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Patel v. Patel

United States District Court, E.D. Pennsylvania

August 1, 2018

HITESH PATEL
v.
NARENDRA PATEL

          MEMORANDUM

          John R. Padova, J.

         Plaintiff has brought the instant action seeking the return of $600, 000.00 that he paid to Defendant as a deposit for the purchase of a delicatessen located in Norristown, Pennsylvania. Defendant has moved to dismiss the Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction and, alternatively, to dismiss five of the six claims for relief asserted in the Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted. For the following reasons, the Motion is granted in part and denied in part.

         I. FACTUAL BACKGROUND

         The Amended Complaint alleges the following facts. On March 14, 2018, Defendant Narendra Patel entered into an Agreement of Sale (the “Agreement”) with Plaintiff Hitesh Patel, JSN Venture, LLC (“JSN”), and JSN-PA Venture, LLC (“JSN-PA”) (collectively the “Buyers”) for the sale of Fern Rock Market and Deli (the “Deli”). (Am. Compl. ¶ 5; Ex. A.)[1] While the Agreement sets forth a sales price of $365, 000.00, Plaintiff and Defendant agreed to a sales price of $650, 000.00. (Id. ¶¶ 7-8.)[2] The Agreement also provided that the sale of the Deli would occur on or before May 1, 2018. (Id. ¶ 10; Agreement, Am. Compl. Ex. A, Art. XVII.) Plaintiff agreed to pay $600, 000.00 to Defendant prior to closing and to provide a promissory note of $50, 000.00 to Defendant at closing. (Am. Compl. ¶ 11.) Plaintiff paid Defendant by way of six $100, 000.00 checks drawn from Plaintiff's personal bank accounts between February 28, 2018 and March 24, 2018. (Id. ¶¶ 12-13; Ex. B.) Defendant deposited all six of Plaintiff's $100, 000.00 checks into an account at KeyBank. (Id. ¶ 14.)

         Article XII of the Agreement required Defendant to obtain a certificate of occupancy for the property in which the Deli is located (the “Property”). (Agreement Art. XII.) Article XII also states that, “[i]f the Seller is unable to [obtain] a certificate permitting occupancy of the Property, then this Agreement shall be null and void and the Buyers shall receive the return of any deposits.” (Id.) Defendant failed to make certain repairs to the Property that the Borough of Norristown required him to make before it would issue the certificate of occupancy.[3] (Am. Compl. ¶¶ 18-19.) Defendant did not obtain a certificate of occupancy for the Property, rendering the Agreement null and void under Article XII. (Agreement Art. XII; Am. Compl. ¶¶ 22-23, 25.)

         Plaintiff appeared at the office of Defendant's attorney on May 1, 2018 for the closing but the closing did not occur because Defendant had not obtained the certificate of occupancy for the Property. (Am. Compl. ¶ 26.) (Id.) Plaintiff demanded the return of the $600, 000.00 he had paid to Defendant. (Id. ¶ 27.) However, Defendant has failed and refused to return any of the money Plaintiff paid him. (Id. ¶ 28.) Moreover, Defendant has already used $126, 065.21 of the $600, 000.00 deposit to satisfy a mortgage on the Property. (Id. ¶ 31.) On May 9, 2018, this Court entered a Temporary Restraining Order requiring that $475, 000.00, which is the remainder of the $600, 000.00 deposit, be held in escrow by Defendant's attorney. (Id. ¶ 33.)

         Neither JSN nor JSN-PA, the other buyers identified in the Agreement, paid any of the $600, 000.00 to Defendant. (Id. ¶ 30.) Both of these entities have authorized and consented to Defendant's return of Plaintiff's entire $600, 000.00 payment to Plaintiff and have disclaimed any interest in that amount. (Id. ¶ 35.)

         The Amended Complaint asserts six claims for relief. Count I asserts a claim for unjust enrichment and a constructive trust. Count II asserts a claim for conversion. Count III asserts a claim for money had and received. Count IV asks the Court to enter a declaratory judgment, declaring the Agreement null and void and ordering the return of the $600, 000.00 deposit paid to Defendant. Count V asserts a claim for breach of contract. Count VI asks the Court for a temporary restraining order prohibiting Defendant from dissipating, depleting, transferring, hiding, or otherwise taking action with respect to the $600, 000.00 that Plaintiff paid him and for a preliminary injunction requiring Defendant to pay the $600, 000.00 into a fund in the Court until this matter is resolved.

         Defendant moves to dismiss the Amended Complaint on the ground that Plaintiff has failed to join an indispensable party whose joinder in this case will destroy our subject matter jurisdiction. Defendant also moves, in the alternative, to dismiss Counts I-IV and VI of the Amended Complaint on the ground that none of these Counts state claims upon which relief can be granted. We first address Defendant's argument that Plaintiff has failed to join an indispensable party.

         II. FAILURE TO JOIN AN INDISPENSABLE PARTY

         A. Rule 12(b)(7)

         Defendant has moved to dismiss this action for failure to join JSN-PA as a plaintiff pursuant to Federal Rule of Civil Procedure 19. Defendant contends that JSN-PA is an indispensable party in accordance with Rule 19 and that its joinder as a plaintiff would destroy our diversity jurisdiction. While Defendant has cast this portion of his Motion as a motion to dismiss for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1), such a motion is properly brought pursuant to Rule 12(b)(7), which provides that a party may bring a motion to dismiss for “failure to join a party under Rule 19.”[4] Fed.R.Civ.P. 12(b)(7).

         “The moving party bears the burden of showing that the absent party is a required party and thus dismissal is proper under Rule 12(b)(7).” Advanced Fluid Sys., Inc. v. Huber, Civ. A. No. 13-3087, 2014 WL 1808652, at *6 (M.D. Pa. May 7, 2014) (citing Disabled in Action of Pa. v. Se. Pa. Transp. Auth., 635 F.3d 87, 97 (3d Cir. 2011)). “In reviewing a motion made under Rule 12(b)(7), the court must accept the allegations in the complaint as true and draw all reasonable inferences in favor of the non-moving party.” Cummings v. Allstate Ins. Co., Civ. A. No. 11-2691, 2011 WL 6779321, at *3 (E.D. Pa. Dec. 27, 2011)) (citing Pittsburgh Logistics Sys., Inc. v. C.R.England, Inc., 669 F.Supp.2d 613, 618 (W.D. Pa. 2009)). See also U.S. Tech Sols., Inc. v. eTeam, Inc., Civ. A. No. 17-1107, 2017 WL 3535022, at *2 (D.N.J. Aug. 16, 2017) (citation omitted). “[T]he court may also consider relevant evidence outside the pleadings.” Advanced Fluid Sys., 2014 WL 1808652, at *6 (citing Polygon U.S. Corp. v. Diversified Info. Techs., Civ. A. No. 12-923, 2012 WL 5379168, at *4 (M.D. Pa. Oct. 31, 2012)).

         B. Rule 19

Rule 19 governs the required joinder of parties and provides as follows:
A person who is subject to service of process and whose joinder will not deprive the court of subject-matter jurisdiction must be joined as a party if:
(A) in that person's absence, the court cannot accord complete relief among existing parties; or (B) that person claims an interest relating to the subject of the action and is so situated that disposing ...

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