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Price v. Foremost Industries, Inc.

United States District Court, E.D. Pennsylvania

April 26, 2018



          BAYLSON, J.

         I. Introduction

         At 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”).

         II. Relevant Factual[1] and Procedural History

         According 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).

         In late May, 2015, a stock purchase agreement was executed, which transferred the entirety of Foremost stock to GLD. (Id. ¶ 7).

         In 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 commenced.” (Id.).

         In 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).[2] Plaintiffs filed their Second Amended Complaint (“SAC”) on January 9, 2018. (ECF 22).

         The SAC 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.

         Presently 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.

         III. Comparison of the Amended Complaint and SAC

         The 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 2).[3]

         IV. Legal Standard

         In 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)).

         All 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).

         Rule 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.).

         “[H]owever, 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.

         A. ...

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