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Jerald S. Batoff v. Julie Charbonneau

March 19, 2013


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


On August 15, 2012, Jerald S. Batoff, plaintiff and counterclaim defendant ("plaintiff"), brought this action against Julie Charbonneau and Dean Topolinkski, defendants and counterclaim plaintiffs ("defendants"), for declaratory judgment. Defendants removed the action to this court on September 21, 2012, and filed their amended counterclaims on October 22, 2012, against plaintiff. Presently before the court is plaintiff's partial motion to dismiss counts IV, V, VI, and VII of defendants' counterclaims pursuant to rule 12(b)(6). For the reasons that follow, I will deny plaintiff's motion to dismiss count IV for unjust enrichment, but grant plaintiff's motion to dismiss count V for conversion, count VI for breach of fiduciary duty, and count VII for tortious interference with contractual relations.


Defendants assert the following factual allegations in support of their counterclaims, which I must accept as true for the purposes of this motion to dismiss.*fn1 In November 2011, Batoff and Charbonneau entered into a lease agreement that included an option ("the Lease/Option Agreement") for Charbonneau to purchase Bloomfield, a historic mansion in Radnor Township ("the Property"). (Defs.' Am. Countercl. ¶ 51.) Additionally, the parties signed a written joinder in which Dean Topolinski joined as a party to the Lease/Option Agreement and agreed to be a guarantor of Charbonneau's obligations under the Lease/Option Agreement. (Id. at ¶ 52.) Topolinkski had already entered into two previous agreements of sale for the Property with the plaintiff, however; due to inadequate funds he had been unable to close on the Property. (Id. at ¶¶ 13, 18, 29-30.) Also, Topolinksi and Batoff had previously signed a residential lease agreement, and accordingly, at the time of the November 2011 Lease/Option Agreement, defendants were already living in the Property. (Id. at ¶ 34.)

The Lease/Option Agreement had a five-year term from November 1, 2011, through October 31, 2016, with the annual rent of $315,000 due in equal installments on November 1, March 1, and July 1 of each lease year. (Id. at ¶ 55.) As part of the Lease/Option Agreement, defendants had the option to purchase the Property for $3.9 million during the lease period. The Lease/Option Agreement also specified that defendants had to pay a $900,000 non-refundable payment for the option to purchase the Property at the execution of the Agreement. (Id. at ¶ 57.) Defendants paid the $900,000 required under the Lease/Option Agreement to plaintiff. On October 31, 2011, DGI, a company owned by Topolinski, wired $300,0000 to Midlantic Real Estate, a company owned by plaintiff. (Id. at ¶ 61.) On November 1, 2011, and November 22, 2011, defendants caused $400,000 and $305,000, respectively, to be wired to plaintiff. (Id. at ¶ 65.) Charbonneau wired plaintiff $300,000 on December 12, 2011. (Id. at ¶ 68.) Plaintiff accepted the entire $1.305 million defendants paid him; however, plaintiff, acting through Midlantic returned $300,000 to DGI.*fn2 (Id. at ¶¶ 62, 66, 70.) Thus, defendants paid plaintiff a total of $1.05 million--$900,000 for the option to purchase and $105,000 for the first rent payment--and consequently they validly obtained the option to purchase the Property. (Id. at ¶¶ 71-72.)

Additionally, paragraph 9 of the Lease/Option Agreement provided that defendants were responsible for paying for "fire, casualty and liability and rent abatement insurance against the Property" which were to be maintained by the plaintiff. (Id. at ¶ 58.) Paragraph 17 of the Lease/Option Agreement provided that if there was a casualty to the Property with a cost to repair the damages of more than $1 million, defendants would be allowed to exercise their option to purchase. (Id. at ¶ 60.) Additionally, according to paragraph 17 of the Lease/Option Agreement, if defendants exercised their option to purchase, they would be entitled to receive at the closing any insurance proceeds paid to plaintiff, and plaintiff would assign his rights to any unpaid insurance proceeds to the defendants. (Id.)

On April 4, 2012, a fire destroyed the house on the Property. (Id. at ¶ 73.) Defendants were forced to move out of the house because the damage the house sustained caused safety concerns. (Id. at ¶ 74.) However, defendants always had the intention to move back to the house once there were no more safety issues. (Id. at ¶ 75.) Immediately after the fire, plaintiff continued to treat defendants as if they still held a valid option to purchase the Property. (Id. at ¶ 76.) For example, plaintiff provided defendants with information about progress of the repairs to the house and about the insurance claim. (Id. at ¶¶ 78, 80.) The insurance policy provided that Chartis, the insurance company, would pay for the rebuilding of the house regardless of cost, or, if the house was not rebuilt, would pay out a maximum of approximately $22.4 million to the insured. (Id. at ¶ 81.)

On July 25, 2012, plaintiff hand delivered a letter to Charbonneau that stated no option to purchase the Property was ever validly obtained, and also set forth alleged defaults of the Lease/Option Agreement. (Id. at ¶ 95.) Prior to this letter plaintiff had not expressed to defendants that he believed Charbonneau had failed to obtain an option to purchase or that she had breached the Lease/Option Agreement in anyway. (Id. at ¶¶ 96-97.) Charbonneau cured all defaults that were possible to cure (some defaults were impossible to cure because they involved the destroyed house). On August 7, 2012, counsel for the defendants delivered to plaintiff a letter that exercised Charbonneau's option to purchase the Property and requested a closing date of September 7, 2012. (Id. at ¶¶ 99-101.) In response to defendants' August 7, 2012, letter, on August 15, 2012, plaintiff's counsel delivered a letter to defendants' counsel claiming that the contractual breaches had not been cured and also reiterating that the option to purchase the Property was null and void. (Id. at ¶ 102.)

On August 15, 2012, plaintiff filed this current lawsuit in the Delaware County Court of Common Pleas, claiming a breach of contract and seeking a declaratory judgment that: (1) Charbonneau has no exercisable purchase option; (2) the agreement is null and void; (3) Charbonneau has no claim against the proceeds of any insurance claim under Batoff's insurance policy regarding the Property; and (4) Charbonneau has no right to participate in any settling of the insurance claim under Batoff's policy. (Compl. 16.) On August 21, 2012, defendants removed the action to this court.

Additionally, throughout August and September, counsel for defendants requested assurances from plaintiff that he would not sell the Property, modify the house, or settle the insurance claim. (Defs.' Am. Countercl. ¶ 106.) Plaintiff refused to make these assurances. (Id. at ¶¶ 109-10.) Consequently, on October 12, 2012, defendants' counsel notified plaintiff's counsel that they would file a motion requesting a temporary restraining order and preliminary injunction if plaintiff could not promise to refrain from selling the Property, modifying the house, or settling the insurance claim. (Id. at ¶ 116.) Plaintiff's and defendants' counsel had a telephone conversion on October 16, 2012, to discuss defendants' potential motion. (Id. at ¶ 118.) During this conversation plaintiff's counsel notified defendants' counsel for the first time that plaintiff had settled the insurance claim for approximately $21 million a week earlier. (Id.) Plaintiffs counsel also disclosed that plaintiff had spent $4 million of the insurance proceeds on his personal mortgage on the Property and to pay for the insurance adjuster, who handled the insurance claim resulting from the fire. (Id. at ¶ 119.)

On October 22, 2012, defendants filed their amended counterclaims (they had previously filed their counterclaims on October 1, 2012, requesting declaratory judgment and specific performance), and a Motion for a Temporary Restraining Order, Preliminary Injunction, and Expedited Discovery regarding the insurance proceeds plaintiff received.*fn3 In defendants' amended counterclaims they request: declaratory judgment that they validly obtained and exercised the option to purchase and consequently have a right to the insurance proceeds (count I); specific performance (count II); breach of contract (count III); unjust enrichment (count IV); conversion (count V); breach of fiduciary duty (count VI); and tortious interference with contractual relations (count VII). On November 5, 2012, plaintiff timely filed this partial motion to dismiss counts IV, V, VI, and VII pursuant to rule 12(b)(6).*fn4


"Courts use the same standard in ruling on a motion to dismiss a counterclaim under Federal Rule of Civil Procedure 12(b)(6) as they do for a complaint." PPG Indus., Inc. v. Generon IGS, Inc., 760 F. Supp. 2d 520, 524 (W.D. Pa. 2011) (citing United States v. Union Gas Co., 743 F. Supp. 1144, 1150 (E.D. Pa. 1990)). "To survive a motion to dismiss [under Rule 12(b)(6)], a [counterclaim] must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "A claim has facial plausibility when the [counterclaim] plaintiff pleads factual content that allows the court to draw the reasonable inference that the [counterclaim] defendant is liable for the misconduct alleged." Iqbal, 129 S. Ct. at 1949 (2009).

In evaluating a motion to dismiss, a court should separate the "the factual and legal elements of a claim." Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). The court "must accept all of the [counterclaim's] well-pleaded facts as true, but may disregard any legal conclusions." Id. at 210-11. The assumption of truth does not apply to legal conclusions couched as factual allegations or to "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements." Iqbal, 129 S. Ct. at 1949. Rather, the counterclaim must contain "'enough factual matter (taken as true) to suggest' the required element. This 'does not impose a probability requirement at the pleading stage,' but instead 'simply calls for enough facts to raise a reasonable ...

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