United States District Court, E.D. Pennsylvania
DAVID PRICE, ET AL.
FOREMOST INDUSTRIES, INC., ET AL.
MEMORANDUM RE: MOTION TO DISMISS
issue in this diversity case is whether this Court should
grant a Rule 12(b)(6) motion to dismiss filed by GLD Foremost
Industries, LLC (“GLD”).
Relevant Factual and Procedural History
to their Second Amended Complaint (“SAC, ” ECF
22), 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. ¶ 4). In April, 2015,
Plaintiffs found a parcel of land in Middletown, Virginia on
which the development and construction would proceed.
(Id. ¶ 5) During this time period, Plaintiffs
were verbally quoted a three-month timeframe for
construction. (Id. ¶ 6).
May, 2015, a stock purchase agreement was executed, which
transferred the entirety of Foremost stock to GLD.
(Id. ¶ 7).
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. ¶ 9). They allege, upon information and
belief, that in September, 2015, GLD was already taking steps
to cease operations of Foremost. (Id. ¶ 12). 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. ¶ 13). Plaintiffs then paid a series of
down-payments, but experienced months of unexcused delays.
(Id. ¶¶ 14, 17, 22-23). This culminated in
Plaintiffs' never receiving the home for which they
entered into a contract. (Id. ¶ 25). 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
11). On December 22, 2017, the Court granted Defendants'
First Rule 12(b)(6) Motion to Dismiss, without prejudice and
with leave to file a second amended complaint within 14 days.
(ECF 21). Plaintiffs filed their Second Amended
Complaint (“SAC”) on January 9, 2018. (ECF 22).
alleges three causes of action: (I) breach of contract
against all Defendants; (II) unjust enrichment against all
Defendants; and (III) violation of Pennsylvania's Unfair
Trade Practices Consumer Protection Law
(“UTPCPL”) against all Defendants.
before the Court is Defendant GLD's Second Rule 12(b)(6)
Motion to Dismiss. For the reasons that follow, it will be
GRANTED WITH PREJUDICE.
Comparison of the Amended Complaint and SAC
Amended Complaint, which this Court dismissed without
prejudice, and the SAC, which the Court is presently tasked
with considering, are nearly identical in all material
respects. One change is that Daniel Gordon has been removed
as a Defendant and all references to him have been removed in
the SAC. Thus, paragraphs 4-6 were removed. Plaintiffs also
slightly modified paragraphs 10-13 from the Amended
Complaint, but in only minor ways. Notably, just like the
Amended Complaint, the SAC is entirely pled “upon
information and belief.” (SAC, at page
considering a motion to dismiss under Rule 12(b)(6),
“we accept all factual allegations as true [and]
construe the complaint in the light most favorable to the
plaintiff.” Warren Gen. Hosp. v. Amgen, Inc.,
643 F.3d 77, 84 (3d Cir. 2011) (internal quotation marks and
citations omitted). “To survive a motion to dismiss, a
complaint must contain sufficient factual matter, accepted as
true, to ‘state a claim for relief that is plausible on
its fact.'” Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly,
550 U.S. 544, 570, (2007)).
allegations of fraud (i.e., Count III) must meet Fed.R.Civ.P.
9(b)'s heightened pleading standard (the
“particularity” requirement). Rule 9(b)'s
heightened pleading standard not only gives defendants notice
of the claims against them, but also provides increased
measure for protection of their reputation and reduces the
number of frivolous lawsuits brought solely to extract
settlements. In re Burlington Coat Factory Sec.
Litig., 114 F.3d 1410, 1418 (3d Cir.1997).
9(b) may be satisfied by describing the circumstances of the
alleged fraud with precise allegations of date, time, or
place, or by using some means of injecting precision and some
measure of substantiation into the allegations of fraud.
Bd. of Trs. of Teamsters Local 863 Pension Fund v.
Foodtown, Inc., 296 F.3d 164, 172 n. 10 (3d Cir. 2002).
Stated another way, the plaintiff must plead the who, what,
when, where, and how of the fraud. Institutional
Investors Grp. v. Avava, Inc., 564 F.3d 242, 253 (3d
Cir. 2009); see Bonavitacola Elec. Constr. v. Boro
Developers, Inc., No, 01-5508, 2003 WL 329145, at *6
(E.D. Pa. Feb.12, 2003) (Baylson, J.).
courts should be sensitive to the fact that application of
[Rule 9(b)] prior to discovery may permit sophisticated
defrauders to successfully conceal the details of their
fraud. Accordingly, the normally rigorous particularity rule
has been relaxed somewhat where the factual information is
peculiarly within the defendant's knowledge or
control.” In re Burlington, 114 F.3d at 1418
(citations and quotation marks omitted). Thus, plaintiffs may
plead certain factual allegations based “upon
information and belief” but must allege that the
necessary information lies within the defendant's
control, and their allegations must be accompanied by a
statement offsets upon which the allegations are based.
In re Craftmatic Sec. Litig., 890 F.2d 628, 645 (3d
Cir. 1989). Boilerplate and conclusory allegations will not
suffice. In re Burlington, 114 F.3d at 1418.