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Hovig Ralph Vartan, Trustee of the Harrispenn v. Wells Fargo Bank Northwest

April 18, 2012

HOVIG RALPH VARTAN, TRUSTEE OF THE HARRISPENN : TRUST, A PENNSYLVANIA TRUST, PLAINTIFF
v.
WELLS FARGO BANK NORTHWEST, N.A., A NATIONAL BANKING ASSOCIATION, DEFENDANT AND THIRD-PARTY PLAINTIFF
v.
PENDLETON HARRISBURG SPE LLC; SPCK HARRISBURG SPE LLC; WF TWO LLC; AND CAMDEN INTERSTATE DRIVE LLC, THIRD-PARTY DEFENDANTS



The opinion of the court was delivered by: Judge Sylvia H. Rambo

MEMORANDUM

Presently before the court is Defendant/Third Party-Plaintiff Wells Fargo Bank, N.A.'s Motion to Dismiss Third-Party Defendants' Amended Counterclaims. (Doc. 39.) The motion has been briefed and is ripe for disposition. For the following reasons, the court will deny the motion.

I. Background

A. Parties

Plaintiff, Hovig Ralph Vartan, Trustee of Harrispenn Trust, brought this action against Wells Fargo Bank, N.A. ("Wells Fargo" or "Defendant"), a national banking association. (Doc. 1, Ex. D, Compl. ¶¶ 1, 3.) Third-Party Defendants, Pendleton Harrisburg SPE LLC, SPCK Harrisburg SPE LLC, WF Two LLC, and Camden Interstate Drive LLC (collectively "Pendleton" or "Third-Party Defendants") are limited liability companies organized under the laws of Delaware. (Doc. 15, Third-Party Compl. ¶¶ 5-8.)

B. Facts*fn1

The underlying conflict in this case stems from Pendleton's purchase of property from Plaintiff at 2575 Interstate Drive, Harrisburg, Pennsylvania (the "Property"). Following the sale of the Property, disputes arose between Pendleton and Plaintiff involving, inter alia, the Property's heating, ventilation and air conditioning. ("HVAC"). (Doc. 33, Amended Answer to Third-Party Complaint and Counterclaim, ¶ 64.) To resolve these problems, Plaintiff, Pendleton, and Wells Fargo entered into a New Facilites Escrow and Servicing Agreement ("Escrow Agreement") whereby escrowed funds were to be used for certain HVAC construction, repairs, and maintenance. (Id. at ¶ 65.) Under the Escrow Agreement, Wells Fargo is the Escrow Agent and Beneficiary and is tasked with making disbursements from the escrowed funds in accordance with the terms of the Agreement. Wells Fargo, as Beneficiary, also had the obligation to, in good faith, approve replacement contractors and consultants. (Id. at ¶ 69.)

Consistent with the terms of the Escrow Agreement, Wells Fargo received approximately $2,840,000.00 which was paid "to provide assets to pay for New Facilities, Tank Work, . . . and other expenses on [the property at 2575 Interstate Drive]." (Doc. 1, Ex. D (Escrow Agreement).) Subsequently, Pendleton entered into a series of contracts with Enginuity LLC ("Enginuity"), a local HVAC contractor. (Doc. 33at ¶ 70.) During the course of performance of those contracts, Enginuity issued invoices to Pendleton. (Id. at ¶ 71.) Pendleton, in turn, submitted the invoices to Wells Fargo for payment pursuant to the terms of the Escrow Agreement. (Id. at ¶ 72.) However, as time went on, Pendleton learned of possible design and construction defects in the HVAC work by Enginuity. (Id. at ¶ 74.) Thus, Pendleton did not immediately submit Enginuity's invoices to Wells Fargo for payment from escrow. (Id. at ¶ 75.) Enginuity, in turn, ceased all work on the Property, leaving the HVAC work incomplete. (Id. at ¶ 76.) Enginuity has since filed suit in the Court of Common Pleas of Dauphin County (docket number 2010-CV-9448-CV) seeking $258,798.80 allegedly owed in unpaid invoices. (Id. at ¶ 77 and Ex. A, Dauphin Cnty. Compl.)

After Enginuity ceased working on the HVAC at the Property, Pendleton retained other engineers and contractors, including Highland Associates ("Highland"), McClure Service Company ("McClure") and Emcor Services/Fluidics, Inc. ("Emcor") to complete Enginuity's obligations. (Id. at ¶ 79.) Pendleton claims that its intention to seek replacement contractors and consultants was communicated to Wells Fargo, however, notwithstanding Wells Fargo's previous approval of contractors other than Enginuity, Wells Fargo refused to entertain any further requests for payments from escrow, apparently because of threats of possible litigation with Plaintiff regarding the propriety of certain disbursements from the escrow account, threats which were realized in the case sub judice. (Id. at ¶¶ 83-84.) On December 7, 2011, Pendleton nevertheless submitted to Wells Fargo invoices totaling $211,437.44. (Id. at ¶ 85.) Those invoices have not been paid. (Id. at ¶ 87.)

In short, two separate lawsuits are currently pending relating to the new facilities work at the property. First, Enginuity sued Pendleton in Dauphin County Court of Common Pleas seeking $258,798.80 in unpaid invoices. Second, in the case at bar, Plaintiff sued Wells Fargo claiming Wells Fargo made payments that fall outside the scope of the escrow agreement and has therefore violated its obligations to Plaintiff. As a result of this suit, Wells Fargo ceased approving payments from escrow of any invoices submitted by Pendleton, resulting in the instant counterclaims.

C. Procedural History

On May 27, 2011, Plaintiff filed a complaint against Wells Fargo in the Court of Common Pleas in Dauphin County, Pennsylvania, asserting breach of contract (Count I), negligence (Count II), and fiduciary breach (Count III) arising out of Wells Fargo's disbursements from the escrow account. (Doc. 1, Ex. D, Compl.) On June 29, 2011, Wells Fargo removed the action to this court. (Doc. 1.) On August 22, 2011, Wells Fargo answered Plaintiff's complaint, denying the allegations set forth therein and asserting several affirmative defenses, including Plaintiff's failure to include all parties to the Escrow Agreement as parties to the case. (Doc. 11.) On August 31, 2011, Wells Fargo filed a third-party complaint bringing Pendleton into this lawsuit as a Third-Party Defendant under Federal Rule of Civil Procedure 14. (Doc. 15.) In the third-party complaint, Wells Fargo brought claims for contribution against Pendleton for negligence (Count I), negligent misrepresentation (Count II), and breach of duty (Count III), as well as an indemnification claim against Pendleton (Count IV). (Id.)

On October 19, 2011, Pendleton answered Wells Fargo's third-party complaint and counterclaimed for declaratory relief and breach of contract relating to the Escrow Agreement. (Doc. 21.) On December 7, 2011, Wells Fargo filed a motion to dismiss Pendleton's counterclaims. (Doc. 27.) Plaintiff also filed a motion to dismiss the counterclaims on that same day. (Doc. 29.) On December 21, 2011, Pendleton filed an amended answer and counterclaims. (Doc. 33.) On January 27, 2012, Wells Fargo re-filed a motion to dismiss the amended counterclaims and brief in support.*fn2 (Docs. 39 & 40.) Pendleton filed a brief in opposition on February 10, 2012 (Doc. 44) to which Wells Fargo replied on February 27, 2012 (Doc. 45). Thus, Wells Fargo's motion is ripe for disposition.

II. Legal Standard

Courts use the same standard in ruling on a motion to dismiss a counterclaim as they do a motion to dismiss a complaint where dismissal is sought under Federal Rule of Civil Procedure 12(b)(6). See Wawrzynski v. Heinz Co., 2012 U.S. Dist. LEXIS 29246, *5-6 (W.D. Pa. March 6, 2012). In light of this legal standard, the court "must accept as true all the allegations in the [counterclaims] and all reasonable interferences that can be drawn from them, and view them in the light most favorable to the non-moving party." Id. (citing Rocks v. City of Phila., 868 F.2d 644, 645 (3d Cir. 1989)). The counterclaims must do more than allege the claimant's entitlement to relief; it must "show such an entitlement with its facts." Fowler, 578 F.3d at 211 (citations omitted). As the Supreme Court instructed in Iqbal, "[w]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the [counterclaimant] has alleged-but it has not 'show[n]'-'that the pleader is entitled to relief.'" Iqbal, 129 S. Ct. at 1950 (quoting Fed. R. Civ. P. 8(a) (alterations in original)). In other words, a claim has "facial plausibility when the plaintiff pleads factual content that ...


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