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Greenwood Land Company v. Omnicare

January 5, 2011

GREENWOOD LAND COMPANY, PLAINTIFF
v.
OMNICARE, INC.; NCS HEALTHCARE OF NEW YORK, INC., DEFENDANTS
OMNICARE, INC.; NSC HEALTHCARE OF NEW YORK, INC., THIRD PARTY PLAINTIFFS
v.
UGL EQUIS CORPORATION, THIRD PARTY DEFENDANT



The opinion of the court was delivered by: Judge David Stewart Cercone

MEMORANDUM OPINION

Pending is UGL Equis Corporation's Motion to Dismiss the Third Party Complaint (ECF No. 57). Counts II and III of that Complaint, which sound in negligence, will be dismissed. As to the breach of contract and contractual indemnification claims set out in Counts I and IV, the Motion to Dismiss is deemed to be a Motion to Transfer Venue Pursuant to 28 U.S.C. § 1404(a). This Motion to Transfer will be granted.

I. Background

In 1994, Greenwood Land Company ("Greenwood"), as landlord of commercial property located in Sharon, Pennsylvania ("the Sharon property"), entered into a Lease Agreement (" the Lease") with Thrift Drug, Inc. ("Thrift"). In late 1997 or early 1998, the assets and liabilities of Thrift were acquired by NCS and, on January 20, 1998, Thrift assigned its tenancy under the Lease to NCS, a wholly-owned subsidiary of NCS Healthcare of New York, Inc. ("NCSH"). In January 2003, Omnicare, Inc. ("Omnicare") acquired NCSH, and, according to Greenwood, became the de facto assignee of the Lease. (ECF No. 3 at ¶ 20(j)). In the single surviving count*fn1 of its Amended Complaint (ECF No. 3), Greenwood claims that Omnicare and NCSH (collectively, "Omnicare") committed various breaches of that Lease. Omnicare, in turn, filed a five count Third Party Complaint (ECF No. 50) against UGL Equis Corporation ("Equis"), a company retained by Omnicare pursuant to a Real Estate Services Agreement ("the Service Agreement"), to provide professional real estate services in connection with the Sharon property. In Count I of the Third Party Complaint, Omnicare alleges that any damages recoverable by Greenwood against Omnicare are attributable to Equis's breach of the Service Agreement. In Count II, Omnicare asserts that it justifiably relied on false and negligent representations made by Equis to the effect that Equis had transmitted to Greenwood timely written notice that the Lease would not be renewed, and had apprised Greenwood of water leaks and associated damage at the Sharon property. Count III alleges negligence on the part of Equis in failing to communicate with or verify Greenwood's receipt of notification regarding non-renewal of the Lease and the water damage to the Sharon property. In Count IV, Omnicare seeks contractual indemnification, and, in Count V, asserts contribution rights against Equis.*fn2

II. Standard of Review

In ruling on a Motion to Dismiss made pursuant to Fed. R. Civ. P. 12(b)(6), the Court must accept the allegations in the complaint as true and view reasonable inferences in the light most favorable to the plaintiff. See Erickson v. Pardus, 551 U.S. 89, 95 (2007). A complaint does not satisfy the requirements of Rule 12(b)(6) if it fails to allege "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007) (modifying longstanding 12(b)(6) standard set out in Conley v. Gibson, 355 U.S. 41 (1957)). See also Ashcroft v. Iqbal, 556 U.S. ----, 129 S.Ct. 1937 (2009) (clarifying that Twombly standard applies beyond the antitrust context).

To survive a motion made pursuant to Fed. R. Civ. P. 12(b)(6), a plaintiff must "make a 'showing' rather than a blanket assertion of an entitlement to relief." Phillips v. County of Allegheny, 515 F.3d 224, 231 (3d Cir.2008). In other words, he must supply "enough facts to raise a reasonable expectation that discovery" will reveal evidence supporting his claim. Id. at 232 (quoting Twombly, 550 U.S. at 556 n.3). The United States Court of Appeals for the Third Circuit has instructed:

[A]fter Iqbal, when presented with a motion to dismiss for failure to state a claim, district courts should conduct a two-part analysis. First, the factual and legal elements of a claim should be separated. The District Court must accept all of the complaint's well-pleaded facts as true, but may disregard any legal conclusions. Second, a District Court must then determine whether the facts alleged in the complaint are sufficient to show that the plaintiff has a "plausible claim for relief." In other words, a complaint must do more than allege the plaintiff's entitlement to relief. A complaint has to "show" such an entitlement with its facts.

Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009). Where the court is unable to infer more than a possibility of misconduct, the complaint does not "show" that the pleader is entitled to relief.

III. Discussion

A. The Negligence Claims: The Gist of the Action and Economic Loss Doctrines Equis argues first that the negligent misrepresentation and negligence claims set out at Counts II and III of the Third Party Complaint respectively must be dismissed based on the gist of the action doctrine:

Count II purports to state a cause of action for fraudulent and negligent misrepresentation, and Count III a cause of action for negligence. Both counts are based upon services which Equis was allegedly obligated to perform under the Services Agreement.

There is no allegation that Equis had an independent duty - outside of the Services Agreement - to perform such services. (Doc. 58 at 4). "Under Pennsylvania law, the 'gist of the action' doctrine will bar a claim for negligent misrepresentation when said claim sounds in contract." Smith v. Lincoln Benefit Life Co., No. 08-1324, 2009 WL 789900 at * 20 (W.D. Pa. March 23, 2009) (citations omitted). "When a plaintiff alleges that the defendant committed a tort in the course of carrying out a contractual agreement, Pennsylvania courts examine the claim and determine whether the 'gist' or gravamen of it sounds in contract or tort." Id. (quoting Sunquest Info. Sys., Inc. v. Dean Witter Reynolds, Inc., 40 F. Supp.2d 644, 651 (W.D. Pa. 1999).

The economic loss doctrine, also invoked by Omnicare, is similar. Under this doctrine, "no cause of action exists for negligence that results solely in economic damages unaccompanied by physical injury or property damage." Excavation Tech., Inc. v. Columbia Gas Co. of Pennsylvania, 985 A.2d 840, 841 n.3 (Pa. 2009) (quoting Adams v. Copper Beach Townhouse Cmtys., L.P., 816 A. 2d 301, 305 (Pa. Super. 2003)). *fn3 See also Bouriez v. Carnegie Mellon Univ., No. 02-cv-2104, 2010 WL 1416845 at * 2 (3d Cir. April 6, 2010) (stating that economic loss doctrine "prohibits plaintiffs from recovering in tort economic loss to which their entitlement flows only from contract") (quoting Duquesne Light Co. v. Westinghouse Elec. Corp., 66 F. 3d 604, 618 (3d Cir. 1995)); Sch. Lane House Philadelphia, LLC, v. RAIT P'ship, L.P., ...


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