United States District Court, W.D. Pennsylvania
OPINION AND ORDER, Re: ECF, 15
Maureen P. Kelly Chief Magistrate Judge
before the Court is a Motion to Dismiss Complaint, ECF No.
15, filed on behalf of Tucker Arensberg, P.C.
("Tucker"), Michael A. Shiner ("Shiner"),
and Kenneth L. Carroll, III ("Carroll")
(collectively, "Defendants"). For the following
reasons, the Motion to Dismiss is denied.
FACTUAL AND PROCEDURAL BACKGROUND
September 2015, Plaintiff Prime Energy and Chemical, LLC
("Prime Energy") entered into a Letter of Intent
and, in November 2015, a Purchase and Sale Agreement
("PSA"), with Mark A. Thompson and Mid-East Oil
Company. The agreements related to oil, gas, and shallow
mineral rights at the "Swamp Angel" property,
located in McKean County, Pennsylvania. At all times related
to the transactions at issue, Thompson and Mid-East Oil were
represented by Shiner and Carroll, attorneys with Tucker.
Prime Energy alleges that Shiner and Carroll engaged in three
separate instances of fraudulent misrepresentation and
concealment related to the underlying transactions, followed
by an attempt to cover up the fraud, as follows:
(1) Defendants represented that Thompson owned the Property
through MarcellX and Mid-East Oil, providing Thompson the
unfettered right to engage in the subject transactions; when
in fact Thompson owned an equal but not controlling share of
the property's titled owner, MarcellX, and the remainder
of MarcellX was owned by parties who had not consented to or
participated in the Prime Energy transaction;
(2) Defendants represented that a deposit by Prime Energy of
$600, 000, equal to 20% of the purchase price, and an
additional $78, 800 payment, were required to ensure
fulfillment of the purchase and to bring current an
outstanding mortgage on the land. Defendants represented that
such funds were to be wired to Shiner for placement in a
designated attorney/Tucker escrow account; when in fact, upon
receipt, the money was transferred directly to Thompson, or
to Shiner for his personal use;
(3) Defendants represented that the property was not subject
to pending litigation, when at the time of the transactions
at issue, at least one other multi-party fraud action was
pending in this Court related to the sale of oil and gas
rights, and that litigation resulted in the entry of judgment
against Thompson in the sum of $2, 000, 000;
(4) Upon Plaintiffs discovery of the true ownership of the
property, and the fact that the deposit money was never
received by those who owned MarcellX and the property,
Defendants covered up the misappropriation of the Prime
Energy's funds by:
(1) presenting a post-dated "consent" by MarcellX
to Thompson's attempted sale of the property; (2) falsely
stating that the funds were used to fulfill the PSA for
MarcellX; (3) continuing to misrepresent Thompson's
status as principal owner of the property through MarcellX
and Mid-East Oil; (4) hiding the fact that the funds had not
been deposited into Tucker's attorney escrow account; (5)
failing to disclose that the funds were transferred directly
to Thompson; (6) deceptively accounting for the use of the
funds; (7) never disclosing pending litigation regarding the
subject premises, oil and gas rights; (8) falsely asserting
that Defendants and Thompson acted in compliance with the PSA
in disregard of their diversion of funds and concealment of
MarcellX's true owners.
ECF No. 1 at 6 -15. Prime Energy alleges that the factual
representations made by Shiner and Carroll were material to
the underlying transactions, and resulted in the loss of the
escrow and mortgage payment funds wired to Shiner. Had the
relevant facts been presented to Prime Energy, the funds
would not. have been remitted, and Prime Energy would not
have lost the expected benefits of the underlying
transaction, represented by the anticipated proceeds
generated by the operation of existing oil and gas wells, and
the drilling of additional wells.
Energy alleges that Shiner and Carroll's conduct was
intentional, fraudulent, reckless, and occurred as the result
of Tucker's failure to supervise each of its attorneys to
ensure that accurate and required truthful disclosures were
made to all parties involved in commercial transactions in
which the firm is engaged. Id. at 16. Accordingly,
Prime Energy brings common law claims for fraud (Count I),
reckless misrepresentation (Count II), negligent supervision.
(Count III), and respondeat superior (Count IV). Defendants
move to dismiss Plaintiffs Complaint pursuant to Rules 9 and
12(b)(6) of the Federal Rules of Civil Procedure. The parties
have filed briefs and extensive exhibits documenting the
underlying transactions in support and in opposition to the
Motion to Dismiss, and it is now ripe for disposition. ECF
Nos. 16, 18 and 24.
STANDARD OF REVIEW
assessing the sufficiency of the complaint pursuant to a
motion to dismiss under Federal Rule of Civil Procedure
12(b)(6), the Court must accept as true all material
allegations in the complaint and all reasonable factual
inferences must be viewed in the light most favorable to the
plaintiff. Odd v. Malone, 538 F.3d 202, 205 (3d Cir.
2008). The Court, however, need not accept bald assertions or
inferences drawn by the plaintiff if they are unsupported by
the facts set forth in the complaint. See California
Public Employee Retirement System v. The Chubb Corp.,
394 F.3d 126, 143 (3d Cir. 2004), citins Morse v. Lower
Merion School Dist, 132 F.3d 902, 906 (3d Cir. 1997).
Nor must the Court accept legal conclusions set forth as
factual allegations. Bell Atlantic Corp. v. Twombly,
550 U.S. 544, 555 (2007). Rather, "[f]actual allegations
must be enough to raise a right to relief above the
speculative level." Id., citing Papasan v.
Allain, 478 U.S. 265, 286 (1986).
United States Supreme Court has held that a complaint is
properly dismissed under Fed.R.Civ.P. 12(b)(6) where it does
not allege "enough facts to state a claim to relief that
is plausible on its face," id. at 570, or where
the factual content does not allow the court "to draw
the reasonable inference that the defendant is liable for the
misconduct alleged." Ashcroft v. Iqbal 556 U.S.
662, 678 (2009). See Phillips v. County of
Allegheny. 515 F.3d 224, 231, 234 (3d Cir. 2008)
(finding that, under Twombly, "labels and
conclusions, and a formulaic recitation of the elements of a
cause of action" do not suffice but, rather, the
complaint "must allege facts suggestive of [the
proscribed] conduct" and that are sufficient "to
raise a reasonable expectation that discovery will reveal
evidence of the necessary element[s]" of his claim).
deciding a motion to dismiss, we may consider the allegations
contained in the complaint, exhibits attached to the
complaint, matters of public record, and any undisputedly
authentic document that a defendant attaches as an exhibit to
a motion to dismiss if the plaintiffs claims are based on the
document. Pension Benefits Guar. Corp. v. White Consol.
Industries, Inc., 998 F.2d 1192, 1196 (3d Cir. 1993).
Where appropriate, the Court shall consider certain of the