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Oca v. Beato

United States District Court, M.D. Pennsylvania

May 31, 2018

RAMON DE OCA, et al., Plaintiff,
v.
IGNACIO BEATO, et al., Defendants.

          Mariani, Judge

          REPORT AND RECOMMENDATION

          MARTIN C. CARLSON, UNITED STATES MAGISTRATE JUDGE

         I. Statement of Facts and of the Case

         This negligence, fraud, racketeering and unfair trade practices complaint now comes before us for consideration of a motion to dismiss filed by one of the defendants, Toma Abstract, Inc. (Doc. 40.) This motion to dismiss seeks the dismissal of the plaintiffs' state law claims for punitive damages at the outset of this litigation. In considering this motion, and the sufficiency of the plaintiffs' allegations as they relate to these claims for punitive damages, we are guided by the well-pleaded facts set forth in in the plaintiff's 45-page, 368-paragraph amended civil complaint. (Doc. 25.)

         That complaint describes a pattern of fraudulent real estate transactions involving defendant Ignacio Beato, who is alleged to have obtained money from the 16 victim-plaintiffs by fraudulently representing that he was authorized to negotiate the sale of certain real estate. In fact, according to the amended complaint Beato had no such authority and was simply and systematically cheating unsophisticated buyers by inducing them to pay him for the purchase of properties which Beato had no authority to sell. Relying upon these false and fraudulent pretenses, representations and promises, the victim-plaintiffs allege that they entrusted moneys to Beato, funds which Beato stole and converted for his own use and the use of others. (Id.)

         While much of the complaint focuses on this extensive pattern of fraud allegedly committed by Beato, two sets of allegations directly implicate Toma Abstract, Inc., in this fraudulent activity. According to the amended complaint, on two occasions victim-plaintiffs who were being targeted by Beato went to Toma Abstract, Inc., to confirm Beato's bona fides, corroborate that he was authorized to sell property that they were considering purchasing, and receive clear titles to the property Beato was purporting to sell. In both instances, according to the amended complaint, agents of Toma Abstract, Inc., vouched for Beato falsely by representing that he was a legitimate real estate agent and was authorized to negotiate the sale of certain properties. (Doc. 25, ¶¶ 53, 54, 88, 89, 90.) Moreover, according to the amended complaint, in one instance Toma's agents actually promised to provide a victim-plaintiff a deed to a property that Beato had fraudulently sold, a promise which Toma Abstract, Inc., never fulfilled. (Id., ¶¶ 53-54.) In the second instance, the false representations made by Toma's agents allegedly induced the victim-plaintiff to make payments to Beato, payments which Beato then converted to his own benefit without delivering title to any real estate to the victim-plaintiff. (Id., ¶¶ 88-90.)

         It is against the backdrop of these well-pleaded facts that we are asked to conduct a preliminary assessment of whether the plaintiff has alleged sufficient facts to pursue a Pennsylvania state law claim for punitive damages against Toma Abstract, Inc. For the reasons set forth below, we conclude that the plaintiff's allegations, if proven, could support a claim for punitive damages under Pennsylvania law. Therefore, we recommend that this motion to dismiss be denied.

         II. Discussion

         A. Motion to Dismiss-Standard of Review

         A motion to dismiss tests the legal sufficiency of a complaint. It is proper for the court to dismiss a complaint in accordance with Rule 12(b)(6) of the Federal Rules of Civil Procedure only if the complaint fails to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). With respect to this benchmark standard for legal sufficiency of a complaint, the United States Court of Appeals for the Third Circuit has aptly noted the evolving standards governing pleading practice in federal court, stating that:

Standards of pleading have been in the forefront of jurisprudence in recent years. Beginning with the Supreme Court's opinion in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) continuing with our opinion in Phillips [v. County of Allegheny, 515 F.3d 224, 230 (3d Cir. 2008)] and culminating recently with the Supreme Court's decision in Ashcroft v. Iqbal BU.S.B, 129 S.Ct. 1937 (2009) pleading standards have seemingly shifted from simple notice pleading to a more heightened form of pleading, requiring a plaintiff to plead more than the possibility of relief to survive a motion to dismiss.

Fowler v. UPMC Shadyside, 578 F.3d 203, 209-10 (3d Cir. 2009).

         In considering whether a complaint fails to state a claim upon which relief may be granted, the court must accept as true all allegations in the complaint and all reasonable inferences that can be drawn therefrom are to be construed in the light most favorable to the plaintiff. Jordan v. Fox Rothschild, O'Brien & Frankel, Inc., 20 F.3d 1250, 1261 (3d Cir. 1994). However, a court “need not credit a complaint's bald assertions or legal conclusions when deciding a motion to dismiss." Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997). Additionally a court need not "assume that a ... plaintiff can prove facts that the ... plaintiff has not alleged." Associated Gen. Contractors of Cal. v. California State Council of Carpenters, 459 U.S. 519, 526 (1983). As the Supreme Court held in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), in order to state a valid cause of action a plaintiff must provide some factual grounds for relief which “requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of actions will not do." Id. at 555. “Factual allegations must be enough to raise a right to relief above the speculative level." Id.

         In keeping with the principles of Twombly, the Supreme Court has underscored that a trial court must assess whether a complaint states facts upon which relief can be granted when ruling on a motion to dismiss. In Ashcroft v. Iqbal, 556 U.S. 662 (2009), the Supreme Court held that, when considering a motion to dismiss, a court should “begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth." Id. at 679. According to the Supreme Court, “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory ...


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