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FLOOD v. MAKOWSKI

June 22, 2005.

STEPHEN L. FLOOD, et al., Plaintiffs,
v.
THOMAS A. MAKOWSKI, et al., Defendants. ASCO FINANCIAL GROUP, INC., et al., Third-Party Plaintiffs, v. MERRILL LYNCH & CO. INC., et al., Third-Party Defendants.



The opinion of the court was delivered by: A. RICHARD CAPUTO, District Judge

MEMORANDUM

Presently before the Court is Motion of Third-Party Merrill Lynch Defendants to Dismiss Counts IV, V, and VI of Third-Party Complaint. (Doc. 276.) I will grant the motion to dismiss in its entirety. I will dismiss the claim of contribution brought by ASCO Financial Group, Donald Williamson, Maria Williamson, Joseph Perfilio, and Michael Joyce (hereinafter ASCO et al.) against Merrill Lynch & Co., Inc, Merrill Lynch, Pierce, Fenner & Smith Incorporated, the Bender Crisci Sennett & Hudacek Group, Raymond L. Crisci, Rodney F. Sennett, Stephen L. Hudacek, Peter M. Butera, William H. Bender, and Cary T. Crisci (hereinafter Merrill Lynch et al.) because ASCO et al. and Merrill Lynch et al. are not joint tortfeasors as a matter of law. I will also dismiss the claim of indemnification brought by ASCO et al. against Merrill Lynch et al. because ASCO et al. failed to claim the existence of a relationship between ASCO et al. and Merrill Lynch et al. that creates a right of indemnity between the parties. Finally, I will dismiss the claim of intentional interference with contractual relations*fn1 brought by ASCO et al. against Merrill Lynch et al. because it is procedurally barred following dismissal of the contribution and indemnification claims.

FACTUAL BACKGROUND

  The present action focuses on the events leading up to and surrounding the investment contracts made by the Luzerne County Retirement Board (hereinafter the Board) and Board members during the period of 1988 to 2002. Luzerne County maintains a pension plan for employees (hereinafter the Plan) which is administered by the Board. In March 1988 the Board retained ASCO Financial Group, Inc. (hereinafter ASCO) as an investment advisor to the Plan. During the course of the relationship with ASCO, various Board members approved contracts to invest the Plan's money. The Board members allegedly involved are Thomas A. Makowski, Thomas P. Pizano, Frank Crossin, and Joseph Jones.*fn2 In 1999, the Plan contracted with ASCO to administer the daily operations of the Plan. In September 2002 the Board dissolved its relationship with ASCO. Plaintiffs allege that various Board members engaged in a pay-to-play scheme in which contracts to invest or manage pension plan assets were awarded in exchange for campaign contributions to various Board members' reelection campaigns.

  PROCEDURAL BACKGROUND

  On October 9, 2003, Plaintiffs filed a ninety-eight page Complaint raising eight claims against twenty-six Defendants. Nearly all of the original Defendants filed motions to dismiss. (Docs. 46, 91, 93, 95, 96, 98, 100, 104, and 108.) I granted the motions in part and denied the motions in part. (Doc. 181.) Since then, several parties have settled their disputes. At the present time, the remaining claims include: beach of fiduciary duty (Defendants Makowski, Pizano, Crossin, Jones, ASCO, and Donald Williamson); RICO violations for conducting and participating in an enterprise by engaging in a pattern of racketeering activity (Defendants Makowski et al., ASCO, Donald Williamson, Maria Williamson, et al.); conspiring to commit RICO violations (all Defendants); violating the Investment Advisors Act (Defendants Donald Williamson and ASCO); and unjust enrichment (Defendants ASCO, Donald Williamson, et al.). Defendants then filed answers which included counterclaims, cross-claims, and affirmative defenses. The Board member defendants filed third-party claims against Michael Morreale for breach of fiduciary duties, indemnity, and contribution. (Doc. 206.) ASCO et al. filed third-party claims against Merrill Lynch et al. for contribution (count IV), indemnification (count V), and intentional interference with contractual relations (count VI).*fn3 (Doc. 212.) The current motion requests that the Court dismiss all claims against Merrill Lynch et al. (Doc. 276.) The motion is ripe for disposition.

  LEGAL STANDARD

  Rule 12(b)(6) of the Federal Rules of Civil Procedure provides for the dismissal of a complaint, in whole or in part, for failure to state a claim upon which relief can be granted. Dismissal is appropriate only if, accepting all factual allegations in the complaint as true and "drawing all reasonable inferences in the plaintiff's favor, no relief could be granted under any set of facts consistent with the allegations in the complaint." Trump Hotels & Casino Resorts, Inc. v. Mirage Resorts Inc., 140 F.3d 478, 483 (3d Cir. 1998).

  In deciding a motion to dismiss, the Court should consider the allegations in the complaint, exhibits attached to the complaint and matters of public record. See Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993). The Court may also consider "undisputedly authentic" documents where the plaintiff's claims are based on the documents and the defendant has attached a copy of the document to the motion to dismiss. Id. The Court need not assume that the plaintiff can prove facts that were not alleged in the complaint, see City of Pittsburgh v. West Penn Power Co., 147 F.3d 256, 263 (3d Cir. 1998), nor credit a complaint's "bald assertions" or "legal conclusions." Morse v. Lower Marion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997).

  When considering a Rule 12(b)(6) motion, the Court's role is limited to determining whether the plaintiff is entitled to offer evidence in support of the claims. See Scheuer v. Rhodes, 416 U.S. 232, 236 (1974). The Court does not consider whether the plaintiff will ultimately prevail. See id. In order to survive a motion to dismiss, the plaintiff must set forth information from which each element of a claim may be inferred. See Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir. 1993). The defendant bears the burden of establishing that the plaintiff's complaint fails to state a claim upon which relief can be granted. See Gould Elecs. v. United States, 220 F.3d 169, 178 (3d Cir. 2000).

  DISCUSSION

  1) Contribution

  ASCO et al. seek contribution from Merrill Lynch et al. They contend that Merrill Lynch et al. are partly responsible for the harm to the Plan for which ASCO et al. may be found liable. Merrill Lynch et al. argue that any damage to the Plan they are allegedly responsible for cannot be attributed to ASCO et al. because ASCO et al. and Merrill Lynch et al. cannot be found to be joint tortfeasors. I agree with Merrill Lynch et al.

  "[A] right to contribution arises only among joint tortfeasors." Foulke v. Dugan, 212 F.R.D. 265, 270 (E.D. Pa. 2002) (citing Kemper Nat'l P & C Cos v. Smith, 615 A.2d 372, 380 (Pa.Super.Ct. 1992). Pennsylvania's Uniform Contribution Among Tortfeasors Act states that joint tortfeasors are "two or more persons jointly or severally liable in tort for the same injury to persons or property, whether or not judgment has been recovered against all or some of them." 42 PA. CONS. STAT. ยง 8322 (2004). "[T]wo actors are joint tortfeasors if their conduct `causes a single harm which cannot be apportioned . . . even though [the actors] may have acted independently.'" Rabatin v. Columbus Lines, Inc., 790 F.2d 22, 25 (3d Cir. 1986) ...


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