United States District Court, W.D. Pennsylvania
MARCELLX, LLC, DAVID M. PRUSHNOK, G. DANIEL PRUSHNOK, and JOHN P. PRUSHNOK, Plaintiffs,
DONALD D. SBARRA, Defendant. Re: ECF No. 24
MAUREEN P. KELLY CHIEF UNITED STATES MAGISTRATE JUDGE.
before the Court is a Motion to Consolidate filed by
Plaintiffs in which they ask the Court to consolidate this
case with Civil Action No. 2:14-cv-866. ECF No. 24.
MarcellX LLC (“MarcellX”), and its principal
owners, David M. Prushnok, G. Daniel Prushnok and John P.
Prushnok (“the Prushnoks”) (collectively,
“Plaintiffs”), have brought this action against
Defendant Donald D. Sbarra (“Defendant”) bringing
claims for slander per se, injurious falsehood, slander,
commercial disparagement, and tortious interference with
prospective business relations based on Defendant's
alleged statement that Plaintiffs had sold “stolen
to the instant Complaint, the deep and shallow mineral rights
on real property located in McKean County, Pennsylvania,
known as the Swamp Angel property (“the
Property”), were owned by Swamp Angel Energy, LLC
(“SAE”), of which Defendant Sbarra was “the
managing member” and an interest holder. ECF No. 1
¶¶ 7, 8. SAE apparently entered into a Purchase and
Sale Agreement (“PSA”) with Horizontal
Exploration, LLC (“Horizontal”), on March 9,
2012, whereby SAE conveyed the shallow mineral rights on the
Property to Horizontal for 2.1 million dollars. Id.
through its President, Mark A. Thompson, subsequently
approached the Prushnoks about acquiring the shallow mineral
rights and participating in the development of the Property.
Id. ¶¶ 11-13. Thereafter, on either June
11, 2012, or July 11, 2012, see id. ¶¶ 14,
16, Horizontal and MarcellX executed an Assignment of
Interest in Purchase and Sale Agreement whereby
Horizontal's PSA was assigned to MarcellX. Id.
¶ 14. The assignment, which had been authorized by SAE,
resulted in MarcellX paying SAE 2.1 million dollars which
MarcellX financed through a loan it obtained from CNB Bank.
Id. ¶¶ 15-16, 24.
allege that the development venture eventually failed
compelling MarcellX to sell its interest in the property in
order to satisfy the outstanding debt to CNB Bank.
Id. ¶¶ 19-20, 24-25. Accordingly, MarcellX
entered into a Purchase and Sale Agreement with Prime Energy
& Chemical, LLC (“Prime”) on July 21, 2016.
Id. ¶ 26. Five days later, on July 26, 2016,
Defendant Sbarra initiated a telephone call to Prime in an
effort to ascertain who had invested in the property.
Id. ¶¶ 27-28, 31-33. After Russell Parker,
a principal of Prime, informed Defendant that Parker and a
friend had bought the property, Defendant allegedly stated
that the Prushnoks had sold, and Parker and his friend had
purchased, “stolen property.” Id.
Civil Action No. 2:14-cv-866 (the “Fund I
Action”), the case with which Plaintiff seeks to
consolidate the instant case, a group of 22 individuals,
family trusts, and businesses, including Donald D. Sbarra
Revocable Trust UAD 11/23/1998 and Donald D. Sbarra TTE,
allege that MarcellX and the Prushnoks made misrepresentation
and took actions to defraud the plaintiffs into investing in
the development venture on the Property. C.A. No.
2:14-cv-866: ECF No. 1. When the development venture failed,
the investors filed suit on July 2, 2014, bringing claims
against MarcellX and the Prushnoks for civil conspiracy and
aiding and abetting violations under Section 10(b) and Rule
10b-5 of the Securities Exchange Act. Id. Also named
as defendants in that suit are Horizontal Explorations, LLC,
and its President, Mark A. Thompson, against which the
plaintiffs have brought claims for fraudulent
misrepresentation, civil conspiracy, violations of Section
10(b) and Rule 10b-5, violations of the Pennsylvania
Securities Act, and a state law claim arising under
Pennsylvania's Unfair Trade Practice and Consumer
Protection Law. Id.
are authorized to consolidated actions “[w]hen actions
involving common questions of law or fact are pending before
the court.” Fed.R.Civ.P. 42(a) (2016). “The
threshold requirement for determining whether consolidation
is permissible is whether there exists a common question of
law or fact. Consolidation must be denied if there is no
common issue tying the cases together.” McClenaghan
v. Turi, Nos. 09-5497 and 11-3761, 2011 WL 4346339, at
*1 (E.D. Pa. Sept. 16, 2011). Moreover, the common question
of law or fact must be a principle one. Farahmand v.
Rumsfield, No. 02-1236, 2002 WL 31630709, at *2 (E.D.
Pa. Nov. 20, 2002). “Where the evidence in one case is
not relevant to the issues in the other, consolidation would
create a likelihood of prejudice by confusing the
issues.” Id. (internal quotation omitted).
although these two cases are “related” in the
broadest sense of the word, there are no principle questions
of law or fact in common. Indeed, the cases are based on
entirely different occurrences, factual allegations and legal
theories. The Fund I Action involves alleged
misrepresentations made in 2012 to induce investors to
participate in a development venture and subsequent actions
whereby their money was misappropriated in a Ponzi-like
scheme, and involves claims of fraudulent misrepresentation,
civil conspiracy, and violations of federal and state
securities laws. The instant case, however, revolves around
an allegedly defamatory statement made to an individual, who
is not a party to either action, almost four years later and
raises slander and tortious interference claims. The lack of
any principle overlap between the two suits appears obvious.
the parties to the two suits are largely different. As
pointed out by Defendants in this matter, there are 31
separate parties to the Fund I Action: the 22 investors,
seven defendants, and two third-party defendants. Only five
of those parties -- Sbarra, a third-party defendant, and four
of the defendants -- are involved in this lawsuit. More
importantly, none of the 22 investors that initiated the Fund
I Action, nor the other three defendants in that suit, have
any involvement in this lawsuit. These parties should not be
required to participate in a consolidated lawsuit involving
claims and issues that have no relevance to them. In short,
the mere fact that the Fund I Action revolves around
investments fraudulently induced to develop the Property and
the Property is the subject of the allegedly defamatory
statement at issue in the instant case, does not provide the
basis for finding that common issues of law or fact exist
between the two cases and Plaintiff's Motion to
Consolidate is properly denied.
the following Order is entered:
NOW, this 13th day of March, 2017, upon
consideration of Plaintiffs' Motion to Consolidate and
Defendant's Memorandum of Law in Opposition thereto, IT
IS HEREBY ...