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Arsenal, Inc. v. Ammons

United States District Court, E.D. Pennsylvania

December 2, 2014

ARSENAL, INC., t/a ARSENAL ASSOCIATES; and 5301 LLC., Plaintiffs,

ANITA B. BRODY, District Judge.

Plaintiffs Arsenal, Inc. and 5301 LLC (collectively "Arsenal") bring suit against defendant Wakefern Food Corporation ("Wakefern"), as well as Larry Ammons, Peter Ammons, Ben Ammons, Melissa Bullard, and Ammons Supermarket LLC (the latter five constituting the "Ammons Defendants, " and all six collectively "Defendants") for promissory estoppel and a variety of economic torts. Arsenal claims Defendants engaged in three years of sham negotiations with Arsenal, negatively impacting Arsenal's proposed real estate development project. Wakefern and the Ammons Defendants both moved to dismiss all counts. For the reasons discussed below, I granted both motions in part and denied them in part.[1]


Arsenal once owned[2] the land comprising the Frankford Arsenal, a former U.S. Army ammunition plant in Northeast Philadelphia responsible for armaments during the Civil War and each of the world wars. Arsenal intended to turn the defunct plant into a large shopping center. To that end, it negotiated with several potential businesses to lease space.

In particular, Arsenal approached Wakefern, a cooperative that owns and controls the ShopRite trademark. Compl., ECF No. 1, Ex. E ¶ 25. Though Wakefern owns the trade name it does not directly operate any of the stores. Instead, the forty-five members of the Wakefern cooperative individually own and operate specific ShopRites, with permission from Wakefern to use the ShopRite name. Arsenal alleges that Wakefern represented that the Ammons Defendants (all members of Wakefern) were interested in becoming the operators of a ShopRite at the Arsenal site. Id. ¶ 27.

Arsenal alleges that after approximately a year and a half of "extensive negotiations" that the Ammons Defendants agreed to "the basic terms of a lease" and indicated that they were going to sign a lease with Arsenal. Id. ¶¶ 34, 36, 39. Negotiations progressed to the point that the parties became ready to execute a Letter of Intent (LOI), a typical precursor of this type of lease. During a May 9, 2012 meeting however, Wakefern representatives and the Ammons Defendants indicated that a LOI was not required, and that Wakefern would produce a proposed lease to Arsenal within a week of the meeting. Id. ¶ 39.

Despite these representations, a year of "unexplained delays" took place where neither the Ammons Defendants nor Wakefern produced a lease for Arsenal to sign. Id. ¶ 41. On August 8, 2013, Arsenal "reiterated the terms and conditions" of the proposed lease, which had previously been memorialized via email. Id.

At a subsequent meeting at one of the Ammons Defendants' existing ShopRites, Wakefern reversed course and demanded a LOI. Arsenal prepared one and sent it to Wakefern on August 20, 2013. Id. ¶ 43. Wakefern did not sign the LOI, instead making additional demands, forcing Arsenal to redraft the proposed agreement. Id.

Negotiations collapsed sometime in December 2013, after three years of ultimately unproductive exchanges. Id. ¶ 25, 50. Arsenal alleges it learned that the Ammons Defendants had been "surreptitiously negotiating with another developer" to open a ShopRite "literally around the corner" from the proposed Arsenal ShopRite (the "Harbison Parcel"). Id. ¶ 46. Wakefern denied to Arsenal that it knew anything about the Harbison Parcel, yet ultimately entered into a lease to place a ShopRite there. Id. ¶ 48.

Arsenal also claims that during the protracted negotiations that it was approached by George Zallie, [3] another member of the Wakefern cooperative, who was also interested in potentially negotiating a ShopRite lease. Zallie indicated he would be willing to sign a lease if he received permission from the Ammons Defendants. Id. ¶ 44. Wakefern's operating rules allow a Wakefern member who first approaches a potential lessor to have exclusive negotiating rights to that location. Id. ¶ 28. Other Wakefern members may pursue the lessor, but only if the first Wakefern member gives her consent. Id. ¶ 44. However, this internal rule was inapplicable- Arsenal approached the Ammons Defendants, not the other way around; any member of the cooperative was free to negotiate with Arsenal. Id. ¶ 25. Nonetheless, Wakefern represented that the rule applied and that the Ammons Defendants had forbidden Zallie from pursuing negotiations with Arsenal. Id. ¶ 44.

Arsenal alleges that Defendants never intended to enter into a lease, and used the negotiations as a pretext to prevent any supermarket from leasing Arsenal's space to reduce competition with the Harbison Parcel ShopRite. Id. ¶ 45.

Arsenal has filed suit against Wakefern and the Ammons Defendants alleging promissory estoppel, tortious interference with perspective contractual relations, fraud, negligent misrepresentation, unfair competition, and civil conspiracy. Both the Ammons Defendants and Wakefern moved to dismiss on related grounds each count of the complaint.

II. Legal Standard

A motion to dismiss for failure to state a claim should be granted when the plaintiff is unable to plead "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). To determine whether a plausible claim has been pled, a court must "tak[e] note of the elements a plaintiff must plead to state a claim, " disregard allegations that, "because they are no more than conclusions, are not entitled to the assumption of truth, " and accept as true all factual allegations. Santiago v. Warminster Twp., 629 F.3d 121, 129-30 (citing Ashcroft v. Iqbal, 556 U.S. 662, 673-74 (2009)) (internal quotation marks omitted); see also Great Western Mining & Mineral Co. v. Fox Rothschild LLP, 615 F.3d 159, 177 (3d Cir. 2010). This "does not impose a probability requirement, ' but instead simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of' the necessary element." Phillips v. Cnty of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008) (quoting Twombly, 550 U.S. at ...

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