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Mikola v. Penn Lyon Homes

June 4, 2008


The opinion of the court was delivered by: Judge McClure



On March 30, 2007, plaintiffs Richard and Carol Mikola filed a complaint against defendants, Penn Lyon Homes, Inc. ("Penn Lyon"), High Tech Home Builders, LLC ("High Tech"), Gregory A. Nilsen, Elizabeth Nilsen, Daisy Lane Holdings, LLC ("Daisy Lane"), and Vermont Estate Home Builders, LLC ("Vermont Estate"). On October 24, 2007, plaintiffs filed an amended complaint which added RMCM, LLC as a plaintiff, a company wholly owned by the Mikolas.

In their amended complaint, plaintiffs allege a cause of action based on Pennsylvania's Unfair Trade Practices and Consumer Protection Law (Count I), breach of contract (Count II), negligence (Count III), breach of warranties and the Magnuson-Moss Warranty Act (Count IV), conversion (Count V), and civil conspiracy (Count VI). The complaint stems from a contract allegedly entered into between plaintiffs and defendants in which defendants would construct a modular home and install it on plaintiff's property. The complaint further alleges that defendants failed to properly construct and install the home and committed fraudulent and deceptive conduct along the way.

The parties are currently conducting discovery. On March 3, 2008, defendant Penn Lyon filed a "Motion . . . for Partial Judgment on the Pleadings." (Rec. Doc. No. 60.) On March 12, 2008, defendants High Tech, Gregory Nilsen, Elizabeth Waters, Daisy Lane, and Vermont Estate (hereinafter "Nilsen defendants") filed a "Motion . . for Partial Summary Judgment on the Pleadings." Both motions raise substantially similar issues. (Rec. Doc. No. 62.) Opposing and reply briefs have been filed for both motions. For the following reasons, we will grant both motions in part. We will dismiss Count III as to the Nilsen defendants and will dismiss Count IV as to all defendants. The remaining counts are permitted to proceed.


I. Applicable Standard

Rule 12(c) of the Federal Rules of Civil Procedure allows a party to move for judgment on the pleadings "[a]fter the pleadings are closed - but early enough not to delay trial." The standard used in analyzing a motion for judgment on the pleadings is identical to the standard applicable to a motion to dismiss under Rule 12(b)(6). Chovanes v. Thoroughbred Racing Ass'n, No. Civ. No. 99-185, 2001 WL 43780 at *1 (E.D. Pa. January 18, 2001) (O'Neill, J.); DeBraun v. Meissner, 958 F. Supp. 227, 229 (E.D. Pa. 1997) (Ditter, J.). The primary difference is that a Rule 12(b)(6) motion is filed before the answer, while a Rule 12(c) motion is filed after the answer. Prima v. Darden Restaurants, Inc., 78 F. Supp. 2d 337, 341-42 (D.N.J. 2000).

When considering a motion to dismiss under Rule 12(b)(6), the court must view all allegations stated in the complaint as true and construe all inferences in the light most favorable to plaintiff. Hishon v. King & Spaulding, 467 U.S. 69, 73 (1984); Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir. 1993). In ruling on such a motion, the court primarily considers the allegations of the pleading, but is not required to consider legal conclusions alleged in the complaint. Kost, 1 F.3d at 183. At the motion to dismiss stage, the court considers whether plaintiff is entitled to offer evidence to support the allegations in the complaint. Maio v. Aetna, Inc., 221 F.3d 472, 482 (3d Cir. 2000). A complaint should only be dismissed if, accepting as true all of the allegations 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, 127 S.Ct. 1955, 1960 (2007).

The failure-to-state-a-claim standard of Rule 12(b)(6) "streamlines litigation by dispensing with needless discovery and factfinding." Neitzke v. Williams, 490 U.S. 319, 326-27 (1989). A court may dismiss a claim under Rule 12(b)(6) where there is a "dispositive issue of law." Id. at 326. If it is beyond a doubt that the non-moving party can prove no set of facts in support of its allegations, then a claim must be dismissed "without regard to whether it is based on an outlandish legal theory or on a close but ultimately unavailing one." Id. at 327.

II. Statement of Relevant Allegations

In their amended complaint, plaintiffs allege that in 2003 plaintiffs began exploring the possibility of purchasing a modular home from manufacturer Penn Lyon. (Rec. Doc. No. 37, ¶¶ 22-27.) They were informed by Penn Lyon that its homes were sold exclusively through its authorized builders, and were given the contact information for High Tech and Gregory Nilsen. (Id. ¶¶ 25-28.) Plaintiffs contacted High Tech and Nilsen and on May 24, 2004, plaintiffs entered into a building construction agreement with them along with a purchase order for a home manufactured by Penn Lyon. (Id. ¶ 32.) The home was to be constructed on a lot plaintiffs had recently purchased in Pike County, Pennsylvania. (Id. ¶ 30.)

Plaintiffs allege that the project was never completed according to the terms of the contract. (Id. ¶ 72.) They point out numerous deficiencies in the work done by High Tech and Nilsen. (Id. ¶ 75.) Similarly, they allege that Penn Lyon failed to assure that the home was set properly on the foundation and that it was weather-tight. (Id. ¶¶ 58-59.) They also allege that Penn Lyon failed to properly train Nilsen or review his construction experience and background prior to making him an authorized builder. (Id. ¶ 33.)

Plaintiffs further allege that defendant Elizabeth Nilsen (who now goes by Elizabeth Waters), was Nilsen's wife during the time period of the contract. (Id. ¶ 6.) During this time, she was in charge of Daisy Lane. (Id. ¶¶ 14-17.) On April 13, 2004 High Tech and Nilsen signed a mortgage note on real property in Milford, Pennsylvania in favor of Daisy Lane and Waters which required that the mortgage be fully satisfied in one year. (Id. ¶ 79.) High Tech and Nilsen never made a single payment and the mortgage was not satisfied within a year. (Id. ¶ 80.) High Tech and Nilsen then deeded the property to Daisy Lane and Waters in lieu of foreclosure. (Id. ¶ 81.) Plaintiffs allege that this transaction amounts to a fraudulent conveyance of assets from High Tech and Nilsen to Daisy Lane in an effort to shield such assets from creditors. (Id. ¶ 81.) Plaintiffs also contend that in July 2005, High Tech transferred real property situated in Vermont to Vermont Estate for little or no consideration. (Id. ¶ 83.)

Finally, plaintiffs allege that defendant High Tech and Vermont Estate are both run by defendant Nilsen and are shells and his alter egos. (Id. ¶ 9.) They allege that neither maintains a separate existence from Nilsen and plaintiffs therefore seek to pierce the corporate veil and hold Nilsen personally liable for the misconduct of High Tech and Vermont Estate. (Id. ¶ 13.) Similarly, they allege that defendant Daisy Lane is run by defendant Waters and is her alter ego. (Id. ¶ 14.) Plaintiffs allege that Daisy Lane does not maintain a separate existence from Waters and plaintiffs therefore seek to pierce the corporate veil and hold Waters personally liable for the misconduct of Daisy Lane. (Id. ¶¶ 15-17.)

III. Analysis

A. Count I - Pennsylvania's Unfair Trade Practices and Consumer Protection Law

In the motions, both Penn Lyon and the Nilsen defendants argue that Count I of the amended complaint should be dismissed because Pennsylvania's Unfair Trade Practices and Consumer Protection Law (UTPCPL) is only applicable to residents of Pennsylvania and plaintiffs are all residents of Florida. (Rec. Doc. No. 61, at 5-7; Rec. Doc. No. 63, at 5-6.) Furthermore, Penn Lyon argues that plaintiffs' contract for purchase was with High Tech and plaintiffs may therefore not maintain a claim under the UTPCPL against Penn Lyon. (Rec. Doc. No. 61, at 6.) Similarly, they contend that plaintiffs are not purchasers of goods for personal, family or household purposes. (Id.) The Nilsen ...

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