Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Lhret Reading, L.P. v. Keystone Oncology Associates, P.C.

United States District Court, E.D. Pennsylvania

June 22, 2015

LHRET READING, LP., Plaintiff,



In this suit for breach of a lease for commercial office space. Plaintiff landlord has sued not only the tenant medical practice and its controlling individual, but also the tenant's law firm. Beyond the breach of contract. Plaintiff alleges the individual also breached a fiduciary duty by wrongly disposing of the practice's assets without paying the lease obligation. The law firm, in Plaintiffs view, aided and abetted that breach of fiduciary duty. The Court agreed to consider the claim against the law firm separately before the other defendants respond to the complaint and, as discussed below, will grant dismissal of that claim.

Factual Allegations

Defendant Patrick J. Colarusso, D.O., is a doctor who practiced through Defendant Keystone Oncology Associates, P.C, of which he was also an officer and the controlling shareholder. The practice operated out of office space leased from Plaintiff LHRET Reading, L.P. Following an extension in 2012, the lease term was to expire in February of 2017. In summer 2013, Colarusso had to close the Keystone practice after its financial viability failed (due in part, according to Defendants, to Plaintiff’s actions). He informed Plaintiff of the practice’s closing in a letter that also expressed interest in assigning or subleasing the leased space. Defendants have indicated they did in fact eventually arrange a replacement tenant.

Plaintiff quickly responded with a letter explaining that Keystone remained obligated under the lease and that vacating the space before February 2017 would be an event of default. Shortly thereafter, Colarusso did end the Keystone practice and sold all its assets to the Reading Hospital; Defendant law firm Leisawitz Heller represented Keystone and Colarusso in that deal. A few months later, Plaintiff sent Colarusso a letter indicating he was in default of the lease and demanding the remaining amount due, $785, 877.67. Another month passed, and Defendant law firm responded on behalf of Keystone and Colarusso with another letter, stating that after paying other debts, Keystone had only $46, 000 remaining, of which $36, 000 was offered to settle Plaintiff’s claims under the lease. Finally, in a January 2014 letter, Defendant law firm described to Plaintiff how the proceeds of sale of the practice were distributed; of the $856, 062 total, most went to pay a chemotherapy drug supplier, with other payments for a line of credit, a pension plan, and payroll. The letter also noted a $312, 000 distribution to Colarusso “for cost of leasehold improvements and drug inventory.” Only the previously mentioned $46, 000 remained.

According to Plaintiff, this distribution, particularly the payment Colarusso made to himself, wrongly disposed of assets that should have been used first to pay the amounts due under the lease. Plaintiff alleges that Defendant law firm’s involvement includes sending the letters noted above, negotiating the asset sale, facilitating the distribution of the sale proceeds, and generally representing Keystone and Colarusso in these matters. Based on the content of the letters back and forth, Plaintiff also alleges the law firm knew Keystone owed a lease debt to Plaintiff and that Keystone was insolvent.

Procedural History

Plaintiff filed its complaint on October 28, 2014, listing the following claims: breach of contract against Keystone, breach of fiduciary duty against Colarusso, fraudulent transfer against Keystone and Colarusso, aiding and abetting breach of fiduciary duty against the law firm, and piercing the corporate veil against Colarusso.

Keystone and Colarusso moved for permission to delay responding to the complaint until after resolution of the law firm’s imminent motion to dismiss the claim against it. The Court granted that extension. The law firm filed its motion to dismiss, and the Court scheduled oral argument. Plaintiff filed an amended complaint, the law firm filed a new motion to dismiss, and the Court rescheduled argument. The Court now rules on the motion to dismiss only the law firm as a defendant, the other defendants having not yet responded to the complaint.


Plaintiff has confirmed in its papers and at argument that the only ground on which it claims the existence of the fiduciary duty at issue in this motion is Keystone’s insolvency. With that point clarified, the law firm argues that the claim is not ripe because there was no insolvency, both because the unpaid lease obligation was not yet a fixed, established debt and because Keystone still had $46, 000 set aside to satisfy further debts. The Court will not resolve the motion on this basis. The existence of set-aside funds relies on defendants’ assertions of fact, and even the question of whether the breach of the lease represented a known debt would be difficult to address at this stage. These arguments also awkwardly involve the direct claims against Keystone and Colarusso, which are not yet before the Court. Having agreed to consider the claim against the law firm separately, the Court will focus its ruling on the separate issues particular to the claim against the law firm.

The question with respect to the law firm is simply whether the allegations are sufficient to state a claim. A sufficient pleading requires “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8. “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678, (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A pleading that offers ‘labels and conclusions’ or ‘a formulaic recitation of the elements of a cause of action will not do.’ Nor does a complaint suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.’” Id. (internal citations omitted, alteration in original) (quoting Twombly, 550 U.S. at 555, 557).

“Determining whether a complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id. at 679. The relevant context includes the nature and elements of the claim at issue. See Arar v. Ashcroft, 585 F.3d 559, 617 (2d Cir. 2009) (“Plausibility thus depends on a host of considerations: The full factual picture presented by the complaint, the particular cause of action and its elements, and the available alternative explanations.”). “Some claims will demand relatively more factual detail to satisfy this standard, while others require less.” In re Ins. Brokerage Antitrust Litig., 618 F.3d 300, 361 (3d Cir. 2010). In Iqbal and Twombly’s own antitrust context, which ultimately entails proving that the defendants not only engaged in parallel conduct but actually agreed to act in concert, the allegations regarding an agreement must be rather strong and actually show that element. See Id. at 319 (“Plaintiffs' obligation to show the existence of a horizontal agreement is not only an ultimate burden of proof but also bears on their pleadings.”). Obviously plaintiffs do not have to prove their cases at the pleading stage, but the analysis is certainly directed toward the question of whether they have alleged enough facts to suggest they can find the proof they need in discovery. See Burtch v. Milberg Factors, Inc., 662 F.3d 212, 227 (3d Cir. 2011) (“Requiring plausibility to infer an agreement from circumstantial evidence ‘does not impose a probability requirement at the pleading stage; it simply calls for enough fact[s] to raise a reasonable expectation that discovery will reveal evidence of illegal agreement.’” (quoting Twombly, 550 U.S . at 556)).

The context of the present case is a claim against a law firm for aiding and abetting a breach of fiduciary duty. This Court has identified “the following three elements of a cause of action for aiding and abetting breach of a fiduciary duty under Pennsylvania law: (1) a breach of a fiduciary duty owed to another; (2) knowledge of the breach by the aider and abettor; and (3) substantial assistance or encouragement by the aider and abettor in effecting that breach.” Reis v. Barley, ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.