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The Ayco Company, L.P v. Jeffrey M. Lipton and

August 29, 2012

THE AYCO COMPANY, L.P.,
PLAINTIFF,
v.
JEFFREY M. LIPTON AND SHELLEY L. LIPTON,
DEFENDANTS.



The opinion of the court was delivered by: Arthur J. Schwab United States District Judge

ELECTRONICALLY FILED

MEMORANDUM OPINION

Plaintiff, Ayco Company, L.P. ("Ayco"), brought this declaratory judgment action seeking a declaration that it is not bound to arbitrate a dispute with Defendants, Jeffrey M. Lipton and Shelley L. Lipton (collectively, "the Liptons"). The parties do not dispute that Jeffrey M. Lipton was the Chief Executive Officer of Nova Chemicals, Inc. ("Nova") from the time the contract between Nova and Ayco was formed to May of 2009. The parties also agree that Ayco's "Engagement Contract" with Nova required Ayco to provide investment advisory, financial counseling, tax advisory, and tax return services to Nova in exchange for remuneration.

The Liptons filed a Motion to Dismiss the Complaint for declaratory relief (doc. no. 13), Ayco filed a Brief in Opposition, (doc. no. 19) and the Liptons filed a Reply Brief. Doc. No. 22. After thoroughly reviewing the Complaint, the Engagement Contract attached to the Complaint, and the parties' respective briefs, this Court will grant Defendants' Motion to Dismiss for the reasons more fully described below.

I. Standard of Review

In considering a Rule 12(b)(6) motion, federal courts require notice pleading, as opposed to the heightened standard of fact pleading. Federal Rule of Civil Procedure 8(a)(2) requires only "'a short and plain statement of the claim showing that the pleader is entitled to relief,' in order to 'give the defendant fair notice of what the .claim is and the grounds on which it rests.'" Bell Atlantic Corp. v. Twombly, 550 U.S. 554, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)).

Building upon the landmark United States Supreme Court decisions in Twombly, 550 U.S. 554 and Ashcroft v. Iqbal, 129 S.Ct. 1937, 1947 (2009), the United States Court of Appeals for the Third Circuit, recently explained that a District Court must take three steps to determine the sufficiency of a complaint:

First, the court must "tak[e] note of the elements a plaintiff must plead to state a claim." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1947 (2009). Second, the court should identify allegations that, "because they are no more than conclusions, are not entitled to the assumption of truth.' Id. at 1950. Third, "whe[n] there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement for relief.' Id. This means that our inquiry is normally broken into three parts: (1) identifying the elements of the claim, (2) reviewing the complaint to strike conclusory allegations, and then (3) looking at the well-pleaded components of the complaint and evaluating whether all of the elements identified in part one of the inquiry are sufficiently alleged.

Malleus v. George, No. 10-3539, 2011 F.3d WL 2044166, at *2 (3d Cir. May 26, 2011).

The third step of the sequential evaluation requires this Court to consider the specific nature of the claim(s) presented and to determine whether the facts pled to substantiate the claim(s) are sufficient to show a "plausible claim for relief." "While legal conclusions can provide the framework of a Complaint, they must be supported by factual allegations." Id.; See also Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11.

The Court may not dismiss a Complaint (or Counterclaim) merely because it appears unlikely or improbable that plaintiff can prove the facts alleged or will ultimately prevail on the merits. Twombly, 550 U.S. at 556, 563 n.8. Instead, the Court must ask whether the facts alleged raise a reasonable expectation that discovery will reveal evidence of the necessary elements. Id. at 556. Generally speaking, a Complaint (or Counterclaim) that provides adequate facts to establish "how, when, and where" will survive a Motion to Dismiss. Fowler, 578 F.3d at 212; See also Guirguis v. Movers Specialty Services, Inc., 346 Fed.Appx. 774, 776 (3d Cir. 2009). In short, the Motion to Dismiss should not be granted if a party alleges facts which could, if established at trial, entitle him to relief. Fowler, 578 F.3d at 563 n.8.

II. Factual Background

Ayco provides comprehensive financial counseling and education services to executives and employees of the companies with whom it contracts. Doc. No. 1, ¶7. On or about October 9, 2001, Nova retained Ayco to provide a "Comprehensive Counseling Program" which included certain financial counseling services, including tax preparation services, for Nova's Chief Executive Officer. Id., ¶¶ 9-10; see also Doc. No. 1-1. These tax preparation services ...


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