IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA
July 13, 2011
TOSHIBA AMERICA MEDICAL SYSTEMS, INC.,
TSIC ACQUISITION, L.P., ET AL., DEFENDANTS
The opinion of the court was delivered by: Rufe, J.
MEMORANDUM OPINION AND ORDER
Toshiba America Medical Systems, Inc. ("Toshiba"), has filed a two count breach of contract suit. Count I states breach of contract claims against TSIC Acquisition, L.P. ("TSIC LP"), TSIC LP's general partner TSIC Acquisition GP, Inc. ("TSIC Inc."), and TSIC LP's limited partners, Michael R Clair, M.D., William H. Hartz, M.D., Philip J. Moldofsky, M.D., Jay S. Rosenblum, M.D., Kenneth E. Brumberger, M.D., and Michael Carr (collectively "the Limited Partners"). *fn1 TSIC LP has filed an answer, and the remaining Count I defendants ("Moving Defendants") have filed a Motion to Dismiss for failure to state a claim. For the reasons set forth below, the Motion will be granted as to the Limited Partners and denied as to the general partner, TSIC Inc.
In the spring of 2007, Toshiba entered into four 63-month medical
imaging equipment lease agreements with two companies: ATI Resources,
Inc. and MRI Capstone Resources, Inc. In February 2009, ATI Resources,
Inc. and MRI Capstone Resources, Inc. assigned their rights and
obligations under the leases to "TSIC Acquisition, L.P. by it's [sic]
General Partner TSIC Acquisition GP, Inc." *fn2
Fox Chase Medical Center guaranteed payment of the TSIC
LP leases. On June 30, 2009, Toshiba sold its interest in the assigned
leases to Wells Fargo Equipment Finance, Inc., and Toshiba guaranteed
Wells Fargo payment for the TSIC LP leases. On April 1, 2010, Wells
Fargo notified Toshiba that TSIC LP was over 90 days delinquent on all
four leases. Toshiba paid Wells Fargo the past and accelerated balance
due on all imaging units, as was required by their guarantee
agreement. Toshiba now seeks to recoup past due and accelerated lease
payments, plus penalties and interest, late charges, attorney's fees,
and other costs incurred by Toshiba due to Defendants' breaches.
Standard of Review
The Court may, pursuant to Federal Rule of Civil Procedure 12(b)(6), dismiss a claim for failure to state a claim upon which relief can be granted if a plaintiff's "plain statement" does not possess enough substance to show that plaintiff is entitled to relief. *fn3 In determining whether a motion to dismiss should be granted, the court must consider those facts alleged in the complaint, accepting the allegations as true and drawing all logical inferences in favor of the non-moving party. *fn4 In addition to the factual allegations set forth in the complaint, the Court may consider the factual allegations within other documents, including those described or identified in the complaint if those documents are integral to Plaintiff's claims. *fn5 Courts are not bound to accept as true bald assertions or legal conclusions couched as factual allegations. *fn6 Something more than a mere possibility of a claim must be alleged; the plaintiff must allege "enough facts to state a claim for relief that is plausible on its face." *fn7 The Complaint must set forth direct or inferential allegations respecting all the material elements necessary to sustain recovery under some viable legal theory. *fn8 The court has no duty to "conjure up unpleaded facts that might turn a frivolous action . . . into a substantial one." *fn9 Discussion
The elements of a breach of contract claim are: 1) the existence of a contract between the parties; 2) plaintiff's performance of its contractual duties; 3) defendant's breach of its contractual duties; and 4) damages. *fn10 Moving Defendants seek to dismiss the claims against them for failure to state a claim upon which relief can be granted, on the grounds that Plaintiff has not pled that Moving Defendants were parties to the lease agreements and are liable to Plaintiff. One cannot be liable for a breach of contract unless one is a party to that contract. *fn11
General Partner TSIC Inc.
The Complaint clearly states that TSIC Inc. is the general partner
in TSIC LP. The lease assignment agreements, which are attached to the
complaint, were entered into and signed by "TSIC Acquisition, L.P. by
it's [sic] General Partner TSIC Acquisition GP, Inc."
*fn12 Under Pennsylvania law, *fn13
general partners are liable for all the obligations of
the limited partnership unless otherwise agreed or provided by
Here, the Plaintiff alleged, and it is undisputed, that TCIS Inc. is the general partner in TCIS LP. In addition, Plaintiff identified and attached to the Complaint the assignment lease agreements to which TCIS Inc. was a signatory on behalf of TCIS LP. Plaintiff has also alleged its compliance with the contract, TSIC's breach of the lease agreements, and resulting damages. Accordingly, the Court finds that Plaintiff has stated a claim for breach of contract against TSIC Inc. Supp. 2d 552, 561 (D.N.J. 2002) with Lyons v. Coxcom, Inc., 718 F. Supp. 2d 1232, 1237 (S.D. Cal. 2009); Patriot Rail Corp. v. Sierra R.R. Co., No. 09-9, 2011 WL 318400 (E.D. Cal., Feb. 1, 2011); Walsh v. West Valley Mission Cmty. Coll. Dist., 66 Cal. App. 4th 1532, 1545 (Cal.App. 6 Dist., 1998).
The Limited Partners
Under Pennsylvania law, "[a] limited partner is not liable,
solely by reason of being a limited partner, under an order of a court
or in any other manner, for a debt, obligation or liability of the
limited partnership of any kind or for the acts of any partner, agent
or employee of the limited partnership." *fn15
Merely alleging that individuals are limited partners in
a limited partnership is not sufficient to assert liability against
those individuals; the Plaintiff must show other grounds for holding
them personally liable, such as alleging that they entered into
contracts in their individual capacities or otherwise personally
participated in the contract formation. *fn16
Plaintiff has not alleged or shown that the Limited Partners were signatories to the contracts at issue nor that they otherwise personally participated in the contract formation.
Instead, to support its claim against the Limited Partners, Plaintiff points to the Limited Partnership Agreement of TSIC Acquisition, L.P., which was not incorporated into or attached to the Complaint, but which may be considered. *fn17 Plaintiff states: "as signatories to the [Limited Partnership] agreement, moving defendants are presumably aware that the partnership agreement specifically provides, at Paragraph 6(f), that an equipment lessor such as [Toshiba] 'may enforce its rights against any or all of the Limited Partners directly, without any prerequisite to proceed against the Partnership or the General Partner.'" But, on close reading of the Limited Partnership Agreement, it is not clear that equipment leases such as the one at issue here are covered by Paragraph 6(f). Section 6 of the Limited Partnership Agreement pertains to capital contributions to the partnership and the partners' obligations to satisfy "financing obligations in connection with the purchase of equipment and working capital for the Partnership." (emphasis added). Plaintiff has not explained how the assigned leases in question fall under this capital contribution provision of the Partnership Agreement, rather than under Section 11(c) which reads:
Limited Partners. Except as set forth in Section 11(e) hereof, the Limited Partners shall take no part in, or interfere in any manner with the management, conduct or control of the Partnership business or the sale, leasing or refinancing of its assets and shall have no right or authority to act for or bind the Partnership. No Limited Partner, in his capacity as such, shall be liable for the debts, liabilities, contracts or other obligations of the Partnership, other than pursuant to the personal guarantees or similar obligations entered into by such Limited Partner.
The Complaint does not allege that the Limited Partners were parties to the contract at issue in this case, nor does it allege that the Limited Partners are personally liable for contracts entered into by the TSIC LP under the Partnership Agreement. The Partnership Agreement attached to Plaintiff's response does not resolve this deficiency, as Plaintiff fails to explain why Section 6(f) and not Section 11(c) governs the Limited Partners' liability under the contract. Accordingly, the Court finds that Plaintiff has failed to state a claim against the Limited Partners. Conclusion
For the reasons set forth above, Moving Defendants' motion to dismiss will be denied as to the claims against TSIC Inc., and granted as to the claims against the Limited Partners.