19
(mandatory treble damages).
As stated above, the NJUTPA provision at issue is not applicable to the
isolated sale of a residence by its owner. Plaintiff has not made any
allegations to suggest that the Kanes' sale of the property at issue in
this case was anything other than the "the isolated sale of a single
family residence by its owner." DiBernardo, 502 A.2d at 1168. Therefore,
Plaintiff has not properly alleged a NJUTPA claim against the Kanes and,
thus, cannot allege damages that exceed $75,000 against
the Kanes. This
Court must dismiss the Complaint against the Kanes for lack of subject
matter jurisdiction. See 28 U.S.C. § 1332(a)(for diversity
jurisdiction amount in controversy must exceed $75,000); Fed.R.Civ.P.
12(h)("[w]henever it appears by suggestion of the parties or otherwise
that the court lacks jurisdiction of the subject matter, the court shall
dismiss the action")(emphasis added).
However, the NJUTPA may still apply to the other Defendants. See
Byrne, 675 A.2d at 240 (NJUTPA applies to professionals representing
non-professional sellers). Claims under the NJUTPA sound in fraud and
must meet the pleading requirements of Fed.R.Civ.P. 9(b). See Naporano
Iron & Metal Co. v. American Crane Corp., 79 F. Supp.2d 494, 511 (D.N.J.
2000) (requirements of 9(b) apply to claims under the NJUTPA). To meet
the pleading requirements of Rule 9(b), "the complaint [must] describe
the circumstances of the alleged fraud with precise allegations of date,
time, or place." Id. "Alternatively, plaintiffs must use some means of
`injecting precision and some measure of substantiation into their
allegations of fraud.'" Id. (quoting Seville Indus. Mach. Corp. v.
Southmost Mach. Corp., 742 F.2d 786, 791 (3d Cir. 1984)). Further, a
plaintiff must "plead fraud with particularity as to each defendant." Id.
However, "`the threshold to withstand a motion to dismiss under
Fed.R.Civ.P. 12(b)(1) is  lower than that required to withstand a
Rule 12(b)(6) motion.'" Suber, 104 F.3d at 583 (quoting Lunderstadt v.
Colafella, 885 F.2d 66, 70 (3d Cir. 1989)).
Plaintiffs have not sufficiently pled a NJUTPA claim against Cornell
Harbor, Stave, Carnuccio, McCorristin-Desmond, or Desmond. Plaintiffs
make no specific fraud allegations against any of these defendants.
Thus, Plaintiffs cannot meet the amount in controversy requirement for
these defendants, and the Court will dismiss the amended complaint
without prejudice as to Cornell Harbor, Stave, Carnuccio,
McCorristin-Desmond, or Desmond for lack of subject matter
However, Plaintiffs have sufficiently pled a NJUTPA claim with respect
to AREA, Soens, Gallagher, Power Play, Pillar, and Galster. As to AREA
and Soens, Plaintiffs allege that: "[o]n or about the [sic] December 13,
1999, Soens represented to Buyers that all of the windows for the
Property were new." See Plaintiffs' Amended Complaint at ¶ 34. With
respect to Gallagher and Power Play, Plaintiffs allege that they sent a
letter to Plaintiffs dated December 14, 1999, indicating that the 2000
budget was not available. Id. at ¶ 36. This budget presumably could
have demonstrated that each unit was going to be assessed for repairs to
the bulkhead and docks. Further, with respect to Pillar and Galster,
Plaintiff alleges that Pillar inspected the property and issued a report
to Plaintiffs that there were no defects with the windows or the
bulkhead. Id. at ¶ 38. Further, Plaintiffs have attached copies of
the pertinent documents to their amended complaint. Considering the lower
pleading threshold required for jurisdictional purposes, we find that
these allegations along with the supporting exhibits attached to the
complaint are sufficient to "`inject precision and some measure of
substantiation into their allegations of fraud.'" Id. (quoting Seville,
742 F.2d at 791); see also Suber, 104 F.3d at 583 (lower pleading
threshold required to satisfy 12(b)(1) than 12(b)(6)).
Because we cannot say with legal certainty that Plaintiffs claims
against AREA, Soens, Gallagher, Power Play, Pillar, and Galster do not
meet the jurisdictional amount in controversy, we will not dismiss the
claims against them for lack of subject matter jurisdiction. See St.
Paul, 303 U.S. at 288-89; see also Suber, 104 F.3d at 583. The Court must
now proceed to analyze whether we have personal jurisdiction over these
Once a defendant raises a personal jurisdiction defense, the burden of
establishing the court's jurisdiction rests with the plaintiff. Provident
Nat. Bank v. Cal. Fed. Sav. & Loan Ass'n, 819 F.2d 434, 437 (3d Cir.
1987). Prior to trial, however, a plaintiff need only make a prima facie
showing of jurisdiction. Mellon Bank (East) PSFS, Nat'l Ass'n v. Farino,
960 F.2d 1217, 1223 (3d Cir. 1992). Further, factual disputes created by
the affidavits, documents and depositions submitted for the court's
consideration are resolved in favor of the non-moving party. Friedman v.
Israel Labour Party, 957 F. Supp. 701, 706 (E.D.Pa. 1997).
Under Federal Rule of Civil Procedure 4(e), we apply Pennsylvania law
to determine whether personal jurisdiction is proper. Pennsylvania's
long-arm statute authorizes both general and specific jurisdiction to the
"fullest extent allowed under the Constitution of the United States."
42 Pa. Cons. Stat. Ann. § 5322(b)(Purdon's 1981). Thus, because
Pennsylvania's "reach is coextensive with the limits placed on the states
by the federal Constitution," Vetrotex CertainTeed Corporation v.
Consolidated Fiber Glass Products Company, 75 F.3d 147, 150 (3d Cir.
1996), we apply the familiar two-part test recently summarized by our
Court of Appeals as follows:
First, the defendant must have made constitutionally sufficient
`minimum contacts' with the forum. Burger King Corp. v. Rudzewicz,
471 U.S. 462, 474 (1985). The determination of whether minimum contacts
requires an examination of the `relationship among the
forum, the defendant and the litigation,' Shaffer v.
Heitner, 433 U.S. 186, 204 (1977), in order to
determine whether the defendant has `"purposefully
directed"' its activities towards residents of the
forum. Burger King, 471 U.S. at 472 (quoting Keeton
v. Hustler Magazine, Inc., 465 U.S. 770, 774 (1984)).
There must be `some act by which the defendant
purposefully avails itself of the privilege of
conducting activities within the forum State, thus
invoking the benefits and protections of its laws.'
Hanson v. Denckla, 357 U.S. 235, 253 (1958). Second,
if `minimum contacts' are shown, jurisdiction may be
exercised where the court determines, in its
discretion, that to do so would comport with
`traditional notions of fair play and substantial
justice.' International Shoe Co. v. Washington,
326 U.S. 310 (1945).
Vetrotex, 75 F.3d at 150-151. "`Specific jurisdiction is invoked when the
cause of action arises from the defendant's forum related activities'
such that the defendant `should reasonably anticipate being haled into
court there.'" Id. at 151 (quoting North Penn Gas Co. v. Corning Natural
Gas Corp., 897 F.2d 687, 690 (3d Cir. 1990) and Helicopteros Nacionales
de Colombia v. Hall, 466 U.S. 408, 414 n. 8 (1984)). However, even where
the cause of action does not
arise from the defendant's forum related
activities, jurisdiction may be based on general jurisdiction where the
defendant has maintained "continuous and systematic" contacts with the
forum. Helicopteros Nacionales De Columbia v. Hall, 466 U.S. 408, 414,
n. 9, 104 S.Ct. 1868 (1984).
Each of the Defendants argues that they do not have sufficient minimum
contacts with Pennsylvania to allow this Court to exercise personal
jurisdiction over them. Plaintiffs make the general allegation that each
of the "Defendants made to this district innumberable telephone calls,
fax transmissions and other communications to Plaintiffs for the sole
purpose of conducting the disputed transaction." (Plaintiffs' Amended
Complaint at ¶ 28(d)). Further Plaintiffs make the following
Defendants Galster and Inspector [sic] forwarded to
this district the within described deficient November
7, 1999 inspection report to Plaintiffs.
Defendants Soens and AREA sent to this district a
July 5, 2000 fax to Plaintiffs regarding the responses
of Defendants Gallagher and Power Play to Plaintiffs'
various requests for information.
On September 26, 2000, Defendant Power Play, agent
for Sellers, wrote to Plaintiffs in this district
soliciting Plaintiffs' business should they wish to
sell the Property.
(Plaintiffs' Amended Complaint at ¶ 28(a), (b), and (c)).
These allegations are insufficient to allow the Court to exercise
personal jurisdiction over these Defendants. Defendants have all submitted
affidavits establishing that they do not regularly conduct business in
Pennsylvania, do not have offices in Pennsylvania, and do not have bank
accounts, phone listings, or other similar accounts in Pennsylvania.
Thus, the Court does not have general jurisdiction over any of the
Further, Plaintiffs' allegations that the Defendants contacted them by
phone, fax and mail in furtherance of the contract for the sale of
property at issue in this case are insufficient for this Court to exercise
specific jurisdiction over the Defendants. It is uncontested that the
property in question, the condominium association, the home inspectors,
and both the buyers' and sellers' realtors are in New Jersey. All of the
material actions in this case, including the inspection of the property,
signing of the contract, and communications between the parties either
occurred in or emanated from New Jersey. The follow-up contacts the
Defendants had with Plaintiffs in Pennsylvania were only necessary to
complete the contract. See Vetrotex, 75 F.3d at 152 ("'informational
communications in furtherance of [a contract between a resident and a
nonresident] does not establish the purposeful activity necessary for a
valid assertion of personal jurisdiction over [the nonresident
defendant]'"). Plaintiffs have not presented any evidence*fn2 to
establish that this Court can exercise personal jurisdiction over the
Defendants.*fn3 See Provident Nat. Bank, 819 F.2d at
437 (once jurisdiction is challenged, plaintiff has burden of proving that
the exercise of jurisdiction is appropriate and cannot merely rely on
pleadings). Thus, while the Court finds that we have subject matter
jurisdiction over the claims against AREA, Soens, Gallagher, Power Play,
Pillar to Post, and Galster, we do not have personal jurisdiction over
Motion to Transfer
Finally, the Court will consider Plaintiffs' Motion to Transfer.
Pursuant to 28 U.S.C. § 1406(a), "a district court that lacks
personal jurisdiction [has discretion] to transfer a case in the interest
of justice to a district in which personal jurisdiction can be
established." Rister v. Cupon, No. CIV.A. 01-2897, 2001 WL 1085043
(E.D.Pa. Sept. 17, 2001) (citing Porter v. Groat, 840 F.2d 255, 257 (4th
Cir. 1988)); see also 28 U.S.C. § 1631 (case may be transferred to
another court in which it could have been brought if there is lack of
jurisdiction in present court). The District of New Jersey will have
general and specific jurisdiction over the Defendants AREA, Soens,
Gallagher, Power Play, Pillar to Post, and Galster. Therefore, the Court
finds that, in the interest of having the case decided on the merits, a
transfer to the District of New Jersey is appropriate in this case.
An appropriate Order follows.
AND NOW, this 12th day of March, 2002, upon consideration of the
Defendants' Motions to Dismiss and Plaintiffs' response thereto and for
the reasons set forth in the foregoing Memorandum, it is hereby ORDERED
• Plaintiffs' claims against Robert C. and Dorothy
A. Kane are DISMISSED for lack of subject matter
• Plaintiffs' claims against Cornell Harbor
Lois Stave, Joe Carnuccio, McCorristin-Desmond, and Jack Desmond are
DISMISSED WITHOUT PREJUDICE for lack of subject matter jurisdiction, and
Plaintiffs shall have twenty (20) days from the date of this Order to
amend their complaint against Cornell Harbor Condominium, Lois Stave, Joe
Carnuccio, McCorristin-Desmond, and Jack Desmond; and