United States District Court, E.D. Pennsylvania
DAVID PRICE, ET AL.
FOREMOST INDUSTRIES, INC., ET AL.
MEMORANDUM RE: MOTION TO STRIKE & MOTION TO
issue in this diversity case is whether this Court should
grant two motions filed by Defendants Daniel Gordon and GLD
Holdings, LLC (“Moving Defendants”): (1) a motion
to dismiss, pursuant to Fed.R.Civ.P. 12(b)(6); and (2) a
motion to strike, pursuant to Fed.R.Civ.P. 12(f).
Relevant Factual and Procedural History
to their Amended Complaint (“Am. Compl., ” ECF
11), Plaintiffs David and Maria Price began to meet with
representatives of Defendant Foremost Industries, Inc.
(“Foremost”) in early 2015 to arrange for
Foremost's development and construction of a modular home
for Plaintiffs. (Am. Compl. ¶ 7). In April, 2015,
Plaintiffs found a parcel of land in Middletown, Virginia on
which the development and construction would proceed.
(Id. ¶ 8) During this time period, Plaintiffs
were verbally quoted a three-month timeframe for
construction. (Id. ¶ 9).
May, 2015, Defendant Daniel Gordon, “through his
majority shareholder status in, and acting through
[Defendant] GLD Foremost Holdings, caused GLD Foremost to
purchase the entirety of stocks of Foremost
Industries.” (Id. ¶ 10). Plaintiff
alleges “upon information and belief” that this
purchase pertained to all assets and liabilities of Foremost,
making GLD Foremost Holdings (“GLD”) a
“successor in interest” of Foremost.
(Id. ¶ 11).
September, 2015, Plaintiffs entered into a sales agreement
with Foremost for the design, development, and construction
of a modular home for the purchase price of $175, 690.07.
(Id. ¶ 12). They allege, again upon information
and belief, that in September, 2015, Defendants were already
taking steps to cease operations. (Id. ¶ 15).
In December, 2015, Plaintiffs secured a construction loan
from their bank, which was a contractual condition precedent
to the design and construction of the modular home.
(Id. ¶ 16). Plaintiffs then paid a series of
down-payments, but experienced months of unexcused delays.
(Id. ¶¶ 17, 20, 22, 25-26). This
culminated in Plaintiffs' never receiving the home for
which they entered into a contract. (Id. ¶ 28).
In fact, Plaintiffs allege upon information and belief that
“construction of the home was never even
September, 2016, Plaintiffs commenced this action by filing a
Writ of Summons in the Court of Common Pleas, Philadelphia
County. In December, 2016, Plaintiffs filed a Complaint, and
in January, 2017, the case was removed to this Court. (ECF
1). Defendants Gordon and GLD filed a motion to dismiss the
Complaint on January 26, 2017, after which Plaintiffs decided
to file an Amended Complaint. (ECF 10). Plaintiffs filed an
Amended Complaint in this Court on September 6, 2017 (ECF
Amended Complaint alleges five causes of action: (I) breach
of contract against all Defendants; (II) unjust enrichment
against all Defendants; (III) violation of Pennsylvania's
Unfair Trade Practices Consumer Protection Law
(“UTPCPL”) against all Defendants; (IV)
fraudulent misrepresentation against all Defendants; and (V)
piercing of the corporate veil against Defendant Gordon.
before the Court are Moving Defendants' Motion to Dismiss
Plaintiffs' Amended Complaint and Motion to Strike
Paragraphs 5, 6, 10, 11, 14, and 15 of Plaintiffs'
Amended Complaint (ECF 13). Plaintiffs filed a Response on
October 10, 2017 (ECF 15), GLD and Gordon filed a Reply on
October 27, 2017 (ECF 16), and Plaintiffs filed a Surreply
(after the Court granted their Motion to File a Surreply) on
November 19, 2017 (ECF 19).
Summary of Parties' Contentions
Motion to Dismiss and Strike contains eight primary
(1) Defendants GLD and Gordon cannot be liable for breach of
contract and unjust enrichment (Counts I and II) because they
were not parties to the modular home sales agreement that
Plaintiffs allege was breached.
(2) Defendants GLD and Gordon cannot be liable for breach of
contract and unjust enrichment (Counts I and II) by virtue of
an agency relationship because the Amended Complaint does not
adequately plead the elements of agency to connect the actual
party to the agreement (Foremost) with its purported agents
(Gordon and GLD).
(3) Defendants GLD and Gordon cannot be liable for the fraud
claims (Counts III and IV) because none of the purported
misrepresentations by the alleged “sales
representatives” are attributable to them.
(4) Defendants GLD and Gordon cannot be liable for the fraud
claims (Counts III and IV) because Plaintiffs have no alleged
that the representations were made falsely, made with
knowledge of their falsity (or recklessness as to whether the
representations were true or false), or made with the intent
of misleading Plaintiffs into relying on them.
(5) Defendants GLD and Gordon cannot be liable for false
advertising under UTPCPL (Count IV) because representations
by individual employees or agents do not qualify as
(6) Defendant Gordon cannot be liable under a
“veil-piercing” theory (Count V) because
Plaintiffs have not adequately alleged he was “in
control” of Foremost.
(7) Paragraphs 5, 6, 10, and 11 of the Amended Complaint
should be stricken because Plaintiffs have not presented any
evidence that Defendant Gordon served as a principal,
employee, or agent of, or had any ownership interest in, GLD
(8) Paragraphs 14 and 15 of the Amended Complaint should be
stricken because they contain unsupported and unrelated
allegations from other pending litigations.
Response opposes the above contentions as follows:
(1) The breach of contract claim (Count I) is adequately pled
because, although Defendants GLD and Gordon were not parties
to the sales agreement, they assumed the obligation to
perform the contract through their full acquisition of the
actual party to the agreement, i.e., Foremost.
(2) The unjust enrichment claim (Count II) is adequately pled
because, by acquiring Foremost, Defendants GLD and Gordon
became the parties who benefitted from Plaintiffs'
(3) The UTPCPL claim (Count III) is adequately pled because:
(A) a false advertising claim can be premised on an
“other agency” relationship; (B) the facts show
the plausibility that Defendants GLD and Gordon were the only
parties in full ownership and control of Foremost; and (C)
the “catchall” provision of the UTPCPL captures
Plaintiffs' claim by prohibiting actions that have a mere
likelihood or reasonable possibility of misleading or
confusing the consumer.
(4) The fraudulent misrepresentation claim (Count IV) is
adequately pled because the sales representatives that
misrepresented facts were agents of Defendants GLD and Gordon
by virtue of GLD's acquisition of Foremost.
(5) The veil piercing claim (Count V) is adequately pled
because Plaintiffs allege that Defendant Gordon executed the
stock purchase agreement on behalf of GLD, an entity that
bears the initials of Defendant Gordon in reverse order.
(6) Paragraphs 5, 6, 10, and 11 of the Amendment Complaint
should not be stricken because they reflect allegations
arising logically from the fact that Defendant Gordon signed
the agreement memorializing GLD's acquisition of
(7) Paragraphs 14 and 15 of the Amended Complaint should not
be stricken because the separate litigations mentioned
therein are matters of public record.
GLD and Gordon's Reply does not make any legal
assertions. Instead, an affidavit from Daniel Gordon is
attached, disputing several factual allegations in the
Surreply asserts that this Court should not consider
Defendants' Reply when ruling on the present Rule
12(b)(6) Motion to Dismiss.
Subject Matter Jurisdiction
not raised by either party, this Court has an obligation to
examine its own subject matter jurisdiction, and may do so
sua sponte. Nesbit v. Gears Unlimited,
Inc., 347 F.3d 72, 76 (3d Cir. 2003). Here, Moving
Defendants removed from the Court of Common Pleas for
Philadelphia County, asserting Diversity Jurisdiction under
28 U.S.C. § 1332(a). To invoke diversity jurisdiction, a
controversy must be between citizens of different states and
the amount in controversy must exceed $75, 000. 28 U.S.C.
§ 1332(a). There is some question here as to whether the
amount in controversy exceeds the jurisdictional amount, as
the Notice of Removal states only that alleged damages equal
“over $50, 000.” Courts discern the amount in
controversy for jurisdictional purposes by consulting the
face of the complaint and accepting plaintiff's good
faith allegations. Frederico v. Home Depot, 507
F.3d. 188, 194 (3d Cir. 2007); Grand Union Supermarkets
of the V.I., Inc. v. H.E. Lockhart Mgmt., 316 F.3d 408,
410 (3d Cir. 2003). In removal cases, the analysis begins
with an examination of the complaint filed in state court -
if that complaint is silent or ambiguous, courts look to the
notice of removal. Frederico, 507 F.3d at 196-97.
Where a case has been removed, and the complaint does not
specifically aver that the amount sought by Plaintiffs is
less than the jurisdictional minimum, the case must
be remanded only if it appears to a legal certainty that the
plaintiff cannot recover the jurisdictional amount
Id. at 197.
Complaint states $54, 669.97 in specific damages, references
additional injury suffered, and does not expressly limit the
amount in controversy to less than $75, 000. Specifically,
for their breach of contract claim, Plaintiffs cite
“numerous financial expenditures made in anticipation
of receiving a home . . . including opportunity cost, time
value of money, and loan interest.” Compl.
¶ 37. In addition, Plaintiffs' UTPCPL claims carry
the possibility of treble damages. ECF 1, at 4; see
also 73 Pa. Cons. Stat. § 209-9.2. As it is not a
legal certainty that Plaintiffs cannot recover $75, 000 or
more, the jurisdictional requirement has been met.
Motion to Strike A. Legal Standard for
Motion to Strike
bring a Motion to Strike portions of Plaintiffs'
Complaint pursuant to Fed.R.Civ.P. 12(f). Rule 12(f) states,
“[t]he court may strike from a pleading an insufficient
defense or any ...