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William S. Karn v. Clayton S. Morrow

December 23, 2011


The opinion of the court was delivered by: McVerry, J.


Pending before the Court is the MOTION TO DISMISS PURSUANT TO FRCP 12(b)(6) (Document No. 3), with brief in support, filed by Defendant Clayton S. Morrow ("Morrow"). Plaintiff William S. Karn ("Karn") has filed a response and "Narrative Sheet" in opposition to the motion and it is ripe for disposition.

Factual and Procedural Background

On November 3, 2011, Karn filed a "Complaint of Interstate Commerce Injury." Both Karn and Morrow are lawyers and citizens of Pennsylvania. Karn alleges that this Court may exercise subject-matter jurisdiction pursuant to federal antitrust laws and the jurisdiction over interstate commerce conferred by the United States Constitution.

The Complaint is not a model of clarity. It appears that a Mr. and Mrs. Phillips entered into an option contract with a Ms. Brown, who allegedly "operates a conservative, socially beneficial business aiding families in need of modestly financed residence." Brown planned to re-sell the home to the Waltermeyers. The Phillips, Brown and the Waltermeyers are not named as parties in this case, and their relationship to Karn and Morrow is not clear.

The Phillips and Waltermeyers discovered the existence of one another‟s respective agreements with Brown. The Complaint alleges that instead of proceeding with the deals, "Morrow joined with the Waltermeyer lawyer*fn1 in an attack on Brown for selling a house that Brown did not own" and induced the Phillips to breach the option contract. Plaintiff alleges that the bank business of mortgage debt paper, in the aggregate, runs in the billions of dollars and that the breach of the option contract by the Phillips implemented by Morrow "is a blow which cripples a business affecting interstate commerce."

Karn concedes that Morrow obtained a state court award of attorney fees of $6,630, although no further details are set forth in the Complaint.*fn2 Presumably, the award of attorney fees was connected in some way to the Phillips-Brown transaction. Karn alleges that Brown lost another $400 in possible profit in the exercise of a real estate option contract. Accordingly, Karn seeks a court award of $7,030, based on a finding that there was a breach of contract resulting in injury to an interstate business operation. In the alternative, if Morrow fails to accept service, Karn asks the Court to enter a default judgment for $17,000, closer to his alleged actual out-of-pocket expenses.

The Complaint is totally silent with respect to Karn‟s own involvement. In the "Narrative Sheet" attached to Karn‟s response to the motion to dismiss, Karn indicates that he "and his associate Brown are operating a law office." Presumably, this Brown is the same person referenced in the Complaint. Nevertheless, there are no factual averments concerning Karn‟s role in the underlying contract dispute or the state court‟s award of attorney fees. In the Narrative Sheet, Karn articulates a theory, namely that he should have the freedom to compete as a real estate lawyer against real estate brokers who allegedly encroach on the practice of law by writing sales agreements, that is not based on the Complaint at all.

Morrow contends that Karn has failed to state a valid claim and seeks dismissal with prejudice for two separate reasons: (1) the failure to contain a short and plain statement of a claim, pursuant to Fed. R. Civ. P. 8; and (2) lack of subject-matter jurisdiction pursuant to the Rooker-Feldman doctrine, as Plaintiff seeks review of a state court decision.


A motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) challenges the legal sufficiency of the complaint filed by Plaintiff. The United States Supreme Court has held that "[a] plaintiff‟s obligation to provide the "grounds‟ of his "entitle[ment] to relief‟ requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atlantic Corp. v. Twombly, 550 U.S. 554, 555 (207) (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)) (alterations in original).

The Court must accept as true all well-pleaded facts and allegations, and must draw all reasonable inferences therefrom in favor of the plaintiff. However, as the Supreme Court made clear in Twombly, the "factual allegations must be enough to raise a right to relief above the speculative level." Id. The Supreme Court has subsequently broadened the scope of this requirement, stating that only a complaint that states a plausibleclaim for relief survives a motion to dismiss." Ashcroft v. Iqbal, -- U.S. --, 129 S. Ct. 1937, 1950 (2009) (emphasis added).

Thus, after Iqbal, a district court must conduct a two-part analysis when presented with a motion to dismiss for failure to state a claim. Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). First, the Court must separate the factual and legal elements of the claim. Id.

Although the Court "must accept all of the complaint‟s well-pleaded facts as true, [it] may disregard any legal conclusions." Id. at 210-211. Second, the 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." Id. at 211 (citing Iqbal 129 S. Ct. at 1949). The determination for "plausibility" will be ""a ...

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