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Perelman v. Perelman

United States District Court, Third Circuit

May 2, 2013

JEFFREY E. PERELMAN, et al.
v.
RAYMOND G. PERELMAN

MEMORANDUM

MARY A. McLAUGHLIN, District Judge.

This action between the plaintiff, Jeffrey Perelman, and the defendant, Raymond Perelman, is one of at least five lawsuits to address a series of financial transactions that occurred over twenty-two years ago. The plaintiff and defendant are father and son; the transactions at issue involve the son's acquisition of several companies from his father and the subsequent formation of a trust to benefit the son's daughter. Jeffrey now moves for summary judgment on his sole remaining claim, seeking a declaratory judgment that his father does not have any viable legal claims based upon these transactions. Jeffrey has also moved to dismiss Raymond's counterclaims, which sought to reform the trust and asserted various claims against Jeffrey and his wife, Marsha. The Court will grant the latter, and it will dismiss the declaratory judgment claim as moot.

I. Factual and Procedural History[1]

As the Court has previously recited the facts of the underlying dispute at length, it now refers only to facts pertinent to the instant motions. The recitation derives from facts pled in the defendant's counterclaim and the record of various state court proceedings, which are a matter of public record and which the Court may consider on a motion to dismiss.[2] Buck v. Hampton Twp. Sch. Dist. , 452 F.3d 256, 260 (3d Cir. 2006).

A. 1990 Business Transactions

In 1990, Raymond and Jeffrey agreed on a business arrangement that transferred considerable business assets from Raymond's companies to Jeffrey's companies. The deal was drafted and negotiated by both parties and through their mutually-shared counsel at the law firm Schnader Harrison Segal & Lewis LLP. It resulted in a series of twelve written agreements ("Transaction Agreements") putting forth conditions for the transfer of those assets ("Business Interests") and the consideration to be paid for them. Def. Answer, Counterclaim § 15; 25 (Docket No. 39).

In addition to the twelve written Transaction Agreements, the parties orally agreed to effectuate certain actions that were not covered in the written agreements. The Oral Agreement focused primarily on the creation of a trust that was intended to benefit Jeffrey's daughter, Allison ("the Trust"). Specifically, Raymond required that Jeffrey create a Trust benefitting Allison and any other children Jeffrey may later have, and that the ownership of the transferred assets be evenly divided between Jeffrey and that Trust. In addition, Raymond required that Jeffrey's wife, Marsha, renounce any interest in the Business Interests transferred from Raymond to Jeffrey and the Trust. Jeffrey and Marsha represented to Raymond that they agreed to these terms. On January 24, 1990, a Trust was formed and a renunciation was executed by Marsha. Id . § 15-19, 22-26.

At some point recently, Raymond discovered that certain aspects of the Trust and of Marsha's renunciation agreement did not conform to his requirements. Specifically, whereas Raymond intended the Trust to benefit Alison primarily, it in actuality gave Allison a remote contingent interest; Jeffrey is the principal beneficiary. In addition, although Marsha signed a renunciation agreement, the agreement did not wholly renounce her interest in the Business Interests. She is still able to derive certain dividends and salaries. The oral representations were central to Raymond's decision to transfer his companies to Jeffrey, and, as a result, his principal goals as to the transaction were frustrated. Id . § 27-33, 35.

B. Litigation History

Since Raymond's discovery of the alleged breach, at least five lawsuits related to the same nucleus of facts have been filed in state and federal court.[3] Four of the five lawsuits have been resolved against Raymond; only the instant case, which was stayed in June 2010 pending resolution of the state court proceedings, remains.

1. First Philadelphia County Action: Complaint and Preliminary Objections

The First Philadelphia County Action was initiated by Raymond against Jeffrey on October 19, 2009. Raymond's complaint alleged claims of breach of contract, fraud, and conversion, and also sought the creation of an express trust, a resulting trust, and a constructive trust upon the Business Interests. Pl. Mot. exh. 2, at 9-13.

Jeffrey filed preliminary objections to the complaint, seeking dismissal of all claims with prejudice on the grounds that the parol evidence rule barred the introduction of evidence of the Oral Agreement. The presiding trial judge held oral argument on his preliminary objections. Id . exh. 5.

On March 25, 2010, in a brief order, the court granted Jeffrey's preliminary objections and dismissed Raymond's claims with prejudice. Subsequently, on October 4, 2010, it issued an opinion relating to the previously-issued order. This opinion stated that Raymond's claims, "which are all based on the same alleged prior oral representations, " were barred by the parol evidence rule. It stated that the twelve written Transaction Agreements did not make any reference to Marsha's renunciation or to the creation of a Trust as conditions precedent of the transfer. In addition, it noted that the Transaction Agreements each contained an integration clause. The court held that the written agreements were fully integrated contracts, and, as a result, barred all "claims based upon oral pre-acquisition representations between Raymond and Jeffrey." Id . exh. 10, at 6-7. Raymond sought appeal of this decision.

2. Federal Action

On the same day that Raymond filed the First Philadelphia County Action, the plaintiffs, [4] led by Jeffrey, filed the instant action in federal court. This action primarily sought a declaratory judgment that Raymond had no viable claim against them with regard to the formation and management of the Trust.[5] Am. Compl. at § 93-96 (Docket No. 10).

Raymond's answer asserted nine counterclaims against the plaintiffs. Raymond sought the Court's imposition of an express trust placing 50% of the Business Interests in a trust for Alison's benefit (Count I). With respect to the actual Trust created by Jeffrey, Raymond sought reformation of its terms to reflect the Oral Agreement, accounting of its assets, and removal of its Trustees (Counts II through IV). The first four counts were asserted against Jeffrey and Frank Katz as one of the trustees. In addition, Raymond asserted claims for breach of contract, promissory estoppel, fraud, fraudulent inducement, and unjust enrichment against Jeffrey and Marsha Perelman (Counts V through IX). Counterclaim at § 36-97.

In May 2010, Jeffrey submitted his original motion to dismiss, in which he argued that Raymond's counterclaims were barred on res judicata, collateral estoppel, and statute of limitations grounds. This motion ...


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