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De Oca v. Beato

United States District Court, M.D. Pennsylvania

June 6, 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. Introduction

         This case, which comes before us for consideration of a motion to dismiss filed by the defendant, Weichert Realtors Trademark, (Doc, 45), underscores the importance of procedural precision in litigation. The plaintiffs initially filed a complaint in May of 2017, (Doc. 1), which alleged that Weichert and others were involved in a far-reaching real estate fraud scheme. Three months later, on August 8, 2017, the plaintiffs filed an amended complaint in this case. (Doc. 25.) That amended complaint involved the same basic core of operative facts, but changed the legal claims brought against a number of defendants, including Weichert, adding some claims while deleting other causes of action.

         This amended complaint is now the operative pleading in this case. Nonetheless, when defendant Weichert filed this motion to dismiss, its motion attacked the legal sufficiency of the plaintiffs' original complaint. (Doc. 50.) This somewhat misplaced attack inspired a rejoinder from the plaintiffs which invited the court to simply discount this motion since it sought dismissal of a complaint which was no longer the relevant pleading in this case. (Doc. 53.) That rejoinder, in turn, caused Weichert to file a reply which acknowledged that the defendant's motion was aimed at the wrong complaint in this case, but nonetheless invited us to consider the defendant's motion to dismiss as it related to overlapping claims found in both the original and the amended complaints. (Doc. 54.)

         While we have accepted this invitation, at least in part, for the reasons set forth below, it is recommended that this motion to dismiss be DENIED.

         II. Statement of Facts and of the Case

         In considering this motion, and the sufficiency of the plaintiffs' allegations as they relate to Weichert Realtors, we are guided by the well-pleaded facts set forth in in the plaintiffs' 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 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, the amended complaint also contains allegations that, if true, may plausibly state a basis for liability against Weichert as well. Specifically, according to the amended complaint, between 2014 and May of 2015, Beato was employed by, and affiliated with, Weichert. (Doc. 25, ¶¶ 30, 34, 80-81.) Holding himself out as an agent of Weichert, and often acting at a time when he was, in fact, allegedly employed by Weichert,[1] the amended complaint alleges that Beato induced a number of victim-plaintiffs to entrust funds to him ostensibly for the purchase of real estate. (Id., ¶¶ 30, 34, 80-81, 97, 160, 162-64, 170, 171, 176-79, 196-200, 210, 212, 215, 219, 227, 230, 233-34, 241, 244-54.) However, instead of applying these funds for their stated purpose, it is alleged that Beato converted these moneys to his benefit and to the benefit of others.

         Cast against the backdrop of these well-pleaded facts, the plaintiffs have lodged six counts against Weichert in this amended complaint: two counts of common law fraud and fraudulent misrepresentation; (Id., Counts V and XII), two counts of violations of Pennsylvania's Unfair Trade Practices and Consumer Protection statute, (“UTPCPL”); (Id., Counts, VI and XIII), a claim of conversion, (Id., Count XI), and a claim of negligent supervision and negligent misrepresentation. (Id., Count VII.) In each instance, the plaintiffs' amended complaint explicitly rests the claims against Weichert on theories of agency law, asserting that Weichert is potentially liable for the acts of its agent Beato. (Id.) Notably, the amended complaint eschews a number of claims that may have been lodged against Weichert in the plaintiffs' original complaint, including racketeering and loss of consortium claims.

         With the legal landscape framed in this fashion, Weichert filed its motion to dismiss, albeit a motion which focused on the claims set forth in the original complaint instead of those alleged in the amended complaint. While Weichert has recognized this error in its reply brief, it has nonetheless invited us to consider its arguments as those arguments may pertain to any overlapping claims found in both complaints. We have done so, but find that none of these claims are subject to dismissal on the pleadings at this time. Therefore, we recommend that this motion to dismiss be denied.

         III. 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 statements, do not suffice." Id. at 678. Rather, in conducting a review of the adequacy of complaint, the Supreme Court has advised trial courts that they must:

[B]egin by identifying pleadings that because they are no more than conclusions are not entitled to the assumption of truth. While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations. When there are well-pleaded factual allegations, a court should assume their veracity ...

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