The opinion of the court was delivered by: Yvette Kane, Chief Judge United States District Court Middle District of Pennsylvania
Presently pending before the Court are Defendant Wyoming Seminary's motion to dismiss and compel arbitration (Doc. No. 30) and Plaintiffs' motion to stay arbitration pending litigation (Doc. No. 3). For the reasons that follow, the Court will grant Defendant's motion to dismiss, but will not compel arbitration. The Court will also deny Plaintiffs' motion to stay arbitration.
Plaintiffs Danielle and Joseph Ochman, Jr., individually and on behalf of their son Daniel Ochman, and Daniel Ochman in his own right, initiated this action by filing a complaint on January 3, 2012. (Doc. No. 1.) On January 26, 2012, Plaintiffs filed a motion to stay arbitration, and on January 31, 2012, Plaintiffs filed an amended complaint. (Doc. No. 4.) On May 18, 2012, the Court granted Plaintiffs twenty-one days in which to file an amended complaint, in order to properly allege diversity jurisdiction. (Doc. No. 28.) On June 8, 2012, Plaintiffs filed a second amended complaint. (Doc. No. 29.)
According to their second amended complaint,*fn1 Plaintiff Daniel Ochman sought to attend a post-graduate program after high school to improve his chances of attending a four-year institution as a music major. Defendant Wyoming Seminary, a private college preparatory school, made a variety of representations to the Ochmans about its post-graduate program. It offered Daniel an invitation to matriculate, which he accepted. Although the enrollment agreement between Joseph and Danielle Ochman and Wyoming Seminary contained a mandatory arbitration provision, Plaintiffs allege that it was a contract of adhesion.
Plaintiff Daniel Ochman matriculated at Wyoming Seminary in August of 2010, and shortly thereafter Plaintiffs came to believe that he was not receiving the attention, guidance, or programming he was initially promised. Plaintiffs had expressed to Wyoming Seminary that Daniel needed "an academic environment that would allow him to grow, mature, and become more self-confident," and Wyoming Seminary "indicated that there would be guidance and encouragement for Daniel from start to finish." (Doc. No. 29 ¶¶ 12, 30.) Instead, it became clear that nobody at Wyoming Seminary had read or appreciated Daniel's application nor appraised themselves of Daniel's particular strengths or weaknesses. Among other issues, Daniel's dormitory room was separated from the other post-graduate students, his college counselor failed to provide any guidance for him, he was transferred out of his only music class, and was allowed to skip classes. Daniel was floundering at Wyoming Seminary and his teacher advisor even informed him that he should "just go home." (Id. at ¶ 51.) And, despite Plaintiff Danielle Ochman's repeated attempts to get help for her son, none was forthcoming. Daniel left Wyoming Seminary in November of 2010.
On January 3, 2012, Plaintiffs filed their original complaint in the Middle District of Pennsylvania, which brought claims under the Rehabilitation Act of 1973 and the Americans with Disabilities Act of 1990. On January 26, 2012, Plaintiffs moved to stay arbitration pending litigation. On January 31, 2012, Plaintiffs filed an amended complaint, which solely alleged a state-law breach-of-contract claim and invoked the Court's diversity jurisdiction under 28 U.S.C. § 1332. Wyoming Seminary moved to dismiss the amended complaint for lack of subject matter jurisdiction, arguing that diversity jurisdiction did not exist because the case failed to meet the $75,000 amount-in-controversy requirement set out in Section 1332(a). On May 18, 2012, this Court dismissed the amended complaint with leave to submit a further amended complaint within twenty-one days.
Plaintiffs filed their second amended complaint on June 8, 2012, alleging two state-law breach of contract claims, invoking the Court's diversity jurisdiction under 28 U.S.C. § 1332. First, Daniel Ochman claims that Wyoming Seminary breached its implied-in-fact contract with him and seeks compensatory damages, economic damages, consequential damages, and delayed income in an amount in excess of $75,000. Second, Plaintiffs Joseph and Danielle Ochman claim that Wyoming Seminary breached its contract with them because it failed to provide the represented educational services to their son. They seek damages of $29,212.89, the amount that they paid Wyoming Seminary in tuition. Wyoming Seminary moves to dismiss the second amended complaint for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6) and lack of subject-matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1). Wyoming Seminary also moves to compel arbitration pursuant to the enrollment agreement it entered into with Plaintiffs.
A. Failure to State A Claim
A motion to dismiss for failure to state a claim, filed pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, tests the legal sufficiency of the complaint, Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir. 1993). In reviewing a motion to dismiss, a court may "consider only the allegations in the complaint, exhibits attached to the complaint, matters of public record, and documents that form the basis of a claim." Lum, 361 F.3d at 221 n.3. The motion will only be properly granted when, taking all factual allegations and inferences drawn therefrom as true, the moving party is entitled to judgment as a matter of law. Markowitz v. Ne. Land Co., 906 F.2d 100, 103 (3d Cir. 1990). The burden is on the moving party to show that no claim has been stated. Johnsrud v. Carter, 620 F.2d 29, 33 (3d Cir. 1980). Thus, the moving party must show that Plaintiff has failed to "set forth sufficient information to outline the elements of his claim or to permit inferences to be drawn that those elements exist." Kost, 1 F.3d at 183 (citations omitted). A court, however, "need not credit a complaint's 'bald assertions' or 'legal conclusions' when deciding a motion to dismiss." Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906, 908 (3d Cir. 1997). While the 12(b)(6) standard does not require "detailed factual allegations," there must be a "'showing,' rather than a blanket assertion of entitlement to relief. . . . '[F]actual allegations must be enough to raise a right to relief above the speculative level.'" Phillips, 515 F.3d at 231-32 (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). Put otherwise, a civil complaint must "set out 'sufficient factual matter' to show that the claim is facially plausible." Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009) (quoting Ashcroft v. Iqbal, 129 S. Ct. 1937, 1955 (2009)).
B. Subject-Matter Jurisdiction
A motion to dismiss for lack of subject-matter jurisdiction pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure does not necessarily follow the same standard of review as the more often considered 12(b)(6) motion. If the challenge to subject-matter jurisdiction relies on a facial attack of the pleadings, "the court must consider the allegations of the complaint as true," as it would with a motion to dismiss under 12(b)(6). Mortensen v. First Federal Savings & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977). A motion that challenges "the existence of subject matter jurisdiction in fact, quite apart from any pleadings," however, does not require a court to consider all allegations of the complaint as true because the court must weigh the evidence to ensure that it has the power to hear the case. Mortensen, 549 F.2d at 891 ("In short, no presumptive truthfulness attaches to the plaintiff's allegations, and the existence of disputed material facts will not preclude the trial court from ...