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Donald D. Sbarra Revocable Trust UAD 11/23/1998 v. Horizontal Exploration, LLC

United States District Court, W.D. Pennsylvania

April 17, 2017

DONALD D. SBARRA REVOCABLE TRUST UAD 11/23/1998, DONALD D. SBARRA TTEE; WILLARD LEE FRICKEY TTE U/A DTD 9/8/99; ROBERT E. SCHMIDT; DAVID R. NORCOM; TIM. L. WERTH; ANTHONY A. SCHMIDT; LORETTA SCHMIDT; DANIEL CARNEY; GAYLA W. CARNEY; BKF INVESTMENTS; KEN BRAUN FAMILY, LLC; JEFF COPPER, INC.; ROBERT DWERLKOTTE; SATELLITE RADIO MANAGEMENT, INC.; ALAN MOSKOWITZ; ATK INVESTMENTS, LLC; ICT EXPLORATION, LLC; BRUCE PRINGLE TTEE JOINT REV TRUST UTA 7-25-11; SHELLEY PRINGLE; SIEBER RESOURCES, LLC; PAGE FAMILY TRUST, ROBERT W. PAGE AND KAY PAGE, CO-TTEES; EDWARD C. RITCHIE, Plaintiffs,
v.
HORIZONTAL EXPLORATION, LLC; MARK A. THOMPSON, MARCELLX LLC, DAVID M. PRUSHNOK, G. DANIEL PRUSHNOK, JOHN P. PRUSHNOK, BRADLEY A. BROTHERS, Defendants MARCELLX LLC, DAVID M. PRUSHNOK, G. DANIEL PRUSHNOK, JOHN P. PRUSHNOK, Third Party Plaintiffs
v.
DONALD D. SBARRA, SWAMP ANGEL ENERGY, LLC Third Party Defendants

          OPINION

          MAUREEN P. KELLY, CHIEF UNITED STATES MAGISTRATE JUDGE

         Pending before the Court is a Motion to Dismiss Amended Counterclaims and Third-Party Complaint filed by Swamp Angel Energy, LLC (“SAE”), Donald D. Sbarra (“Sbarra”), Daniel Carney (“Carney”), Robert E. Schmidt (“Schmidt”) and the Donald D. Sbarra Revocable Trust UAD 11/23/1998 (“the Sbarra Trust”)(collectively, “the Swamp Angel Parties”). ECF No. 119.

         For the following reasons, the Motion to Dismiss will be granted in part and denied in part.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         A. Procedural History

         The relevant procedural history of this case is as follows. In the operative Amended Complaint, Plaintiffs, a group of 22 individuals, family trusts and businesses, raised fourteen claims arising out their investment in an oil and gas well drilling venture in Western Pennsylvania on a 2900-acre parcel of land known as the Swamp Angel property. ECF No. 56.

         Motions to Dismiss the Amended Complaint were filed by: (1) Defendants Bradley A. Brothers (“Brothers”), Horizontal Exploration, LLC (“Horizontal”) and Mark A. Thompson (“Thompson”) (collectively, “the Horizontal Defendants”), ECF No. 65; and (2) Defendants MarcellX, LLC, David M. Prushnok, G. Daniel Prushnok and John P. Prushnok (collectively, “the Prushnok Defendants”), ECF No. 68. On June 15, 2016, this Court denied these Motions to Dismiss. ECF No. 77.

         On July 29, 2016, the Horizontal Defendants filed an Answer to Amended Complaint, Affirmative Defenses and Crossclaim. ECF No. 89. Also on July 29, 2016, the Prushnok Defendants filed an Answer, Affirmative Defenses, Crossclaims, Counterclaims and Third-Party Complaint. ECF No. 90. On August 9, 2016, the Prushnok Defendants filed an Answer and Affirmative Defenses to the Horizontal Defendants' Crossclaim. ECF No. 94. On September 6, 2016, the Horizontal Defendants filed an Answer to the Prushnok Defendants' Crossclaims. ECF No. 103. On November 21, 2016, the Prushnok Defendants filed Amended Counterclaims and Third-Party Complaint, incorporating, the Answer, Affirmative Defenses and Crossclaims from ECF No. 90. ECF No. 117.

         On December 7, 2016, the Swamp Angel Parties filed the instant Motion to Dismiss and a Brief in Support thereof. ECF Nos. 119-120. On December 19, 2016, the Horizontal Defendants filed a Joinder in Motion to Dismiss Amended Counterclaims. ECF No. 122. On January 10, 2017, the Prushnok Defendants filed a Brief in Opposition to the Motion to Dismiss. ECF No. 126. On January 24, 2017, the Swamp Angel Parties filed a Reply Brief. ECF No. 127. The Motion to Dismiss is now ripe for consideration.

         B. Amended Counterclaims and Third-Party Complaint

         In their Amended Counterclaims and Third-Party Complaint, the Prushnok Defendants characterize this case as “a matter of Thompson and Sbarra inducing the Prushnoks (and other Fund I[1] investors) to invest and then failing to follow through with their own promised contributions, ” ECF No. 117 ¶ 4. The Prushnok Defendants make the following allegations.

         Prior to the dealings in this case, Sbarra, Carney and Schmidt, in their capacity as principals of SAE, owned the lease of shallow and deep mineral rights on the Swamp Angel property. ECF No. 90 ¶ 251. Sbarra, Carney and Schmidt represented to the Prushnoks “on numerous occasions” that they, through SAE, would collectively invest $1, 000, 000 in the development of the Swamp Angel property if the Prushnoks would agree to use MarcellX to acquire the shallow mineral rights. ECF No. 117 ¶ 6.

         On or about June 4, 2012, shortly before the MarcellX acquired the shallow mineral rights from SAE, a conference call took place. Id. ¶¶ 9-10. Attorney Kevin Gormly set up the call. Id. ¶ 10. In Gormly's office for the call were David Prushnok, G. Daniel Prushnok, Thompson, Brothers, Jared Brody and Gormly. Id. ¶ 11. On the call but not in Gormly's office was Sbarra and Sbarra's lawyer, Matthew Wolford. Id. During the call, David Prushnok asked Sbarra to confirm that, as part of the deal whereby MarcellX would acquire the shallow mineral rights from SAE, Sbarra and the other SAE principals would commit to investing $1, 000, 000 in the new partnership for the development of the property. Id. ¶ 12. Sbarra confirmed David Prushnok's understanding. Id. ¶ 13. Sbarra's representations were “authorized and/or ratified” by Carney and Schmidt. Id. ¶ 14. The Prushnok Defendants relied on this repeated representation in entering into the agreement to acquire the shallow mineral rights, as Sbarra, Carney, Schmidt and SAE intended. Id. ¶¶ 16-18.

         Sbarra, Carney, Schmidt and SAE never intended to invest the promised $1, 000, 000, and, in fact, invested only $375, 000. Id. ¶¶ 19, 22. Fund I, under the control of the Horizontal Defendants, accepted the lesser investment because of a conspiracy between the Horizontal Defendants and Sbarra, Carney, Schmidt and SAE. Id. ¶ 20. The development of the Swamp Angel property failed. Id. ¶ 21. A major factor in that failure was the failure to Sbarra, Carney, Schmidt and SAE to make the promised investment. Id. As a result of the development's failure, the Prushnok Defendants were deprived of the benefit of their bargain in acquiring the shallow mineral rights thereto. Id.

         Sbarra and Thompson failed to disclose to Fund I investors their history of business dealings. Id. ¶¶ 24-28. Thompson later concealed and misrepresented facts concerning the Fund I books. Id. ¶¶ 29-31.

         The Amended Counterclaims and Third-Party Complaint contains four counts: (1) Count I for breach of contract against Sbarra, Carney, Schmidt, SAE and the Sbarra Trust; (2) Count II for unjust enrichment against Sbarra, Carney, Schmidt and SAE; (3) Count III for fraudulent inducement against Sbarra, Carney, Schmidt, SAE and the Sbarra Trust; and (4) Count IV for civil conspiracy against Sbarra, Carney, Schmidt, SAE, the Sbarra Trust and the Horizontal Defendants. ECF No. 117 at 7-12.

         II. STANDARD OF REVIEW

         In assessing the sufficiency of the complaint pursuant to a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the Court must accept as true all material allegations in the complaint and all reasonable factual inferences must be viewed in the light most favorable to the plaintiff. Odd v. Malone, 538 F.3d 202, 205 (3d Cir. 2008). The Court, however, need not accept bald assertions or inferences drawn by the plaintiff if they are unsupported by the facts set forth in the complaint. See California Pub. Employees' Retirement System v. The Chubb Corp., 39 F.3d 126, 143 (3d Cir. 2004) (citing Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997)). Nor must the Court accept legal conclusions set forth as factual allegations. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).

         Rather, “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Id. (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). Indeed, the United States Supreme Court has held that a complaint is properly dismissed under Fed.R.Civ.P. 12(b)(6) where it does not allege “enough facts to state a claim to relief that is plausible on its face, ” id. at 570, or where the factual content does not allow the court "to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). See Phillips v. Cnty. of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008) (finding that, under Twombly, “labels, conclusions, and a formulaic recitation of the elements of a cause of action” do not suffice but, rather, the complaint “must allege facts suggestive of [the proscribed] conduct” and that are sufficient “to raise a reasonable expectation that discovery will reveal evidence of the necessary element[s] of his claim”). “The plausibility standard is not akin to a ‘probability requirement, ' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Iqbal, 556 U.S. at 677. “When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.” Id. at 679.

         III. ...


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