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Foxmoor Movie Theater, Inc. v. Novescor

January 18, 2008

FOXMOOR MOVIE THEATER, INC., PLAINTIFF,
v.
NOVESCOR, L.L.C., AND RAM V. RAYASAM, DEFENDANTS.



The opinion of the court was delivered by: A. Richard Caputo United States District Judge

(JUDGE CAPUTO)

MEMORANDUM

Presently before the Court is the Motion (Doc. 21) of Defendants Novescor, L.L.C., and Ram V. Rayasam to dismiss Count I of Plaintiff's Complaint (Doc. 22-2), which alleges fraudulent inducement. Because the parol evidence rule in Pennsylvania bars introduction of extrinsic evidence when fraud in the inducement is alleged, Defendants' motion will be granted. The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1332.

BACKGROUND

This action, initially filed in the Southern District of New York, was transferred to this Court in January of 2007 (see Doc. 1-5.) In its Complaint, Plaintiff Foxmoor Movie Theater, Inc., (Foxmoor) alleged as follows: Defendant Novescor, L.L.C (Novescor) owns and operates the Foxmoor Village Shopping Center on Route 209 in East Stroudsburg, Pennsylvania, and Defendant Ram V. Rayasam is the Managing Member of Novescor. (Compl., Doc. 22-2 ¶¶ 8, 11.) Plaintiff Foxmoor owns and operates a movie theater and arcade, known as Foxmoor Cinemas, in the shopping center. (Id. ¶ 9.) Foxmoor occupies the premises pursuant to a twenty (20) year lease between Novescor, as Landlord, and Screen Arts Corporation/Norman Adie ("Screen Arts"), as Tenant, which is dated February 11, 2006, was executed on behalf of Novescor by Defendant Rayasam, and was assigned to Foxmoor by Screen Arts on April 24, 2006. (Id. at ¶¶ 9-10, 12.) Plaintiff alleges further that Novescor agreed, by the terms of the lease, to maintain all common areas of the shopping center. (Id. ¶¶ 13-14.)

Plaintiff Foxmoor alleges that Defendant Rayasam fraudulently induced Plaintiff to enter into the lease by making false representations to Norman Adie, the director and principal shareholder of Foxmoor, that Novescor would improve the condition of the shopping center by, among other things, improving signage, repaving roadways, making repairs, improving access and visibility to the shopping center, and aggressively seeking to fully occupy the shopping center with commercial tenants. (Id. ¶¶ 15-17.) Plaintiff alleges that it would never have entered the lease but for these representations and that Adie told Rayasam that the Defendants' commitment to make these improvements was a precondition to Plaintiff entering the lease; that Rayasam's statements were false and fraudulent and made with the intent to deceive and defraud Plaintiff and that Defendants have refused to abide by their representations; that Plaintiff believed these representations to be true and relied upon them, to Plaintiff's detriment, in entering the lease and investing approximately one million, fifty thousand dollars ($1,050,000.00) in the theater and arcade. (Id. at ¶¶ 18-25).

In Count I, based on the above allegations, Plaintiff seeks damages in the amount of one million, fifty thousand dollars ($1,050,000.00). (Id. ¶ 26; see also id. at 8.) In Count II, based on the above allegations, Plaintiff, alleging that it has no adequate remedy at law, seeks recision of the lease and to be reimbursed for the cost of all improvements, rent and other payments it made to Defendant Novescor. (Id. ¶¶ 32-33; see also id. at 8-9.) In Count III, Plaintiff alleges that Novescor is in breach of its lease with Plaintiff because it has failed to take a number of actions, which Plaintiff lists, in order to maintain the common areas of the shopping center. (Id. ¶ 36.) This breach, Plaintiff alleges, has allowed the shopping center to fall into disrepair, causing Plaintiff to suffer damage to its business; Plaintiff therefore seeks to recover damages in the amount of two-hundred fifty thousand dollars ($250,000.00). (Id. ¶¶ 37-38; see also id. at 9.) In Count IV, Plaintiff alleges that Novescor is in breach of the lease because it has failed to maintain the roof of the premises that Plaintiff leases, causing Plaintiff to suffer water damage to its equipment and the cost of repairing the roof itself; Plaintiff therefore seeks damages in the amount of ninety-nine thousand dollars ($99,000). (Id. ¶¶ 39-42; see also id. at 9.) In Count V, Plaintiff alleges that Novescor is in breach of the lease because it failed to apply the monthly one-thousand, six-hundred, sixty-six dollar and sixty-six cent ($1,666.66) common area maintenance (CAM) fee it receives from Plaintiff for the fee's intended purpose. (Id. ¶¶ 43-47). Plaintiff alleges that it has no adequate remedy at law for this breach, and seeks a judgment mandating and compelling Novescor to maintain the common areas of the property as required by the lease. (Id. ¶ 48; see also id. at 9.) In Count VI, Plaintiff alleges that it has paid Novescor approximately twenty-five thousand dollars ($25,000), as of the date of its Complaint, in CAM charges, and that Novescor has not used any part of this payment for its intended purpose. (Id. ¶ 50.) Plaintiff seeks an abatement of its rent in the amount of twenty-five thousand dollars ($25,000) for the common area maintenance services that Novescor failed to provide, as well as "costs and disbursements of this action" and "such other and further relief as the Court deems just and proper." (Id. ¶ 51; see also id. at 9.)

Defendants moved to dismiss Plaintiff's claim for recission of the lease based on fraud in the inducement on the ground that Plaintiff cannot meet an essential element of a fraud claim: that Defendant Rayasam made a material misrepresentation of fact, and alternatively, on the ground that the parol evidence rule bars Plaintiff from introducing extrinsic evidence of communications between the parties prior to integration of the lease agreement. (Defs.' Mem. in Supp. of Mot. to Dismiss, Doc. 22.) Defendants' motion is fully briefed and 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 as true all the facts alleged in the complaint, Plaintiff has not plead "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. ----, 127 S.Ct. 1955, 1960, 167 L.Ed.2d 929 (2007) (abrogating "no set of facts" language found in Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d. 80 (1957)). As a result of the Twombly holding, Plaintiffs must now nudge their claims "across the line from conceivable to plausible" to avoid dismissal. Id. The Supreme Court noted just two weeks later in Erickson v. Pardus, --- U.S. ----, 127 S.Ct. 2197, 2200, 167 L.Ed.2d 1081 (2007) (per curiam), that Twombly is not inconsistent with the language of Federal Rule of Civil Procedure 8(a)(2), which requires only "a short and plain statement of the claim showing that the pleader is entitled to relief." Specific facts are not necessary; the statement need only " 'give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.' " Id. (citing Twombly, 127 S.Ct. at 1959 (quoting Conley, 355 U.S. at 47)).

There has been some recent guidance from the Courts of Appeals about the apparently conflicting signals of Twombly and Erickson. The Second Circuit Court of Appeals reasoned that "the [Supreme] Court is not requiring [in Twombly] a universal standard of heightened fact pleading, but is instead requiring a flexible 'plausibility standard,' which obliges a pleader to amplify a claim with some factual allegations in those contexts where such amplification is needed to render the claim plausible." Iqbal v. Hasty, 490 F.3d 143, 157-58 (2d Cir. 2007) (emphasis in original). Similarly, the Seventh Circuit Court of Appeals stated that "[t]aking Erickson and Twombly together, we understand the Court to be saying only that at some point the factual detail in a complaint may be so sketchy that the complaint does not provide the type of notice of the claim to which the defendant is entitled under Rule 8." Airborne Beepers & Video, Inc. v. AT&T Mobility LLC, 499 F.3d 663, 667 (7th Cir. Aug. 24, 2007).

Until further guidance, this Court will follow the guidance of the Second and Seventh Circuit Courts of Appeals, and apply a flexible "plausibility" standard, on a case-by-case basis, in those contexts in which it is deemed appropriate that the pleader be obliged to amplify a claim with sufficient factual allegations.

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), cert. denied, 510 U.S. 1042 (1994). 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 Merion 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 ...


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