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Oldcastle Precast, Inc v. Vpmc

May 13, 2013

OLDCASTLE PRECAST, INC., PLAINTIFF,
v.
VPMC, LTD, JOSEPH R. GAMBONE, JR., MICHAEL A. GAMBONE, AUDREY GAMBONE, CO-EXECUTOR OF THE ESTATE OF ANTHONY R. GAMBONE, SR., MICHAEL A. GAMBONE, CO-EXECUTOR OF THE ESTATE OF ANTHONY R. GAMBONE, SR., GEORGE J. FALCONERO, CO-EXECUTOR OF THE ESTATE OF ANTHONY GAMBONE, SR., SANDRA LEE GAMBONE, CO-EXECUTOR OF THE ESTATE OF ANTHONY GAMBONE, SR., AND SHARON ANAPOSIKY, CO-EXECUTOR OF THE ESTATE OF ANTHONY GAMBONE, SR., DEFENDANTS.



The opinion of the court was delivered by: Robert F. Kelly, Sr. J.

MEMORANDUM

Presently before the Court is Defendants, VPMC, Ltd., Joseph R. Gambone, Jr., Michael

A. Gambone, Audrey Gambone, George J. Falconero, Sandra Lee Gambone, and Sharon Anaposiky's (collectively, "Defendants"), Motion to Dismiss Plaintiff's Amended Complaint, Plaintiff, Oldcastle Precast, Inc.'s ("Oldcastle"), Response, and Defendants' Reply. For the following reasons, Defendants' Motion will be granted in part and denied in part.

I. BACKGROUND

Oldcastle is a corporation organized under the laws of the State of Washington. (Am. Compl. ¶ 1.) Defendant, VPMC, Ltd. ("VPMC"), is a Pennsylvania corporation with a principal place of business in East Norriton, Pennsylvania. (Id. ¶ 2.) Defendants, Joseph Gambone, Jr., and Michael A. Gambone ("Michael Gambone"), are citizens of Pennsylvania, and Michael Gambone is a co-executor of the Estate of Anthony R. Gambone, Sr. ("Estate of Anthony Gambone"). (Id. ¶¶ 3-4, 6.) Defendant, Audrey Gambone, is a citizen of Pennsylvania and co-executor of the Estate of Anthony Gambone. (Id. ¶ 5.) Defendant, George J. Falconero, is a citizen of Pennsylvania and a co-executor of the Estate of Anthony Gambone. (Id. ¶ 7.) Defendants, Sandra Lee Gambone and Sharon Anaposiky, are citizens of Pennsylvania, and a co-executors of the Estate of John A. Gambone, Sr. ("Estate of John Gambone"). (Id. ¶¶ 8-9.)

Oldcastle avers that in 2005 it owned approximately 20.68 acres of property located in Bucks County, Pennsylvania (the "Property"), and that on December 9, 2005, it entered into an agreement of sale (the "Agreement of Sale") with Gambone Acquisition Company ("GAC"), whereby GAC agreed to pay Oldcastle $2,800,000 ("Purchase Price"), in exchange for title to the Property. (Id. ¶¶ 12-13.) On November 3, 2006, GAC entered into an assignment agreement, whereby GAC assigned its rights and obligations under the Agreement of Sale to Ridgewood, Inc. ("Ridgewood"). (Id. ¶ 14.) Ridgewood paid $1,400,000 in cash to Oldcastle, and borrowed from Oldcastle the remaining $1,400,000 to purchase the Property. (Id. ¶ 15.) On November 3, 2006, Ridgewood executed a mortgage note (the "Note"), that was secured by a mortgage (the "Mortgage"). (Id. ¶ 16.) Pursuant to the Note, Ridgewood promised to pay Oldcastle the principal amount of $1,400,000 (the "Principal"), together with the interest rate of six percent (6%) through November 3, 2007. (Id.) In addition, under the Note, all unpaid principal amounts and other amounts payable under the Note became due on or before November 3, 2007 (the "Maturity Date"). (Id. ¶¶ 17-18.) On or about November 3, 2006, Gambone Development Company ("GDC") executed a guaranty (the "Guaranty"), whereby GDC guaranteed to Oldcastle, the "full and prompt payment of all sums and charges . . . payable by [Ridgewood], its successors and assigns, under the Loan. " (collectively, the Note, the Mortgage, and the Guaranty will be referred to as the "Loan Documents"). (Id. ¶ 19; Ex. E.) The Guaranty contains a confession of judgment provision whereby GDC authorized any court to confess or enter judgment against it for all sums due under the terms of the Note in the event of a default under any of the documents securing Oldcastle's loan to Ridgewood. (Id. ¶ 20, Ex. E at ¶ 12.)

As of November 3, 2007, the Maturity Date under the Note, Ridgewood had solely made interest-only payments, and had failed to pay any of the Principal to Oldcastle. (Id. ¶ 21.) On December 5, 2007, Oldcastle entered into a modification of the Note (the "First Modification Agreement") with Ridgewood, GDC, John A. Gambone, Sr., Anthony R. Gambone, Sr.,*fn1 and John R. Gambone, Jr. (collectively, the Estate of John Gambone, the Estate of Anthony Gambone, and Joseph R. Gambone, Jr. will be referred to as the "VPMC Principals"). The VPMC Principals were also the Directors of VPMC. (Id. ¶¶ 22-23; Ex. F.) Pursuant to the First Modification Agreement, Oldcastle agreed to extend the Maturity Date of the Note until August 3, 2008, and Ridgewood agreed to make monthly payments to Oldcastle in the amount of $14,000, for the period of December 3, 2007, until August 3, 2008. (Id. ¶ 24.) Under the First Modification Agreement, the VPMC Principals represented that they were principals and directors of VPMC, a company that owned a property known as the Shops at Blue Bell (the "Shops"). (Id. ¶ 25.) The VPMC Principals also represented that they believed the sale of the Shops would generate sufficient funds to pay all amounts owed to Oldcastle under the Loan Documents on the settlement date of the Shops. (Id. ¶ 26.) The First Modification Agreement states in relevant part:

The VPMC Principals (i) have a reasonable belief that the [Shops] will be sold on or before August 3, 2008, (ii) have a reasonable belief that the net proceeds from a sale of the Shops will result in sufficient funds to pay [Oldcastle] all amounts that are due and owing under the Loan Documents, (iii) will use best efforts to cause VPMC to sell the [Shops] on or before August 3, 2008, and (iv) hereby covenant and agree that on the settlement date of the sale of the [Shops] they will cause sufficient funds to be transferred by wire transfer to an account of [Oldcastle] in order to pay to [Oldcastle] all amounts that are due and owing under the Loan Documents.

(Id.; Ex. G at ¶ 2.3.)

Oldcastle asserts that Michael Gambone is the President of VPMC and, though he did not sign the First Modification Agreement, he participated in the negotiation of this Agreement, and he knew that the VPMC Principals had bound VPMC to this financial commitment to Oldcastle. (Id. ¶¶ 28-31.) Ridgewood failed to pay the Principal and any other amount due Oldcastle under the Loan Documents on or before the modified Maturity Date. (Id. ¶ 32.)

On January 5, 2009, Oldcastle entered into a second modification of the Note with Ridgewood and GDC (the "Second Modification Agreement"). (Id. ¶ 33; Ex. H.) Oldcastle avers that the VPMC Principals were not parties to this Agreement, and this Agreement does not contain any indication that it displaced or superseded the First Modification Agreement. (Id.) Under the Second Modification Agreement, Ridgewood represented that it had entered into an agreement with the Central Bucks School District to sell the Property for at least $2,500,000, and that as a result of the sale of the Property, it would receive funds sufficient to pay Oldcastle at least $772,000, and would be able to repay the additional sum of $328,000 from the proceeds of a loan it expected to obtain. (Id. ¶¶ 35-36.) Ridgewood further promised to pay this combined sum of $1,100,000 to Oldcastle on or before March 3, 2009, as a repayment of principal under the Note. (Id. ¶ 36.) Furthermore, Oldcastle asserts that Ridgewood and GDC reaffirmed their obligations under the Loan Documents, including the First Modification Agreement. (Id.; Ex. G ¶ 1.9.)

On December 23, 2010, VPMC sold the Shops to a third-party for approximately $22,840,000. (Id. ¶ 42.) Oldcastle claims that none of the Defendants notified Oldcastle about the sale of the Shops, and none of the proceeds from the sale were applied toward the repayment of Ridgewood's debt owed to Oldcastle. (Id. ¶ 43.) Oldcastle maintains that it first discovered that VPMC had sold the Shops, and had failed to apply any of the proceeds toward the repayment of Ridgewood's debt owed to it, on or about December 2011. (Id. ¶ 45.) Oldcastle states that "throughout the process of negotiating the First Modification Agreement and thereafter, the VPMC Principals and Michael A. Gambone acted in their individual capacities, representing, among other things, that they could, and would, sell the Shops and use the proceeds from the sale to pay Oldcastle in full in [sic] to satisfy Ridgewood's loan obligations, as required by the First Modification Agreement." (Pl.'s Resp. Mot. to Dismiss at 5.) Oldcastle contends that, at the time of these representations, the VPMC Principals and Michael Gambone knew or should have known of the falsity of the representations intending for Oldcastle to rely upon their misrepresentations. (Id. ¶¶ 5-6.) Instead, the VPMC Principals and Michael Gambone sold the Shops for their own personal benefit and kept or spent the proceeds of the sale of the Shops for their own benefit. (Id.)

Oldcastle filed a Complaint against the Defendants on November 6, 2012*fn2 , and an Amended Complaint on January 7, 2013. (Doc. Nos. 1, 7). In the Amended Complaint, Oldcastle asserts claims against the VPMC Principals and Michael A. Gambone for fraud (Count I), negligent misrepresentation (Count II), conversion (Count IV), civil conspiracy (Count V), and alter ego/participation (Count VIII). Oldcastle alleges a claim solely against Michael Gambone for tortious interference with a contractual relationship (Count III). Oldcastle further avers a claim against VPMC, the VPMC Principals, and Michael Gambone for quantum meruit/unjust enrichment (Count VII), and claims solely against the VPMC Principals for breach of contract of the First Modification Agreement (Count VI), and promissory estoppel (Count IX). Defendants filed the instant Motion to Dismiss on January 24, 2013. Oldcastle filed a Response on February 21, 2012, and Defendants filed a Reply on March 15, 2013. (Doc. Nos. 9, 12-13).

Defendants assert in their Motion to Dismiss that Oldcastle's claims both in tort and contract are barred by the applicable statutes of limitations. Defendants further maintain that even if Oldcastle's claims are not time-barred, the relationship between Oldcastle and Defendants is governed exclusively by a contract, and Oldcastle is "seeking only economic damages based on the alleged failure to perform under the contract," and because of such, Oldcastle's tort claims are barred by the gist of the action and economic loss doctrines. (Defs.' Mot. to Dismiss at 2.) Defendants also assert several additional arguments seeking to dismiss a number of causes of action and several, if not all, Defendants from this action. We will address each argument in turn.

II. STANDARD OF REVIEW

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the sufficiency of a complaint. Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir. 1993). Under Rule 12(b)(6), the defendant bears the burden of demonstrating that the plaintiff has not stated a claim upon which relief can be granted. Fed. R. CIV. P. 12(b)(6); see also Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005). In Bell Atl. Corp. v. Twombly, the Supreme Court stated that "a plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." 550 U.S. 544, 555 (2007). Following Twombly, the Third Circuit has explained that the factual allegations in the complaint may not be "so undeveloped that it does not provide a defendant the type of notice which is contemplated by Rule 8." Phillips v. County of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008). Moreover, "it is no longer sufficient to allege mere elements of a cause of action; instead 'a complaint must allege facts suggestive of [the proscribed] conduct.'" Id. (alteration in original) (quoting Twombly, 550 U.S. at 563 n.8). Furthermore, the complaint's "factual allegations must be enough to raise a right to relief above the speculative level." Id. at 234 (quoting Twombly, 550 U.S. at 555). "This 'does not impose a probability requirement at the pleading stage,' but instead 'simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of the necessary element.'" Id. (quoting Twombly, 550 U.S. at 556).

Notwithstanding Twombly, the basic tenets of the Rule 12(b)(6) have not changed. The Knit With v. Knitting Fever, Inc., No. 08-4221, 2009 U.S. Dist. LEXIS 30230, at *6 (E.D. Pa. Apr. 8, 2009). The general rules of pleading still require only a short and plain statement of the claim showing that the pleader is entitled to relief, not detailed factual allegations. Phillips, 515 F.3d at 231. Moreover, when evaluating a motion to dismiss, the court must accept as true all well-pleaded allegations of fact in the plaintiff's complaint, and must view any reasonable inferences that may be drawn therefrom in the light most favorable to the plaintiff. Id.; Buck v. Hampton Twp. Sch. Dist., 452 F.3d 256, 260 (3d Cir. 2006). Finally, the court must "determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief." Pinkerton v. Roche Holdings Ltd., 292 F.3d 361, 374 n.7 (3d Cir. 2002).

III. DISCUSSION

1. Statutes of Limitations

Defendants first assert that to the extent that Oldcastle ever possessed any claims based on VPMC's failure to sell the Shops under the First Modification Agreement, those claims accrued no later than August 3, 2008, when the Shops were not sold. Defendants argue that because Oldcastle waited more than four years to commence this action, and the longest statute of limitations available to Oldcastle is four years, the Amended Complaint must be dismissed.*fn3

(Defs.' Mot. to Dismiss at 8-9.)

Defendants state that "accepting Oldcastle's allegations as true, all of its claims accrued no later than August 3, 2008 when VPMC did not sell the Shops and the VPMC Principals did not pay Oldcastle pursuant to the First Modification." (Id. at 9.) Accordingly, Defendants argue that Oldcastle "knew on August 3, 2008 - when it did not receive any money - that the VPMC Principals' 'reasonable belief' and 'best efforts' [had] not come to fruition," and that if Oldcastle suffered any injury, it occurred on August 3, 2008, when the Note was not paid off. (Id.)

In response, Oldcastle first argues that "in the Third Circuit, limitations defenses must be presented as an affirmative defense in an answer and not in a motion to dismiss unless 'the time alleged in the statement of claim shows that the cause of action has not been brought within the statute of limitations.'" Thomas v. Care Plus of New Jersey, Inc., 484 F. App'x 692, 693 (3d Cir. 2012). The Thomas Court held that "[w]e may therefore affirm on the basis of a limitations dismissal when the defect is apparent from the face of the complaint." Id. Oldcastle asserts that from the "face of the Amended Complaint, which alleges that it first discovered the injury in question in or about December 2011, [it] commenced this litigation within all applicable statute of limitations." (Pl.'s Resp. Mot. to Dismiss at 7.) We are not of the opinion that the "defect is apparent from the face of the complaint." See Thomas, 484 F. App'x at 693. While Oldcastle alleges that it discovered its injury in December 2011, there is certainly a question raised by its Amended Complaint whether it should have discovered any injury prior to this date. We, thus, find that the Defendants properly raised a statute of limitations defense in its Motion to Dismiss, and proceed to discuss the merits of this issue.

Oldcastle asserts that it filed each of its claims within the applicable statutes of limitations because the claims did not accrue until December 2011, when it first discovered that VPMC had sold the Shops and failed to apply the proceeds toward the repayment of the loan, as required under the First Modification Agreement. Oldcastle argues that "[t]he true test in determining when a cause of action arises or accrues is to establish the time when the plaintiff could have first maintained the action to a successful conclusion." Kapil v. Association of Pennsylvania State College and University Faculties, 470 A.2d 482, 485 (Pa. 1983), (quoting Argust v. Dick Mackey General Contracting Co., Inc., 568 A.2d 255, 257 (Pa. Super. 1990)). "Thus, the date that starts the computation of time for the running of the limitation period is the date when the cause of action arises as determined by the occurrence of the final significant event necessary to make the claim suable." Mack Trucks, Inc., v. Bendix-Westinghouse Automotive Air Brake Co., 372 F.2d 18, 20 (3d. Cir. 1966); see also Ross v. Johns-Manville Corp., 766 F.2d 823, 826 (3d. Cir. 1985).

Oldcastle maintains that the event triggering its ability to be able to assert its various causes of action against Defendants was the sale and settlement of the Shops, and subsequent failure by the VPMC Principals to use the proceeds to pay off the Loan as required in the First Modification Agreement. (Pl.'s Resp. Mot. to Dismiss at 8.) Oldcastle argues that if it had sued Defendants immediately after August 3, 2008, its claims would not have been ripe because VPMC had not yet sold the Shops, and the VPMC Principals had not yet breached the First Modification Agreement by failing to use the proceeds to pay off the Loan, and thus, it had not yet sustained any damage. Oldcastle asserts in its Amended Complaint that VPMC sold the Shops to a third-party on December 23, 2010, but first discovered that VPMC had sold the Shops and failed to apply any of the proceeds toward the repayment of Ridgewood's debt owed to it in December 2011. (Am. Compl. ¶¶ 42, 45.)

The question of whether a statute of limitations has run is usually a question for the trial judge, but where the issue involves a factual determination, the determination is for the jury. Farm Credit Leasing Serv. Corp. v. Ferguson Packaging Machinery, Inc., No. 07-1900, 2007 WL 4276841, at *4 (E.D. Pa. Dec. 3, 2007) (quoting Caleb v. CRST, Inc., 43 F. App'x 513, 516 (3d Cir. 2002)). "Specifically, 'the point at which the complaining party should reasonably be aware that he has suffered an injury is generally an issue of fact to be determined by the jury; only where the facts are so clear that reasonable minds cannot differ may the commencement of the limitations period be determined as a matter of law.'" Id. (quoting Caleb, 43 F. App'x at 516).

Here, it is apparent on the face of the First Modification Agreement itself that Oldcastle's alleged injuries did not occur on August 3, 2008, for statute of limitation purposes. As noted, the First Modification Agreement states that the VPMC Principals "have a reasonable belief that the [Shops] will be sold on or before August 3, 2008," and "will use best efforts to cause VPMC to sell the [Shops] on or before August 3, 2008." (Am. Compl.; Ex. G ¶2.3.) It does not state that the VPMC Principals were obligated to sell the Shops by that date. It follows that if the VPMC Principals were not contractually bound to sell the Shops by August 3, 2008, then Oldcastle could not have suffered harm when that date came and the Shops were not sold.*fn4 Thus, we find that this date was not the earliest date that Oldcastle could have discovered its injury. The next most reasonable date on this record that Oldcastle could have suffered injury is when the Shops were actually sold on December 23, 2010. Using this date as the earliest time giving rise to Oldcastle's causes of action, it is evident that all of Oldcastle's causes of action were filed prior to the expiration of the applicable statutes of limitations because the initial Complaint was filed on November 6, 2012, which is less than two years after the statutes began to run (December 23, 2010). Accordingly, Defendants' Motion to Dismiss on statute of limitations grounds is without merit.

2. Oldcastle's Tort Claims Against Michael Gambone and the VPMC Principals

A. Gist of the Action Doctrine

Defendants next argue that Oldcastle's claims "arise solely from the fully integrated First Modification," and that Oldcastle "does not plead any duties that are not specifically set forth in the First Modification." (Defs.' Mot. to Dismiss at 12.) Defendants assert that because Oldcastle's claims arise solely from its expectations in connection with the First Modification Agreement, Oldcastle's tort claims are barred under the "Gist of the Action Doctrine." (Id.)

The gist of the action doctrine bars tort claims under the following circumstances: (1) where the claim arises solely from a contract between the parties; (2) where the duties allegedly breached were created by a contract; (3) where liability is derived from a contract; or (4) where the success of the tort claim is dependent on the terms of a contract.*fn5 Pittsburgh Constr. Co. v. Griffith, 834 A.2d 572, 582 (Pa. Super. 2003). In eToll, Inc. v. Elias/Savion Advert, Inc., the Court in applying the gist of the action doctrine stated that a "claim should be limited to a contract claim when the parties' obligations are defined by the terms of the contracts, and not by the larger social policies embodied by the law of torts." 811 A.2d 10, 14 (Pa. Super. 2002) (quoting Bohler-Uddeholm Am., Inc. v. Ellwood Grp., Inc., 247 F.3d 79, 104 (3d Cir. 2001)).

Oldcastle responds that as a threshold issue, the gist of the action doctrine does not apply to any of its tort claims against Michael Gambone because he was not a party to the First Modification Agreement. See Centimark Corp. v. Pegnato & Pegnato Roof Management, Inc., No. 05-708, 2008 WL 1995305, at *13 (E.D. Pa. May 6, 2008); Levert v. Philadelphia Int'l Records, No. 04-1489, 2005 WL 2271862, at *3 (E.D. Pa. Sept. 16, 2005). In Centimark, the Court determined that the defendants were unable to invoke the gist of the action doctrine to foreclose litigation of the conversion claim against them individually because they, as individuals, were not parties to the contract. Centimark Corp., 2008 WL 1995305, at *13. In Levert, the Court found that the gist of the action doctrine did not apply to the defendant because he was not a party to any contract and there was no agreement between the parties. Levert, 2005 WL 2271862, at *3.

However, in Williams v. Hilton Group, PLC, the United States Court of Appeals for the Third Circuit (the "Third Circuit") looked at the overall relationship of the parties and their involvement in the contract at issue in concluding that the gist of the action doctrine did bar a tort claim against a defendant even though that defendant was not a signatory to the contract. Williams, 93 F. App'x 384, 385 (3d Cir. 2004). The Third Circuit stated:

[W]e hold that the District Court did not err in concluding that the doctrine barred Williams' claims against Ross, as well as his claims against Ladbrokes. Although Williams did not have a contractual relationship with Ross, Williams cannot detach Ross from his status as an agent for Ladbrokes. Ross served as the principal negotiator for Ladbrokes. As the Pennsylvania courts have spelled out, the gist of the action doctrine bars tort claims against an individual defendant where the contract between the plaintiff and the officer's company created the duties that the individual allegedly breached.

Id. at 384. Integrated Waste Solutions, Inc. v. Goverdhanam followed the Circuit's lead and also looked at the relationship between the parties in determining that the gist of the action doctrine barred a tort claim against the defendant despite the fact that he was not a party to the contract at issue. Integrated Waste Solutions, No. 10-2155, 2010 WL 4910176, at *1 (E.D. Pa. Nov. 30, 2010). The Court stated in relevant part:

Here, Goverdhanam clearly acted as his own company's chief negotiator, and his misrepresentations were based on his intent (or lack thereof) to comply with, or have his company comply with, the terms of the Confidentiality Agreement and subsequent service contract. . . . Given that the alleged contracts between the parties governed the subject matter of Defendant Goverdhanam's purported misrepresentations, Goverdhanam's lack of contractual relationship with Plaintiff does not preclude the Court's application of the gist of the action doctrine.

Id. at 12.

Here, we follow the rational of Williams and Integrated and will not preclude the application of the gist of the action doctrine regarding Oldcastle's tort claims against Michael Gambone solely because he is not a signatory to the First Modification Agreement. Rather, we will look to Gambone's relationship to VPMC and his involvement in the consummation of this agreement. Oldcastle asserts that Gambone is President of VPMC and that he "knew that the VPMC Principals had bound VPMC to this financial commitment to Oldcastle by way of the First Modification Agreement, and, upon information and belief, participated in the negotiation of the First Modification Agreement." (Am. Comp. ¶¶ 28-29.) In its fraud and negligent misrepresentation claims, Oldcastle avers that "upon information and belief" the VPMC Principals and Michael Gambone knew of the falsity of the representations made to Oldcastle and intended it to rely on such. (Id. ¶¶ 51-52, ...


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