United States District Court, W.D. Pennsylvania
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,
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
DONALD D. SBARRA, SWAMP ANGEL ENERGY, LLC Third Party Defendants
MAUREEN P. KELLY, CHIEF UNITED STATES MAGISTRATE JUDGE
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.
following reasons, the Motion to Dismiss will be granted in
part and denied in part.
FACTUAL AND PROCEDURAL BACKGROUND
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.
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.
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.
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
Amended Counterclaims and Third-Party Complaint
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
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.
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.
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.
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
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.
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
STANDARD OF REVIEW
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).
“[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.