Dobson v. The Milton Hershey School And School Trust et alBRIEF IN OPPOSITION re MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM AMENDED COMPLAINT COUNTS V, VII, VIII, IX, X, XI AND XIIM.D. Pa.November 15, 2016IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA ADAM DOBSON Plaintiff, v. THE MILTON HERSHEY SCHOOL, and THE HERSHEY TRUST COMPANY, AS TRUSTEE OF THE MILTON HERSHEY SCHOOL TRUST, Defendants. : : : : : : : : : : : : : : : : : C.A. NO.: 2016-cv-1958-YK JURY TRIAL DEMANDED PLAINTIFF’S RESPONSE TO DEFENDANTS’ MOTION TO DISMISS AMENDED COMPLAINT Case 1:16-cv-01958-YK Document 24 Filed 11/15/16 Page 1 of 26 i TABLE OF CONTENTS TABLE OF AUTHORITIES .................................................................................... ii I. INTRODUCTION ...........................................................................................1 II. COUNTERSTATEMENT OF FACTUAL BACKGROUND .......................2 III. STANDARD OF REVIEW.............................................................................4 IV. ARGUMENT...................................................................................................5 A. The Gist Of The Action Doctrine Does Not Bar Plaintiff’s Tort Claims Because The Complaint Articulates A Duty Outside Of Any Contract, Through MHS’s In Loco Parentis Relationship With Adam. ...........................................................................................5 1. The ADA Settlement Agreement, The Equal Opportunity Policy, And The Handbook Describe a Duty to Adam That Is Extracontractual. .............................................................9 B. Adam’s Negligence Claim (Count V) Is Grounded In The In Loco Parentis Duty, And In Any Event MHS’s “Shadow Policy” Existed Outside Of Any MHS Policy Document...................13 C. Adam’s Breach Of Fiduciary Duty Claim (Count XII) Arises Out Of The In Loco Parentis Duty. ....................................................17 D. Adam’s Remaining Tort Claims For Negligent And Intentional Misrepresentation Claims (Counts VII And VIII), Intentional And Negligent Infliction Of Emotional Distress (Counts IX And X) And Conspiracy (Count XI) Are Not Barred By The Gist Of The Action Doctrine...............................................................18 E. Adam Sufficiently Pleads His Misrepresentation And Intentional Infliction Of Emotional Distress Claims. .........................19 1. Negligent And Intentional Misrepresentation Claims (Counts VII And VIII) ..............................................................19 2. Intentional Infliction Of Emotional Distress Claim..................20 V. CONCLUSION..............................................................................................22 Case 1:16-cv-01958-YK Document 24 Filed 11/15/16 Page 2 of 26 ii TABLE OF AUTHORITIES Cases Alpart v. Gen. Land Partners, Inc., 574 F. Supp. 2d 491 (E.D. Pa. 2008)...................................................................17 Bell Atlantic Corp. v. Twombly, 550 U.S. 554 (2007)...........................................................................................4, 5 Bohler-Uddeholm Am., Inc. v. Ellwood Group, Inc., 247 F.3d 79 (3d Cir. 2001) ..................................................................................10 Bruno v. Erie Ins. Co., 106 A.3d 48 (Pa. 2014)........................................................................................10 CH & H Pennsylvania Properties, Inc. v. Heffernan, 2003 WL 22006799 (E.D.Pa. Aug. 20, 2003) .......................................................5 ClinMicro Immunology Ctr., LLC v. PrimeMed, P.C., No. 3:CV-11-02213, 2012 WL 6537994 (M.D. Pa. Dec. 14, 2012) .....................5 Conley v. Gibson, 355 U.S. 41 (1957).................................................................................................4 Covertech Fabricating, Inc. v. TVM Building Products, Inc., 2014 WL 2605427 (W.D. Pa. June 11, 2014) .......................................................5 D.R., a minor child v. Middle Bucks Area Vocational Tech. School, 972 F.2d 1364, 1371-72 (3d Cir. 1992) (en banc).................................................7 Fowler v. UPMC Shadyside, 578 F.3d 203 (3d Cir. 2009) ..................................................................................4 Gati v. Univ. of Pittsburgh, 91 A.3d 723 (Pa. Super. Ct. 2014)................................................................ 13, 14 Guirguis v. Movers Specialty Services, Inc., 346 F. App’x. 774 (3d Cir. 2009) ..........................................................................4 Harris v. St. Joseph’s University, 2014 WL 1910242 (E.D. Pa. May 13, 2014)................................................ 12, 15 K.A., a minor v. Upper Perkiomen School Dist., 2012 WL 2362565 (E.D. Pa. Mar. 12, 2012) ........................................................6 Case 1:16-cv-01958-YK Document 24 Filed 11/15/16 Page 3 of 26 iii Kimberg v. Univ. of Scranton, 411 Fed. Appx. 473 (3d Cir. 2010)............................................................... 13, 14 Kleinknecht v. Gettysburg College, 989 F.2d 1360 (3d Cir. 1993) ................................................................................6 Love v. Cramer, 606 A.2d 1175 (Pa. Super. 1992), app. denied, 621 A.2d 580 (Pa. 1992)..........21 Nicini v. Morra, 212 F.3d 798 (3d. Cir. 2000) .............................................................................6, 7 Suessenbach Family Ltd. Partnership v. Access Midstream Partners, L.P., 2015 WL 1470863 (M.D. Pa. Mar. 31, 2015) .......................................................5 Swartley v. Hoffner, 734 A.2d 915 (Pa. Super. 1999) ..........................................................................14 The Court in Reardon v. Allegheny Coll., 926 A.2d 477 (Pa. Super. 2007) ..........................................................................15 Uddeholm America, Inc. v. Ellwood Group, Inc., 247 F.3d 79 (3d Cir.2001) ...................................................................................17 Rules and Regulations Fed. R. Civ. P. 8(a)(2) ................................................................................................4 Local Rule 7.8 ............................................................................................................1 Additional Authorities Restatement (Second) of Torts, § 314A(4)................................................................6 Case 1:16-cv-01958-YK Document 24 Filed 11/15/16 Page 4 of 26 Plaintiff, Adam Dobson, submits this response to Defendants’ Motion to Dismiss Plaintiff’s Amended Complaint (the “Motion to Dismiss”), and in support thereof aver as follows. I. INTRODUCTION Defendants, the Milton Hershey School and the Hershey Trust Company, as Trustee of the Milton Hershey School Trust (together, “MHS”) exercised full care, custody, and control over Adam Dobson (“Adam” or “Plaintiff”) - a minor child at the time of his enrollment - giving rise to an in loco parentis relationship, which entailed total control over every aspect of his life, including provision of adequate medical care and accommodations for his mental disabilities. This special relationship gave rise to a duty of care separate and apart from any contract, and it is this duty that MHS breached when it expelled Adam from MHS because of his psychological disability. Because Adam’s claims are grounded in this duty separate from any contract, MHS’s gist of the action arguments must fail. Finally, Adam adequately pleads the how, when, and where of his claims. MHS’s arguments to the contrary are merits arguments disguised as attacking the adequacy of the pleadings, and are impossible to resolve at the Motion to Dismiss stage. Accordingly, MHS’s Motion to Dismiss must be denied. Case 1:16-cv-01958-YK Document 24 Filed 11/15/16 Page 5 of 26 2 II. COUNTERSTATEMENT OF FACTUAL BACKGROUND MHS exercised full care, custody, and control over Adam, giving rise to an in loco parentis relationship with Adam, which required MHS to provide adequate medical care and accommodations for his severe depression. AC ¶¶ 20-35.1 MHS failed to meet the standard of care required of a residential school of its nature by proceeding according to its apparent “shadow policy” of expelling students after they had been institutionalized twice for mental health issues. AC ¶¶ 93-98. This “shadow policy” is not contemplated or disclosed in any contract between Adam and MHS but is instead a rule mechanically applied: “(a) without regard to the therapeutic results of the second hospitalization; (b) without consultation with the institution’s care-providers; (c) without any further analysis of the mental health of the child and accommodations that could be made; and (d) without any analysis of the consequences to the child of termination from MHS, the one stable and nurturing environment that many MHS have had in their short lives.” AC ¶ 96. Additionally, as it undertook this shadow policy, MHS exacerbated Adam’s depressive issues by, through Adam’s houseparents, forcing him to watch a religious-based video that was intended to “cure” him of being gay. AC ¶ 75. This conduct was contrary to directives on MHS as to how it should care for students like Adam, namely: 1 The Amended Complaint (ECF No. 20) shall be cited as “AC.” Case 1:16-cv-01958-YK Document 24 Filed 11/15/16 Page 6 of 26 3 (1) the ADA Settlement Agreement reached between MHS and the United States Department of Justice in the Mother Smith case (AC ¶¶ 39-45); (2) the Equal Opportunity Policy MHS was required to implement as a result of the ADA Settlement Agreement (AC ¶¶ 47-48; 61-62); and (3) the MHS Student/Sponsor Handbook (the “Handbook”) (AC ¶¶ 63-65.) These documents were not contracts between Adam and MHS, but instead constituted MHS’s own policies and procedures that they failed to follow at the expense of an unwritten “shadow” two-expulsion policy. (AC ¶ 96.) At MHS’s urging, Adam was first institutionalized at Philhaven, an independent mental and behavioral health care center off campus, in October 2012. AC ¶¶ 76-80. Subsequently, Adam was again institutionalized at Philhaven, in May 2013. AC ¶¶ 86-91. During these hospitalizations, Adam first learned from Philhaven staff of MHS’s unofficial “shadow policy” that he could face expulsion after being institutionalized for a second time. AC ¶ 92. Indeed, before Adam was even discharged from his second institutionalization, MHS expelled him and evicted him from his student home. AC ¶ 98. After being expelled from MHS, Adam was released back to an unstable, transient, and abusive home life, and robbed of the chance to further his education at college. AC ¶¶104-110. Adam was devastated by being expelled from MHS, robbed of his academic future, and being forced back to an unstable and abusive Case 1:16-cv-01958-YK Document 24 Filed 11/15/16 Page 7 of 26 4 home life, to such an extent that his emotional distress manifested itself physically. AC ¶¶ 184; 210; 215. MHS knew or should have known that its conduct exacerbated Adam’s fragile mental state, and that MHS’s conduct caused severe emotional and physical damage to Adam. Compl. at ¶¶ 206-215. MHS holds itself out to be in loco parentis for students like Adam (a student whose challenges it is MHS’s stated mission to address), that is until their mental health needs represent too much of a monetary, administrative, and potential public relations burden. AC ¶¶ 30-35; 93-97. III. STANDARD OF REVIEW Fed. R. Civ. P. 8(a)(2) requires only “‘a short and plain statement of the claim showing that the pleader is entitled to relief,’ in order to ‘give the defendant fair notice of what the … claim is and the grounds on which it rests.’” Bell Atlantic Corp. v. Twombly, 550 U.S. 554, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). This Court must ask whether the facts alleged raise a reasonable expectation that discovery will reveal evidence of the necessary elements. Twombly, 550 U.S. at 556. A complaint that provides adequate facts to establish “how, when, and where” will survive a Motion to Dismiss. Fowler v. UPMC Shadyside, 578 F.3d 203, 212 (3d Cir. 2009); see also Guirguis v. Movers Specialty Servs., Inc., 346 F. App’x. 774, 776 (3d Cir. 2009). A Motion to Dismiss should not be granted if a Case 1:16-cv-01958-YK Document 24 Filed 11/15/16 Page 8 of 26 5 party alleges facts, which could, if established at trial, entitle it to relief. Twombly, 550 U.S. at 563 n. 8. Moreover, “[i]n the context of the gist of the action doctrine, caution must be exercised in dismissing a tort action on a motion to dismiss because whether tort and contract claims are separate and distinct can be a factually intensive inquiry.” Suessenbach Family Ltd. P'ship v. Access Midstream Partners, L.P., 2015 WL 1470863, at *19 (M.D. Pa. Mar. 31, 2015) (internal citations and quotations omitted) (citing Covertech Fabricating, Inc. v. TVM Bldg. Products, Inc., 2014 WL 2605427 (W.D. Pa. June 11, 2014); see also ClinMicro Immunology Ctr., LLC v. PrimeMed, P.C., No. 3:CV-11-02213, 2012 WL 6537994, at *6 (M.D. Pa. Dec. 14, 2012); CH & H Pennsylvania Properties, Inc. v. Heffernan, 2003 WL 22006799, at *6 n. 6 (E.D.Pa. Aug. 20, 2003)(declining to apply the gist of the action doctrine without an intensive inquiry into the facts). IV. ARGUMENT A. The Gist Of The Action Doctrine Does Not Bar Plaintiff’s Tort Claims Because The Complaint Articulates A Duty Outside Of Any Contract, Through MHS’s In Loco Parentis Relationship With Adam. MHS owes each of its students a duty of care, requiring it to take affirmative steps to protect them from harm. This duty flows from the special custodial relationship between MHS and its students. Section 314A of the Restatement (Second) of Torts recognizes such a duty arising when “[o]ne who is required by Case 1:16-cv-01958-YK Document 24 Filed 11/15/16 Page 9 of 26 6 law to take or who voluntarily takes the custody of another under circumstances as to deprive the other of his normal opportunities for protection is under a similar duty to the other.” Restatement (Second) of Torts, § 314A(4) (emphasis added). Courts applying Pennsylvania law have recognized negligence causes of action based on Section 314A. See K.A., a minor v. Upper Perkiomen School Dist., 2012 WL 2362565, *2 (E.D. Pa. Mar. 12, 2012) (finding complaint stated a cause of action under Section 314A and related Section 324A where it pled student “under the supervision and custody of the school district”). In analogous circumstances arising under federal civil rights laws, the Third Circuit has likewise recognized negligence claims based on a rationale of custody over a minor, reasoning that this measure of control leads to a special relationship between the parties and, therefore, an affirmative duty to provide care and protection to the minor. Nicini v. Morra, 212 F.3d 798, 806-09 (3d. Cir. 2000) (en banc) (finding special relationship and concomitant duty in foster care because foster children are “substantially dependent upon the state … to meet … basic needs”); Kleinknecht v. Gettysburg College, 989 F.2d 1360, 1366-68 (3d Cir. 1993) (same, in context of school-sponsored intercollegiate athletic activities). The Court of Appeals has outlined the hallmarks of a custodial relationship sufficient to trigger the affirmative duty of care and protection, including facts showing that the plaintiff was “unable to seek alternative living arrangements,” Case 1:16-cv-01958-YK Document 24 Filed 11/15/16 Page 10 of 26 7 that plaintiff is “wholly dependent upon the [defendant] for food, shelter, clothing and safety” and for plaintiff’s “basic needs,” or that the defendant has supplanted the plaintiff’s parents as a primary caretaker and decisionmaker. Nicini, 212 F.3d at 808 (internal quotations omitted); D.R., a minor child v. Middle Bucks Area Vocational Tech. School, 972 F.2d 1364, 1371-72 (3d Cir. 1992) (en banc) (analogizing to foster care situation). Admissions from MHS clearly show that these factors are met such that a custodial relationship creating a special duty of care exists between MHS and each of its students, including Adam. AC ¶¶ 23-33. For example, in the Mother Smith case, MHS admitted that it is “designed and operated to raise and care for children, and to fulfill a parental role for most of the year.” AC ¶ 27. Through written statements made in promotional materials and court filings, MHS openly embraces its custodial status over its students. MHS describes itself as “a private residential school with surrogate parenting responsibilities,” going so far as to state that MHS is designed and operated to “fulfill a parental role.” AC ¶¶ 26-27. MHS, according to its website, is a “coeducational home” with “family style residences” providing a “structured home life,” complete with a “pair of married houseparents.” AC ¶¶ 13; 23. MHS also advertises that it “aims to create a family-like atmosphere for students” with houseparents and other students becoming a form of “extended family.” AC ¶ 24. In line with its self-proclaimed Case 1:16-cv-01958-YK Document 24 Filed 11/15/16 Page 11 of 26 8 caretaker status over students, MHS “provides a unique all-encompassing program for these children, including an education, housing in a family setting, food, clothing, medical, dental and psychological care, and recreational opportunities, with no financial obligation to the family.” AC ¶ 28. Consistent with the admissions made above, MHS monitors and regulates every aspect of children’s lives, creating a surrogate institutional family. MHS even regulates the love lives of its students, and requires, among other things, that “Students must be at least 15 years of age and in Senior Division to begin dating,” and that “[d]ating arrangement must be set up with and approved by houseparents.” AC ¶ 33. MHS further regulates both parental visitation schedules and overnight visits taken by students, which are often visits between the students and their natural parents and/or guardians. AC ¶ 31. Indeed, MHS’ assumption of a surrogate family role is so pronounced that it prohibits parent-child interaction during the first month that a child is enrolled at MHS, even for children as young as 4, working to create a dependent dynamic between students and their new caretaker, MHS. AC ¶ 32. In accordance with the duty described above, MHS functioned as Adam’s primary caregiver at all times during his enrollment at MHS, providing him with education, housing, food, clothing and psychiatric care. In addition to the above, MHS further exercised custody and control over Adam by making him submit to Case 1:16-cv-01958-YK Document 24 Filed 11/15/16 Page 12 of 26 9 in-patient admissions at Philhaven. AC ¶ 177. These and other MHS practices illustrate that MHS is deliberate in its effort to substitute its student home/MHS “school family” for the biological families of enrolled students, thereby heightening its own duties to these children, in good times and bad. Thus, any subsequent removal from MHS must be seen as the equivalent of removal from a child’s natural family. It is this special custodial relationship that gives rise to a duty of care separate and apart from any purported contractual relationship. 1. The ADA Settlement Agreement, The Equal Opportunity Policy, And The Handbook Describe a Duty to Adam That Is Extracontractual. As staging for its gist of the action arguments, MHS characterizes its relationship to Adam, and its failure to provide the psychiatric treatment and stable home environment he desperately needed as one governed exclusively by contract. But MHS’s argument fails for two reasons. First, the policy documents MHS attempts to characterize as contracts themselves outline an extra-contractual duty. Second, it is without question that MHS’s failure to treat Adam in full recognition of his fragile emotional state, and indeed its decision to expel him and tear him away from the relative stability of MHS at his most vulnerable time implicates a broader social policy that a mechanical gist of the action argument cannot preclude, let alone at the Motion to Dismiss stage. Case 1:16-cv-01958-YK Document 24 Filed 11/15/16 Page 13 of 26 10 The Handbook, the Equal Opportunity Policy, and the ADA Settlement Agreement are MHS’s own directives on an appropriate standard of care, which it failed to follow in caring for Adam. This failure constitutes tortious conduct that caused harm to Adam. The gist of the action doctrine is intended to prevent plaintiffs from “piling on” tort damages for what are really plain-vanilla breaches of contract. See, e.g., Bruno v. Erie Ins. Co., 106 A.3d 48, 60 (Pa. 2014); Bohler- Uddeholm Am., Inc. v. Ellwood Group, Inc., 247 F.3d 79, 103 (3d Cir. 2001). Plaintiff is not suggesting that he is entitled to recover in violation of those principles in this action. Rather, Adam asserts that MHS engaged in wrongful conduct outside of any contractual relationship between Adam and MHS, including but not limited to: • adhering to an arbitrary and ad hoc “shadow policy” of expelling Adam after two institutionalizations; • declining to use its vast resources to address his condition; and • acting either negligently or deliberately to terminate Adam’s enrollment, deny him an opportunity to obtain a college education, and subject him to severe psychological and emotional trauma both during and after his time at MHS. In the Motion to Dismiss, MHS grossly mischaracterizes the nature of the Handbook, the Equal Opportunity Policy, and the ADA Settlement Agreement by Case 1:16-cv-01958-YK Document 24 Filed 11/15/16 Page 14 of 26 11 stating that, in the Amended Complaint, “Plaintiff asserts that these ‘promises’ governed his relationship with the School and its conduct toward him.” Motion to Dismiss at 8. But there is not a single allegation that any of these documents fully defined the scope of the relationship between MHS and Adam. Rather, these documents comprised a set of policies MHS used to acknowledge its own standard of care - a standard MHS grossly breached by expelling Adam at the time of his greatest need of psychiatric treatment and a stable growth environment. The ADA Settlement Agreement, reached between MHS, the United States Department of Justice, and the Plaintiffs in the Mother Smith case (Adam was not a party), “imposed continuing obligations on MHS, including the enactment and enforcement of a non-disclosure and equal opportunity policy applicable to its programs and services for all students.” AC ¶ 43. The ADA Settlement Agreement required the creation of the Equal Opportunity Policy, providing that MHS would institute policies and procedures that would prevent discrimination against children with disabilities. Id. Notwithstanding the existence of the Equal Opportunity Policy and the Handbook, it would be impossible for MHS and Adam to agree as a matter of contract that Adam would not face any discrimination on the basis of his psychiatric disability. Violation of these policies is by its very nature tortious. Case 1:16-cv-01958-YK Document 24 Filed 11/15/16 Page 15 of 26 12 Moreover, the Handbook is pertinent to the Amended Complaint not because it represents the entire scope of the relationship between Adam and MHS, but because it sets forth several affirmative representations by MHS as to the psychiatric care available to a student such as Adam. AC ¶¶ 63-65. Among other inapposite cases (discussed below), MHS relies on Harris v. St. Joseph’s University for the general proposition that the “relationship between a student and a private school is governed by contract law.” 2014 WL 1910242 (E.D. Pa. May 13, 2014); Motion to Dismiss at 7. But rather than supporting MHS’s attempt to paint with a broad brush in characterizing the relationship between Adam and MHS as purely contractual, Harris provides a helpful study in contrast to the facts of this case. Harris arose from an internal disciplinary investigation and student conduct hearing at Saint Joseph’s University, which resulted in plaintiff being found responsible for sexually assaulting another student. Id. at *1. Plaintiff alleged that the school did not follow the investigation and disciplinary procedures outlined in the student Handbook in finding him responsible for the assault. Id. Crucially, plaintiff pled in his complaint that “At all times material hereto, a contractual relationship purportedly existed between SJU and plaintiff. The Student Handbook, the terms of which were unilaterally drafted by SJU, was deemed part of that contract.” Id. at *2. Case 1:16-cv-01958-YK Document 24 Filed 11/15/16 Page 16 of 26 13 Nowhere in the Amended Complaint is it pled that any contractual relationship pertinent to MHS’s failure to adequately facilitate treatment for Adam’s psychiatric condition was breached. As discussed in detail below, MHS acted in loco parentis for Adam, such that its duty to provide adequate care for Adam existed outside of any written contractual duty to provide for his care and wellbeing. B. Adam’s Negligence Claim (Count V) Is Grounded In The In Loco Parentis Duty, And In Any Event MHS’s “Shadow Policy” Existed Outside Of Any MHS Policy Document. As explained above, the duty predicating Adam’s negligence claim is that created by the special custody, care, and control MHS held over Adam. In its Motion to Dismiss, MHS advances the absurd argument that, because it created policies contemplating that it would not discriminate against people like Adam with mental health disabilities, such policies represent the sum of its duties to students to avoid the damages proximately caused by such prejudice. But the cases cited by MHS are inapposite to this position. See, e.g., Gati v. Univ. of Pittsburgh, 91 A.3d 723 (Pa. Super. Ct. 2014) (Containing no gist of the action analysis and holding merely that “the right of a student to attend a public or private college or university is subject to the condition that he comply with its scholastic and disciplinary requirements.”); Kimberg v. Univ. of Scranton, 411 Fed. Appx. 473 (3d Cir. 2010) (Containing no gist of the action analysis, with no negligence claim Case 1:16-cv-01958-YK Document 24 Filed 11/15/16 Page 17 of 26 14 at issue). Gati concerned a dental student being expelled because he failed to follow school policy regarding patient consent for a root canal. 91 A.3d at 724. Kimberg involved a nurse anesthesiology student being terminated because of clinical performance deficiencies, which standards for clinical performance were outlined in school policies. 411 Fed. Appx. at 475. Neither of the students in those cases were promised medical care as the result of a school policy, and then denied that care to their extreme detriment. Plaintiffs in those cases failed to comply with the scholastic and disciplinary requirements of their schools - they were not expelled because they had disabilities, as in this case. In Swartley v. Hoffner, 734 A.2d 915 (Pa. Super. 1999) a student was permitted to bring a breach of contract claim based on the school dissertation committee’s failure to award her a Ph.D., but her contract claim failed because she could not point to a single contract provision that the school breached. 734 A.2d 915 (Pa. Super. 1999). No negligence cause of action or gist of the action analysis was at issue. Id. These cases could not be more different from the instant matter, where the only condition of enrollment MHS might point to is its apparent but unattainable requirement that Adam should have gotten better before requiring a second institutionalization. Such a condition of enrollment - notwithstanding that it is unconscionable as a matter of public policy and in light of MHS’s stated mission - Case 1:16-cv-01958-YK Document 24 Filed 11/15/16 Page 18 of 26 15 was outside of any contract, and was imposed by MHS only after it became clear that Adam required significant intervention. Moreover, nowhere in any contract entered into between Adam and MHS is there any mention of the “shadow policy” that Adam would be expelled after being institutionalized twice. Nor was it ever contemplated in any contract that MHS could expel Adam and evict him from his home while he was still institutionalized, to his great emotional and psychological detriment at a time when he was most vulnerable. As such, even if the ADA Settlement Agreement, the Equal Opportunity Policy, and the Handbook could be considered contractual, MHS conducted tortious conduct outside of any of their executory promises. The cases cited by MHS that do actually analyze the gist of the action doctrine in the context of negligence are also distinguishable. The Court in Reardon v. Allegheny Coll. applies the gist of the action doctrine to bar a negligence claim where a student sued for breach of contract and negligence after being terminated for plagiarizing. 926 A.2d 477 (Pa. Super. 2007). Plaintiff advanced a negligence cause of action without articulating any duty of care separate from school policies and procedures. Id. at 487; Harris, 2014 WL 1910242 at *6. In contrast, as part of his negligence claim, Adam articulates the in loco parentis duty. AC ¶¶ 30-35; 93-97; 176. In the count for negligence (Count V), the Amended Complaint provides: Case 1:16-cv-01958-YK Document 24 Filed 11/15/16 Page 19 of 26 16 Specifically, and as described at length above, through its “unique, home-like environment,” [MHS] exercised custody and control over … Adam. At all relevant times, MHS functioned as Adam’s primary caregiver, providing education, housing, food, clothing and medical, dental and psychological care. In these and other ways, Adam was dependent on [MHS] to meet his basic needs of sustenance, care and protection. Moreover, [MHS] had imposed limitations on Adam’s freedom to act on his own behalf and has deprived Adam of his normal opportunities for protection. Compl. at ¶ 176. This articulated duty of care stands in stark contrast to the facts of the cases above, where plaintiffs’ negligence theories rested entirely on express contractual duties. Additionally, as a matter of social policy, MHS cannot be permitted to insulate itself from tort damages merely because it has an anti-discrimination policy in place. This is especially the case given MHS’s arbitrary application of an unofficial “two institutionalization” policy that had never been articulated in any policy document. If MHS intended to limit its duty to care for Adam’s mental health to this extent, it never articulated that limitation in any policy or procedure known to Adam or his parents. This is not to mention the circumstances of Adam’s being forced to watch a religious-based instructional video intented to mitigate his attraction to members of the same sex, or his expulsion and eviction from his home while still institutionalized - draconian treatment not outlined in any MHS policy. Adam has thus sufficiently articulated MHS’s breach of the Case 1:16-cv-01958-YK Document 24 Filed 11/15/16 Page 20 of 26 17 special duty of care it owed him separate and apart from any contract, and its negligence claim should proceed. C. Adam’s Breach Of Fiduciary Duty Claim (Count XII) Arises Out Of The In Loco Parentis Duty. As shown above, MHS clearly owed a special duty of care to Adam based on its in loco parentis relationship with him. It is well-settled that, even where claims for breach of contract are pled concurrently, a breach of fiduciary duty claim can proceed “if the fiduciary duty is based on duties imposed as a matter of social policy and if the fiduciary duty is not based on a contractual agreement between the parties.” Alpart v. Gen. Land Partners, Inc., 574 F. Supp. 2d 491, 499 (E.D. Pa. 2008) (citing Bohler-Uddeholm America, Inc. v. Ellwood Group, Inc., 247 F.3d 79 (3d Cir.2001)). To say that MHS had no fiduciary duty to protect and care for Adam notwithstanding that it had 24/7 control over every aspect of his life as a young child would be to utterly ignore the core allegations in the Amended Complaint, and would lead to the absurd - indeed tortious - result that MHS could simply expel children if it determined that they represented too much of a financial, administrative, or public relations burden and, as occurred in this case, release them back into often treacherous and developmentally devastating home lives. MHS unilaterally defined the scope of its in loco parentis relationship with its students through its policy documents, and must be held accountable to that duty. Case 1:16-cv-01958-YK Document 24 Filed 11/15/16 Page 21 of 26 18 D. Adam’s Remaining Tort Claims For Negligent And Intentional Misrepresentation Claims (Counts VII And VIII), Intentional And Negligent Infliction Of Emotional Distress (Counts IX And X) And Conspiracy (Count XI) Are Not Barred By The Gist Of The Action Doctrine. In the Motion to Dismiss, MHS asserts in a conclusory fashion that Adam’s claims for negligent and intentional misrepresentation, negligent and intentional infliction of emotional distress, and conspiracy are also barred by the gist of the action doctrine. In so doing, MHS merely restates its position that the ADA Settlement Agreement, the Equal Opportunity Policy, and the Handbook are contracts between Adam and MHS. Motion to Dismiss at 12-14 (excluding discussion of breach of fiduciary duty claims). This argument trivializes the wholly separate in loco parentis duty owed by MHS to Adam, which continued fact discovery in this case will only reinforce. As set forth above, even if these documents could be construed as creating a contractual relationship between MHS and Adam, the in loco parentis duty exists separate and apart from any contract. Further, MHS wholly ignores that Adam pleads for damages in connection with “severe mental anguish, emotional distress, physical manifestations of emotional distress, embarrassment, loss of self-esteem, disgrace, humiliation, and loss of enjoyment of life, conscious pain and suffering.” See, e.g., AC ¶ 224 (damages for civil conspiracy). Discovery will bear out these damages suffered as Case 1:16-cv-01958-YK Document 24 Filed 11/15/16 Page 22 of 26 19 the result of MHS’s conduct, separate and apart from the financial benefit of the college education Adam was forced to forego. E. Adam Sufficiently Pleads His Misrepresentation And Intentional Infliction Of Emotional Distress Claims. 1. Negligent And Intentional Misrepresentation Claims (Counts VII And VIII) Adam clearly alleges that he relied on MHS’s representations regarding the care available to him to his detriment. Although the Handbook and the Equal Opportunity Policy are not contracts, they do constitute MHS’s representations to Adam regarding the type and breadth of psychiatric care Adam could expect if he required it. For example, MHS states in the Handbook that it would develop individualized plans for disabled students to ensure that MHS was able to accommodate them (it did not do so for Adam). AC ¶ 64. Moreover, the Complaint alleges that MHS never articulated to Adam its apparent practice of expulsion after two psychiatric admissions. AC ¶ 93. The Amended Complaint thoroughly outlines the “numerous representations” made by MHS regarding its supposed compliance with the ADA and its commitment to non-discrimination beginning in 2013. AC ¶¶ 61-65. It is further alleged that Adam agreed to be institutionalized for a second time at Philhaven under the belief that it would be critical to his success at MHS (while, Case 1:16-cv-01958-YK Document 24 Filed 11/15/16 Page 23 of 26 20 unbeknownst to him, he would be expelled as the result of this second institutionalization). AC ¶ 90. This omission itself is a misrepresentation that creates an actionable claim. MHS’s misrepresentations to Adam and his mother lulled them into a false sense of security that Adam would get the care he needed and remain at MHS as a productive member of the community. Adam relied on these misrepresentations to his detriment, to the extent he was expelled without warning by MHS and torn away from the supportive community to which he had grown accustomed. Accordingly, Adam’s negligent and intentional misrepresentation claims are sufficiently pled. 2. Intentional Infliction Of Emotional Distress Claim2 In the Motion to Dismiss, MHS ignores the averments in the Amended Complaint pleading physical injury, and also audaciously claims that, as pled, MHS’s conduct - including allowing Adam to be subjected to a religious video aimed at suppressing his attraction to members of the same sex - is not “outrageous.” Adam sufficiently pleads physical harm as the result of MHS’s conduct. He alleges “significant mental, emotional and physical harm, including, but not limited to, severe mental anguish, emotional distress, physical manifestations of 2 MHS does not assert that Plaintiff failed to plead his negligent infliction of emotional distress claim. Case 1:16-cv-01958-YK Document 24 Filed 11/15/16 Page 24 of 26 21 emotional distress, embarrassment, loss of self-esteem, disgrace, humiliation, and loss of enjoyment of life as well as conscious pain and suffering.” AC ¶ 184; see also AC ¶ 205 alleging “severe physical and emotional distress, including severe mental anguish and horror.” AC ¶¶ 210; 215. Pennsylvania law recognizes pleading of such physical manifestations of emotional distress as sufficient. Love v. Cramer, 606 A.2d 1175, 1179 (Pa. Super. 1992), app. denied, 621 A.2d 580 (Pa. 1992) (Court held that “symptoms of severe depression, nightmares, stress and anxiety, requiring psychological treatment, and ... ongoing mental, physical and emotional harm” sufficiently stated physical manifestations of emotional suffering to sustain a cause of action for intentional infliction of emotional distress.”) Next, MHS cites a litany of cases to assert that MHS’s conduct as pled does not rise to the level of “outrageous conduct” required to plead intentional infliction of emotional distress. However, in so doing MHS attempts to sidestep Adam’s allegations regarding the horrendous treatment he received from both MHS administrators and his houseparents. Among a host of other facts pled, MHS expelled Adam and evicted him - a minor child - from his home while he was still institutionalized at Philhaven. AC ¶ 98. Prior to that, Adam’s houseparents forced him to watch a religious-based video that was intended to “cure” him of being gay. AC ¶ 75. As a matter of common sense, these facts alone are sufficient to plead that MHS’s harmful conduct directed to Adam rose to the level of being Case 1:16-cv-01958-YK Document 24 Filed 11/15/16 Page 25 of 26 22 “outrageous.” At the very least, a determination of whether this and other conduct alleged against MHS is “outrageous” cannot be made at the Motion to Dismiss stage. V. CONCLUSION For the foregoing reasons, Plaintiff, Adam Dobson, respectfully requests that MHS’s Motion to Dismiss be denied in its entirety. Dated: November 15, 2016 Respectfully submitted: /s/ Gregory F. Cirillo Gregory F. Cirillo, Esquire DILWORTH PAXSON LLP 1500 Market Street, Suite 3500E Philadelphia, PA 19102 215-575-7000 Emails: gcirillo@dilworthlaw.com; anassar@dilworthlaw.com Attorneys for Plaintiff, Adam Dobson Case 1:16-cv-01958-YK Document 24 Filed 11/15/16 Page 26 of 26 UNREPORTED CASES Case 1:16-cv-01958-YK Document 24-1 Filed 11/15/16 Page 1 of 49 CH & H Pennsylvania Properties, Inc. v. Heffernan, Not Reported in F.Supp.2d (2003) 2003 WL 22006799 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 1 2003 WL 22006799 Only the Westlaw citation is currently available. United States District Court, E.D. Pennsylvania. CH & H PENNSYLVANIA PROPERTIES, INCORPORATED, Plaintiff, v. Joseph E. HEFFERNAN, III and Keith Valley Partnership, Defendants. No. CIV.A. 03-CV-2349. | Aug. 20, 2003. MEMORANDUM AND ORDER KELLY. *1 Presently before the Court is a Motion to Dismiss, or In the Alternative, a Motion for a More Definite Statement filed by Defendants Joseph E. Heffernan, III (“Heffernan”) and Keith Valley Partnership (the “Partnership”) (collectively, the “Defendants”) challenging several state statutory and common law claims contained in the Complaint filed by Plaintiff CH & H Pennsylvania Properties, Incorporated (“CH & H”). In its Complaint, CH & H, which maintains a seven percent (7%) interest in the Partnership, claims that Heffernan, as the Partnership's general partner, breached his contractual and fiduciary duties to the Partnership by failing to develop or sell property owned by the Partnership despite the advantageous economic opportunities presented to him, and requests monetary damages and declaratory relief. In response, Defendants argue that CH & H fails to set forth any factual basis for these claims and requests dismissal of CH & H's Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6), or, in the alternative, a more definite statement of CH & H's allegations under Federal Rule of Civil Procedure 12(e). For the following reasons, Defendants' Motions are GRANTED IN PART and DENIED IN PART. I. BACKGROUND On August 11, 1970, Ronald and Minna Mintz, Louis and Sheila Chaifetz and Sidney and Leah Jean Haifetz entered into an agreement (the “Partnership Agreement”) to create the Partnership for the purpose of “investing in and holding Property.” (Partnership Agreement, CH & H's Compl. Ex. A.) To fulfill the Partnership's objectives, it purchased a parcel of land situated in Horsham, Pennsylvania (the “Partnership Property”). On April 15, 1985, the Partnership Agreement was amended to add CH & H as a partner, and provided it with a seven percent (7%) interest in the Partnership and the Partnership Property. 1 The amendment to the Partnership Agreement specified that “[a]ll Partners other than CH & H shall advance on behalf of CH & H, CH & H's pro rata share of all necessary carrying charges incurred in connection with the operation and management of the Partnership Property....” (Id.) 1 The Partnership Agreement was previously amended on November 17, 1975 and June 23, 1981. However, these amendments are not pertinent to the instant dispute. Sometime after 1992, Heffernan acquired the remaining 93 percent (93%) ownership interest in the Partnership and, having the majority interest, has since acted as the managing general partner of the Partnership until the present time. Thus, from 1992 to the present, CH & H and Heffernan retain 100 percent (100%) ownership interest in the Partnership between them. After Heffernan acquired control over the Partnership, CH & H contends that the parties entered into another agreement, apart from the Partnership Agreement, obligating Heffernan to develop or sell the Partnership Property in an economically advantageous manner to the Partnership (the “Agreement”). 2 Heffernan does not dispute that the parties entered into the Agreement. Sometime after the parties entered into the Agreement, Heffernan allegedly requested that CH & H pay certain partnership payments, which CH & H refused to pay, and made drawings from Partnership accounts without seeking CH & H's authorization. 2 We assume that the Agreement was verbally communicated between the parties since it terms are not contained in the Partnership Agreement or in any amendments thereof provided to the Court. On April 16, 2003, CH & H filed a Complaint with the Court alleging violations of Pennsylvania's Uniform Partnership Act (“UPA”) and common law, and Case 1:16-cv-01958-YK Document 24-1 iled 11/15/16 Page 2 of 49 CH & H Pennsylvania Properties, Inc. v. Heffernan, Not Reported in F.Supp.2d (2003) 2003 WL 22006799 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 2 requesting monetary damages, a declaratory judgment, an accounting and dissolution of the Partnership. Specifically, CH & H contends that Heffernan breached the Agreement and his fiduciary duty to the Partnership by failing to take any affirmative steps either to develop or to sell the Partnership Property in a manner that suited the best interest of the Partnership. Moreover, CH & H argues that Heffernan violated the Partnership Agreement when he demanded that CH & H assist in paying certain costs and expenses generated by the Partnership, despite language in the Partnership Agreement stating that Heffernan must pay all Partnership costs. II. DISCUSSION *2 Pursuant to Federal Rule of Civil Procedure 12(b)(6), Defendants initially argue that CH & H's Complaint must be dismissed on grounds that it fails to set forth sufficient facts supporting its claims. In the alternative, they request an order requiring CH & H to provide a more specific statement of each of its breach of contract and breach of fiduciary duty claims and request for declaratory relief, an accounting and dissolution of the Partnership contained in its Complaint so as to provide Defendants the opportunity to prepare an adequate response to CH & H's claims. We assess each of Defendants' requests for relief, in reverse order, below and, for the following reasons, DENY Defendants' motion for a more definite statement as to all claims, and GRANT IN PART and DENY IN PART Defendants' motion to dismiss. A. Motion for a More Definite Statement Defendants request that this Court order CH & H to provide a more detailed statement of its claims since they allege that CH & H's Complaint merely avers legal conclusions and vague allegations of misconduct. CH & H responds that since it does not aver claims which must be plead with specificity pursuant to Federal Rule of Civil Procedure 9, its Complaint need only satisfy the general “notice pleading” requirements as set forth in Federal Rule of Civil Procedure 8(a). We find that CH & H's Complaint complies with the liberal pleading requirements set forth in Rule 8(a) and, accordingly, deny Defendants' request for a more definite statement as to all of CH & H's claims. Pursuant to Rule 8(a), a pleading “shall contain (1) a short and plain statement of the grounds upon which the court's jurisdiction depends ..., (2) a short and plain statement of the claim showing that the pleader is entitled to relief, and (3) a demand for judgment for the relief the pleader seeks.” Fed.R.Civ.P. 8(a). The liberal notice pleading requirements espoused in Rule 8 serve to “give the defendant fair notice of what [the] claim ... so that he can make an adequate response.” Loftus v. SEPTA, 843 F.Supp. 981, 986 (E.D.Pa.1994). However, pleadings that fail to provide the opposing party with general knowledge of the claims and facts asserted pursuant to Rule 8(a) are subject to dismissal under Rule 12(b)(6). See Fed.R.Civ.P. 12(b)(6). To prevent dismissal at this early stage of litigation, courts may allow a plaintiff to submit a more definite statement of the underlying facts and claims pursuant to Federal Rule of Civil Procedure 12(e). See Fed.R.Civ.P. 12(e). Rule 12(e) provides that: “[i]f a pleading to which a responsive pleading is permitted is so vague or ambiguous that a party cannot reasonably be required to frame a responsive pleading, the party may move for a more definite statement before interposing a responsive pleading.” Fed.R.Civ.P. 12(e). However, Rule 12(e) motions are highly disfavored since “[t]he overall scheme of the federal rules calls for relatively skeletal pleadings and places the burden of unearthing factual details on the discovery process.” Hides v. Certainteed Corp., No. Civ. A. 94-7352, 1995 U.S. Dist. LEXIS 10849, at *3 (E. D.Pa. July 26, 1995); Synder v. Brownlow, No. Civ. A. 93-5238, 1993 U.S. Dist. LEXIS 17569, at *3 (E.D.Pa. Dec. 10, 1993). As one court commented: *3 The class of pleadings that are appropriate subjects for a motion under Rule 12(e) is quite small- the pleading must be sufficiently intelligible for the court to be able to make out one or more potentially viable legal theories on which the claimant might proceed, but it must be so vague or ambiguous that the opposing party cannot respond, even with a simple denial, in good faith or without prejudice to himself. Hides, 1995 U.S. Dist. LEXIS 10849, at *2. Case 1:16-cv-01958-YK Document 24-1 iled 11/15/16 Page 3 of 49 CH & H Pennsylvania Properties, Inc. v. Heffernan, Not Reported in F.Supp.2d (2003) 2003 WL 22006799 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 3 To plead a breach of contract claim properly under Pennsylvania law, the plaintiff must provide general allegations of “the existence of a contract to which the plaintiff and defendant(s) were parties, the essential terms of that contract, a breach of the duty imposed by the contract and damages as a result.” Cottman Transmission Systems, Inc. v. Melody, 851 F.Supp. 660, 672 (E.D.Pa.1994). To satisfy these pleading requirements under Rule 8, CH & H avers that the parties entered into the Agreement that obligated Heffernan to develop or sell the Partnership Property in an economically advantageous manner, and claims that Heffernan breached the Agreement by failing to develop or sell the Partnership Property when he was presented with economically advantageous opportunities. Although CH & H does not disclose when Heffernan breached the Agreement and what economic advantageous opportunities were, its Complaint sufficiently sets forth allegations of each element of this breach of a contract claim so as to provide Defendants with general notice of its claims. “The basis for granting such a motion [under Rule 12(e) ] is unintelligibility, not lack of detail. As long as the defendant is able to respond, even if only with a simple denial, in good faith, without prejudice, the complaint is deemed sufficient for purposes of Rule 12(e).” Sun Co. v. Badger Design & Constructors, Inc., 939 F.Supp. 365, 374 (E.D.Pa.1996) (citations omitted). Under this standard, we find that CH & H's allegations of breach of contract are not so vague, ambiguous, or unintelligible that Defendants cannot frame a responsive pleading. Accordingly, we deny Defendants' Rule 12(e) motion for a more definite statement as to this claim. Likewise, we find that CH & H's Complaint avers sufficient facts to support its breach of fiduciary duty claim under Rule 8. To demonstrate a breach of fiduciary duty claim under Pennsylvania law, a plaintiff must demonstrate that a fiduciary relationship exists between the parties and that the defendant breached its fiduciary duty by failing to act for the benefit of the partnership, and instead, acted in a manner to promote his individual interests. See Haydinger v. Freedman, No. Civ. A. 98- 3045, 2000 U.S. Dist. LEXIS 7924, at *30 (E.D. Pa. June 8, 2000). CH & H avers in its Complaint that both it and Heffernan are partners in the Partnership, and, as such, are accountable as fiduciaries pursuant to Pennsylvania law. See 15 Pa. Cons.Stat. § 8334. 3 CH & H also avers that Heffernan violated his fiduciary duty owed to the Partnership by failing to manage and develop the Partnership Property in the agreed upon economically advantageous manner, thereby injuring the Partnership and CH & H. Although CH & H does not provide in depth details, CH & H's allegations satisfy the notice pleading requirements as set forth in Rule 8. Since CH & H is not required to provide Defendants with intimate detail of its claims on the face of its Complaint, but need only provide sufficient notice for Defendants to respond in good faith, we stress that discovery is the proper tool for Defendants' request for the specifics of this claim. Therefore, we deny Defendants' motion for a more definite statement as to this claim. 3 Section 8334 of the UPA provides: Every partner must account to the partnership for any benefit and hold as trustee for it any profits derived by him without the consent of the other partners from any transaction connected with the formation, conduct or liquidation of the partnership or from any use by him of its property. 15 Pa. Cons.Stat. § 8334. *4 Likewise, we find that CH & H's request for declaratory relief, an accounting and dissolution of the Partnership are plead with adequate notice to Defendants under Rule 8. In its Complaint, CH & H avers that since the Partnership Agreement expressly states that Heffernan, and not CH & H, is responsible for its pro rata share of the Partnership costs if the Partnership Property is neither sold nor refinanced, then CH & H is entitled to a declaration of Heffernan's obligations under the Partnership Agreement. See 28 U.S.C. § 2201. 4 Section 2201 of the Declaratory Judgment Act provides that “[i]n a case of actual controversy within its jurisdiction, ... any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought. Any such declaration shall have the force and effect of a final judgment or decree and shall be reviewable as such.” 28 U.S.C. § 2201(a). Although Defendants contend that CH & H does not provide sufficient detail as to this claim and that a controversy does not exist between the parties, which we discuss below, we find that CH & H satisfies the general Rule 8 pleading requirements by arguing that Heffernan's improper demand for payment, in violation of the Partnership Agreement, constitutes a threat of legal harm warranting declaratory relief. Case 1:16-cv-01958-YK Document 24-1 iled 11/15/16 Page 4 of 49 CH & H Pennsylvania Properties, Inc. v. Heffernan, Not Reported in F.Supp.2d (2003) 2003 WL 22006799 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 4 4 CH & H indicates in its Response to Defendants' Motion to Dismiss that it intends to rely on the Declaratory Judgment Act, 28 U.S.C. § 2201. Furthermore, we find that CH & H sets forth sufficient facts under Rule 8 to support a cognizable claim pursuant to the UPA, 15 Pa. Cons.Stat. §§ 8301-35. 5 Defendants contend that since CH & H fails to provide any detail regarding its allegations that Heffernan made unauthorized drawings from the Partnership accounts, CH & H's Complaint fails to provide sufficient notice of its claim to which Defendants could respond. As set forth in its Complaint, CH & H contends that “Heffernan has paid himself or credited himself and his affiliates with fees, interest, profits and/or other drawings from the Partnership in ways not authorized by the Partnership Agreement” and that, despite its demands, Heffernan has refused to provide an accounting of the Partnership. (CH & H's Compl. at 7.) The UPA, as adopted by Pennsylvania, provides that “[e]very partner must account to the partnership for any benefit and hold as trustee for it any profits derived by him without the consent of the other partners from any transaction connected with the formation, conduct or liquidation of the partnership or from any use by him of its property.” 15 Pa. Cons.Stat. § 8334(a). Any partner, pursuant to the UPA, has the right to a formal accounting of the partnership affairs if: (1) he is wrongfully excluded from the partnership business or possession of its property by his copartners; (2) the right exists under the terms of any agreement; (3) it is provided by section 8334 (relating to partners being accountable as fiduciaries); or (4) whenever other circumstances render it just and reasonable. 15 Pa. Cons.Stat. § 8335. CH & H contends that Heffernan has paid himself and his affiliates by taking money from the Partnership in violation of the Partnership Agreement and his fiduciary duties, thereby warranting a formal accounting of the Partnership finances under the UPA. We find that, pursuant to the notice pleading standards applicable to a claim for an accounting, CH & H provides Defendants with sufficient facts for it to frame an adequate response to CH & H's allegations. Although CH & H does not provide explicit detail relating to the circumstances surrounding Heffernan's alleged unauthorized withdrawals, we find that discovery is the proper tool for gathering this information. 5 Although CH & H does not request specifically an accounting under the UPA in its Complaint, it indicated in its Response to Defendants' Motion to Dismiss that it intended to pursue its request for an accounting under this Act and not common law. *5 Finally, we deny Defendants' request for a more definite statement as to CH & H's claim for dissolution of the Partnership. CH & H contends that dissolution of the Partnership is warranted pursuant to Section 8354 of the UPA because the Partnership has been prejudicially affected and frustrated due to Heffernan's ineffective management of and inattention to the Partnership, and continuing breach of the Partnership Agreement. The UPA provides that dissolution of a partnership may be caused by operation of law or decree of court. 15 Pa. Cons.Stat. §§ 8353-54. Section 8354 provides that: On application by or for a partner, the court shall decree a dissolution whenever: (1) A partner has been declared a lunatic in any judicial proceeding or is shown to be of unsound mind. (2) A partner becomes in any other way incapable of performing his part of the partnership contract. *6 (3) A partner has been guilty of such conduct as tends to affect prejudicially the carrying on of the business. (4) A partner willfully or persistently commits a breach of the partnership agreement or otherwise so conducts himself in matters relating to the partnership business that it is not reasonably practicable to carry on the business in partnership with him. (5) The business of the partnership can only be carried on at a loss. (6) Other circumstances render a dissolution equitable 15 Pa. Cons.Stat § 8354(a). CH & H claims that Heffernan's failure to manage the Partnership effectively, refusal to provide for an accounting, and continuing violation of the Agreement is conduct that prejudicially affects the Partnership business and frustrates its purpose, both of which are grounds for dissolution pursuant to Sections 8354(a)(3) and (a)(4). Under such broad language justifying dissolution under the UPA, we find that CH & H satisfies the liberal pleading requirements set forth in Rule 8 by providing Defendants with sufficient notice Case 1:16-cv-01958-YK Document 24-1 iled 11/15/16 Page 5 of 49 CH & H Pennsylvania Properties, Inc. v. Heffernan, Not Reported in F.Supp.2d (2003) 2003 WL 22006799 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 5 of this claim for relief, and therefore, DENY Defendants' Motion for a More Definite Statement in its entirety. B. Motion to Dismiss Defendants also contend that CH & H's Complaint fails to aver sufficient facts in support of any of its claims and must be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6). Rule 12 provides that a party may move to dismiss a claim for failure to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). When reviewing a motion to dismiss pursuant to Rule 12(b) (6), the Court must accept the non-movant's well-plead averments of fact as true and view all inferences in the light most favorable to the non-moving party. Angelastro v. Prudential-Bache Securities, Inc., 764 F.2d 939, 944 (3d Cir.1985); Society Hill Civic Assoc. v. Harris, 632 F.2d 1045, 1054 (3d Cir.1980); Abbdulaziz v. City of Philadelphia, No. Civ. A. 00-5672, 2001 U.S. Dist. LEXIS 16972, at *4 (E.D.Pa. Oct. 18, 2001). In reviewing a motion to dismiss, the court must only consider the facts alleged in the pleadings and attachments thereto. Jordan v. Fox, Rothschild, O'Brien & Frankel, 20 F.3d 1250, 1261 (3d Cir.1994); Douris v. Schweiker, No. Civ. A. 02-1749, 2002 U.S. Dist. LEXIS 21029, at *6 (E.D.Pa. Oct. 23, 2002). A motion to dismiss is appropriate only when the movant establishes that he is entitled to judgment as a matter of law and there exists “no set of facts in support of his claims which would entitle him to relief.” Ford v. Schering- Plough Corp., 145 F.3d 601, 604 (3d Cir.1998); Schrob v. Catterson, 948 F.2d 1402, 1405 (3d Cir.1991). Based on our analysis above and, viewing all facts in a light most favorable to the non-movant, we find that CH & H presents sufficient facts to support its breach of contract and fiduciary duty claims, 6 and its requests for an accounting and dissolution of the Partnership to survive dismissal pursuant to Rule 12(b)(6). Although Defendants dispute that Heffernan has breached his obligations under either the Agreement or the Partnership Agreement, or that he has violated his fiduciary duty as the general managing partner of the Partnership, we must credit CH & H's averments that Heffernan has failed to take advantage of economically favorable offers to the Partnership for purposes of a Rule 12(b)(6) motion, and, at this juncture, find that CH & H presents claims that survive dismissal. 6 We reject as premature Defendants' additional contentions that the economic loss and gist of the action doctrines preclude CH & H from bringing a breach of fiduciary duty claim in conjunction with a breach of contract claim. The economic loss doctrine “prohibits plaintiffs from recovering in tort economic losses to which their entitlement flows only from a contract.” Duquesne Light Co. v. Westinghouse Elec. Corp., 66 F.3d 604, 618 (3d Cir.1995). The gist of the action doctrine bars claims for allegedly tortious conduct where the “gist of the conduct alleged sounds in contract rather than tort.” Polymer Dynamics, Inc. v. Bayer Corp., No. Civ. A. 99-4040, 2000 U.S. Dist. LEXIS 11493, at *18-19 (E. D.Pa. Aug. 14, 2000). Although the facts supporting CH & H's breach of fiduciary duty claim are similar to those it relies upon in its breach of contract averments, we cannot conclude, at this juncture, that CH & H will be unable to prove facts demonstrating damages beyond those contemplated by the Agreement to warrant dismissal of its breach of fiduciary duty claim under the economic loss doctrine. Nor can we determine from the pleadings that CH & H could not show that Heffernan's actions were in violation of his fiduciary duties, and not only in breach of the obligations imposed by the Partnership Agreement, to trigger the gist of the action doctrine. See Haymond v. Lundy, Nos. Civ. A. 99-5015, 99- 5048, 2000 U.S. Dist. LEXIS 8585, at *24 (E.D. Pa. June 22, 2000) (stating that, in the context of the gist of the action doctrine, “[c]aution must be exercised in dismissing a tort action on a motion to dismiss because whether tort and contract claims are separate and distinct can be a factually intensive inquiry”). Without a factually intensive inquiry, we decline to apply these doctrines at this time. However, we agree with Defendants that CH & H fails to set forth a basis supporting its request for a declaration that: (1) CH & H is not obligated to contribute any share of the Partnership's costs and expenses unless the Partnership Property is sold or refinanced, and (2) Heffernan shall advance CH & H's pro rata share of these Partnership costs. The Declaratory Judgment Act permits a court to “declare the rights and other relations of any interested party seeking such declaration,” 28 U.S.C. § 2201(a), and affords the court considerable discretion to determine what circumstances are appropriate for declaratory relief. Step-Saver Data Systems v. Wyse Technology, 912 F.2d 643, 646 (3d Cir.1990). In order “to avoid accrual of avoidable damages to one not certain of his rights and to afford him an early adjudication without waiting until his adversary should see fit to begin suit, after damage had accrued,” Travelers Insurance Co. v. Case 1:16-cv-01958-YK Document 24-1 iled 11/15/16 Page 6 of 49 CH & H Pennsylvania Properties, Inc. v. Heffernan, Not Reported in F.Supp.2d (2003) 2003 WL 22006799 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 6 Davis, 490 F.2d 536, 543 (3d Cir.1974) (citations omitted), federal courts have generally interpreted the Declaratory Judgment Act liberally. Exxon Corp. v. FTC, 588 F.2d 895, 900 (3d Cir.1978). However, “[t]he discretionary power to determine the rights of parties before injury has actually happened cannot be exercised unless there is a legitimate dispute between the parties.” Step-Saver, 912 F.2d at 647. Thus, the Court may only exercise its declaratory relief power provided: (1) the action presents a case or controversy and (2) the action is ripe for disposition. See Travelers Insurance Co. v. Obusek, 72 F.3d 1148, 1153-54 (3d Cir.1995). *7 To satisfy the controversy requirement, the action must present: “(1) a legal controversy that is real and not hypothetical, (2) a legal controversy that affects an individual in a concrete manner so as to provide the factual predicate for reasoned adjudication, and (3) a legal controversy so as to sharpen the issues for judicial resolution.” Id. at 1154. To determine whether the action is ripe for adjudication, the courts “examine the adversity of the interest between the parties to the action, the conclusiveness of the declaratory judgment and the practical help, or utility of the declaratory judgment.” Id. (internal quotations omitted). “Basically, the question ... is whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” Maryland Cas. Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273, 61 S.Ct. 510, 85 L.Ed. 826 (1941). Defendants argue that CH & H's declaratory judgment request does not satisfy the requirements of the Declaratory Judgment Act because there is no controversy between the parties regarding whether CH & H would be liable to Defendants for Partnership costs at this time. Although Heffernan does not seem to dispute that he had once requested CH & H to pay its share of the Partnership costs, he claims that he has not taken legal action to collect any Partnership costs from CH & H or engaged in any other activity to trigger a controversy between the parties. Although Heffernan has not taken any further steps to collect payments from CH & H, CH & H argues that Heffernan's improper demand for payment threatens its ability to participate in the Partnership and creates a likelihood that it would be sued by Defendants for an alleged breach of the Partnership Agreement. CH & H argues that these threats are sufficient to satisfy the controversy requirement under the Declaratory Judgment Act. While CH & H is correct in stating that a litigant can seek a declaratory judgment where the harm is threatened in the future, it must also demonstrate that the probability of that future event occurring is real and substantial, and “of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” Presbytery of the Orthodox Presbyterian Church v. Florio, 40 F.3d 1454, 1466 (3d Cir.1994); Mountbatten Surety Co. v. Brunswick Insurance Agency, No. Civ. A. 00-1255, 2000 U.S. Dist. LEXIS 10611, at *10 (E. D.Pa. July 27, 2000); Obusek, 72 F.3d at 1154. CH & H states that Heffernan has threatened legal action when it once requested from CH & H its pro rata share of Partnership costs. CH & H does not allege that Heffernan commenced suit against it, threatened legal action, repeatedly demanded payment from CH & H, attempted settlement, or engaged in any other action that would lead CH & H to believe that litigation was a real and immediate threat. See IMS Health, Inc. v. Vality Technology Inc., 59 F.Supp.2d 454, 461-62 (E.D.Pa.1999) (finding declaratory relief warranted when plaintiff received threats of litigation). Viewing the facts in a light most favorable to CH & H, we conclude that even if Heffernan once requested payment from CH & H, this averment alone does not demonstrate a threat of real or immediate harm to qualify as a justiciable controversy ripe for declaratory relief. Accordingly, we find the threat of real or immediate harm is lacking, and GRANT Defendants' Motion to Dismiss CH & H's claim for declaratory relief pursuant to the Declaratory Judgment Act. All other claims averred in CH & H's Complaint remain before the Court. ORDER *8 AND NOW, ___ this day of August 2003, in consideration of the Motion to Dismiss, or In the Alternative, a Motion for a More Definite Statement filed by Defendants Joseph E. Heffernan, III and Keith Valley Partnership (collectively, the “Defendants”) (Doc. No. 2), the Response of Plaintiff CH & H Pennsylvania Properties, Incorporated (“CH & H”) (Doc. No. 3) and Defendants' Reply thereto (Doc. No. 4), it is ORDERED that Defendants' Motions are GRANTED Case 1:16-cv-01958-YK Document 24-1 iled 11/15/16 Page 7 of 49 CH & H Pennsylvania Properties, Inc. v. Heffernan, Not Reported in F.Supp.2d (2003) 2003 WL 22006799 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 7 IN PART and DENIED IN PART to the extent that:_________________________ 1. Defendants' Motion to Dismiss is GRANTED as to CH & H's request for a declaratory judgment under the Declaratory Relief Act, 28 U.S.C. § 2201. 2. The remainder of Defendants' Motion to Dismiss is DENIED and CH & H's other claims remain before this Court. 3. Defendants' Motion for a More Definite Statement is DENIED in its entirety. All Citations Not Reported in F.Supp.2d, 2003 WL 22006799 End of Document © 2016 Thomson Reuters. No claim to original U.S. Government Works. Case 1:16-cv-01958-YK Document 24-1 iled 11/15/16 Page 8 of 49 ClinMicro Immunology Center, LLC v. PrimeMed, P.C., Not Reported in F.Supp.2d (2012) 2012 WL 6537994 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 1 2012 WL 6537994 Only the Westlaw citation is currently available. United States District Court, M.D. Pennsylvania. CLINMICRO IMMUNOLOGY CENTER, LLC, Plaintiff, v. PRIMEMED, P.C., and Joan Salijko, Defendants. Civil Action No. 3:CV-11-02213. | Dec. 14, 2012. Attorneys and Law Firms Alan M. Rosen, Neal A. Jacobs, The Jacobs Law Group, PC, Gene M. Linkmeyer, Jacobs Law Group PC, Philadelphia, PA, for Plaintiff. Brooke C. Madonna, David B. Picker, Spector Gadon & Rosen, P.C., Philadelphia, PA, for Defendant. MEMORANDUM A. RICHARD CAPUTO, District Judge. *1 Presently before the Court is Defendants PrimeMed, P.C. (“PrimeMed”) and Joan Salijko's (“Salijko”) Motion to Dismiss Plaintiff ClinMicro Immunology Center, LLC's (“ClinMicro”) First Amended Complaint. (Doc. 30.) I previously dismissed, without prejudice, ClinMicro's tortious interference with contracts claims. (Docs. 25; 26.) ClinMicro subsequently filed the First Amended Complaint to cure the deficient tortious interference allegations. (Doc. 27.) Defendants have again moved for dismissal of these claims pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Because the tortious interference with contracts claims now adequately state claims upon which relief can be granted, Defendants' motion to dismiss will be denied. I. Background The facts as set forth in the First Amended Complaint are as follows: ClinMicro is an indepedent clinical microbiology and immunology center with expertise in the development, management, administration, and supervision of clinical reference laboratory businesses for medical service providers. (First Am. Compl., ¶ 2.) PrimeMed is a licensed medical service provider engaged in the business of providing clinical laboratory services to its patients and to referring providers. (Id. at ¶ 4.) Beginning on or about April 3, 2006, Salijko became employed with ClinMicro as a laboratory manager. (Id. at ¶ 6.) Salijko had multiple responsibilities for ClinMicro, including administering, coordinating, and informing the director of ClinMicro about the technical activities of the company. (Id.) In connection with her employment with ClinMicro, Salijko executed a Confidentiality Agreement, a Security Policy Agreement, and a supplemental Confidentiality and Non- Disclosure Agreement (collectively the “Confidentiality Agreement”). (Id. at ¶ 7.) In or about August 2007, PrimeMed entered into discussions with ClinMicro to induce ClinMicro to build a clinical laboratory for PrimeMed. (Id. at ¶ 13.) After ClinMicro formulated the plan for development and operation of the laboratory, PrimeMed requested ClinMicro to relocate its business operations to the same facilities occupied by PrimeMed. (Id. at ¶ 14.) To facilitate the relocation, PrimeMed effectively loaned money to ClinMicro. (Id. at ¶ 15.) The loan was used to pay the expenses associated with ClinMicro's required fit-out and renovation of the premises so that it could be located at the same facility as PrimeMed. (Id.) The relocation ultimately occurred in or about January 2009. (Id .) After the relocation, ClinMicro began constructing the clinical laboratory it had previously developed for PrimeMed. (Id. at ¶ 16.) The new laboratory received state approval to begin operations in or about March 2009. (Id.) In addition to building the new laboratory, PrimeMed also wanted ClinMicro to provide day-to-day management and technical services to the laboratory. (Id. at ¶ 17.) *2 In or about March 2009, well after the original discussions between the parties commenced, and after considerable services had been rendered to PrimeMed by ClinMicro, PrimeMed prepared and provided to ClinMicro proposed agreements intending Case 1:16-cv-01958-YK Document 24-1 Filed 11/15/16 Page 9 of 49 ClinMicro Immunology Center, LLC v. PrimeMed, P.C., Not Reported in F.Supp.2d (2012) 2012 WL 6537994 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 2 to memorialize the parties' pre-existing and continuing business relationship. (Id. at ¶ 18.) These agreements included: (1) a Laboratory Management Agreement (“LMA”); (2) a Reference Laboratory Services Agreement (“LSA”); (3) a Sublease Agreement; and (4) a Promissory Note. (Id.) With respect to the LMA, the parties disputed the amount that PrimeMed was obligated to pay to ClinMicro for “Development Services” for the development of the clinical laboratory. (Id. at ¶ 19.) As a result, ClinMicro replaced the original Section 4.3 of the LMA with an Addendum that provided for a specific procedure by which the amount owed to ClinMicro for development services would be determined. PrimeMed, however, did not execute the modified LMA or provide a further modified version of the LMA. (Id. at ¶ ¶ 19-20.) As such, ClinMicro never executed the Promissory Note. (Id. at ¶ 20.) Despite the disputes over these documents, the parties proceeded with their relationship and continued conducting business substantially in accordance with the terms of the LMA, the LSA, and the Sublease. (Id. at ¶ 21.) Pursuant to the terms of the LSA, PrimeMed continued to refer to ClinMicro all laboratory service work as identified in the LSA. (Id. at ¶ 22.) Such work included a substantial number of “Vitamin-D Tests.” (Id.) These tests were performed in a distinct and specialized manner by ClinMicro, provided substantial laboratory services and marketability to PrimeMed, and produced substantial profit for both parties. (Id.) With respect to the laboratory operations provided to PrimeMed by ClinMicro, Salijko served as their laboratory manager. (Id. at ¶ 24.) In or about June 2011, ClinMicro's main lab management computer went missing from its administrative office. (Id. at ¶ 26.) The computer contained ClinMicro's lab management software, Orchard, which is a pathology information system designed to handle the clinical, molecular, cytology, and pathology testing, reporting and billing functions of ClinMicro. (Id.) The computer was designed to run the Orchard software to analyze, interface with, store, and transmit prescriber data, patient data, cost data, and test data to and from the publisher's host computer. (Id.) The computer was later learned to have been removed from ClinMicro by Salijko, who had taken the computer to PrimeMed so that certain business data and records could be removed and copied. (Id. at ¶ 27.) Once the computer was returned to ClinMicro, however, its functionality was limited, as business, provider, patient, and e-mail data had all been removed from the computer. (Id. at ¶ 28.) At the time the computer was taken by Salijko to PrimeMed, neither party had authorization to remove or delete any data or information stored on the computer. (Id. at ¶ 29.) *3 Thereafter, on or about June 13, 2011, PrimeMed sought to conclude certain aspects of the parties relationship. (Id. at ¶ 31.) In particular, PrimeMed sought to immediately terminate the LMA despite a provision in the agreement requiring at least ninety (90) days notice of intent to terminate prior to the expiration of the existing contractual term. (Id.) Two days later, on June 15, 2011, Solijko resigned her position with ClinMicro and accepted an offer of employment with PrimeMed in substantially the same capacity as her employment with ClinMicro. (Id. at ¶ 33) In addition to Salijko, eight (8) other ClinMicro employees were lured to work for PrimeMed in or about June 2011. (Id. at ¶ 34.) PrimeMed's solicitation of ClinMicro's employees occurred despite a restriction against such conduct in the LMA. (Id. at ¶ 35.) And, after luring these employees from ClinMicro, PrimeMed ceased referring Vitamin-D Tests to ClinMicro, and instead began subcontracting those tests to an unrelated third- party. (Id. at ¶ 36.) PrimeMed also ceased reimbursing ClinMicro for the removal of laboratory waste at that time. (Id. at ¶ 37.) As a result of these events, ClinMicro commenced this action against PrimeMed and Salijko on November 29, 2011, asserting a federal law claim against Defendants for violation of the Computer Fraud and Abuse Act, 18 U.S.C. §§ 1030, et seq., and a number of supplemental state law claims. (Doc. 1.) PrimeMed subsequently sought dismissal of a number of the state law claims in January 2012. (Doc. 10.) On July 23, 2012, PrimeMed and Salijko's motion to dismiss was granted in part and denied in part. (Docs. 25; 26.) In particular, the motion to dismiss was granted with respect to the fraudulent inducement and the duty of good faith and fair dealing claims, and the claims were dismissed with prejudice. The motion to dismiss the tortious interference with contracts claims was also Case 1:16-cv-01958-YK Document 24-1 Filed 11/15/16 Page 10 of 49 ClinMicro Immunology Center, LLC v. PrimeMed, P.C., Not Reported in F.Supp.2d (2012) 2012 WL 6537994 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 3 granted, and the claims were dismissed without prejudice. PrimeMed's motion to dismiss was denied in all other respects. ClinMicro subsequently amended the tortious interference with contracts claims. In response, Defendants again moved to dismiss the claims pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. (Doc. 30.) Now, as the motion to dismiss has been fully briefed, it is ripe for disposition. II. Legal Standard Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of a complaint, in whole or in part, for failure to state a claim upon which relief can be granted. See Fed.R.Civ.P. 12(b)(6). When considering a Rule 12(b)(6) motion, the Court's role is limited to determining if a plaintiff is entitled to offer evidence in support of their claims. See Semerenko v. Cendant Corp., 223 F.3d 165, 173 (3d Cir.2000). The Court does not consider whether a plaintiff will ultimately prevail. See id. A defendant bears the burden of establishing that a plaintiff's complaint fails to state a claim. See Gould Elecs. v. United States, 220 F.3d 169, 178 (3d Cir.2000). *4 “A pleading that states a claim for relief must contain ... a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a). The statement required by Rule 8(a)(2) must give the defendant fair notice of what the ... claim is and the grounds upon which it rests. Erickson v. Pardus, 551 U.S. 89, 93, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007) (per curiam) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127, 127 S.Ct. 1955, ----, ----, 167 L.Ed.2d 929, ----, ---- R. Ct.1955, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). Detailed factual allegations are not required. Twombly, 550 U.S. at 555. However, mere conclusory statements will not do; “a complaint must do more than allege the plaintiff's entitlement to relief.” Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir.2009). Instead, a complaint must “show” this entitlement by alleging sufficient facts. Id. “While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations.” Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1950, 173 L.Ed.2d 868 (2009). As such, “[t]he touchstone of the pleading standard is plausability.” Bistrian v. Levi, 696 F.3d 352, 2012 WL 4335958, at *8 (3d Cir. Sept.24, 2012). The inquiry at the motion to dismiss stage is “normally broken into three parts: (1) identifying the elements of the claim, (2) reviewing the complaint to strike conclusory allegations, and then (3) looking at the well-pleaded components of the complaint and evaluating whether all of the elements identified in part one of the inquiry are sufficiently alleged.” Malleus v. George, 641 F.3d 560, 563 (3d Cir.2011). Dismissal is appropriate only if, accepting as true all the facts alleged in the complaint, a plaintiff has not pleaded “enough facts to state a claim to relief that is plausible on its face,” Twombly, 550 U.S. at 570, meaning enough factual allegations “ ‘to raise a reasonable expectation that discovery will reveal evidence of’ “ each necessary element. Phillips v. County of Allegheny, 515 F.3d 224, 234 (3d Cir.2008) (quoting Twombly, 550 U.S. at 556). “The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Iqbal, 129 S.Ct. at 1949. “When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.” Iqbal, 129 S.Ct. at 1949. In deciding a motion to dismiss, the Court should consider the allegations in the complaint, exhibits attached to the complaint, and matters of public record. See Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir.1993). The Court may also consider “undisputedly authentic” documents when the plaintiff's claims are based on the documents and the defendant has attached copies of the documents to the motion to dismiss. Id. The Court need not assume the plaintiff can prove facts that were not alleged in the complaint, see City of Pittsburgh v. W. Penn Power Co., 147 F.3d 256, 263 & n. 13 (3d Cir.1998), or credit a complaint's “ ‘bald assertions' ” or “ ‘legal conclusions.’ ” Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir.1997) (quoting In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1429- 30 (3d Cir.1997)). III. Discussion Case 1:16-cv-01958-YK Document 24-1 Filed 11/15/16 Page 11 of 49 ClinMicro Immunology Center, LLC v. PrimeMed, P.C., Not Reported in F.Supp.2d (2012) 2012 WL 6537994 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 4 *5 As stated, Defendants seek dismissal of ClinMicro's tortious interference with contracts claims against PrimeMed (Count VI) and Salijko (Count VII). The elements of a tortious interference with existing contractual relations claim under Pennsylvania law are: (1) that there be an existing contractual relationship between the plaintiff and a third party; (2) that the defendant purposely or intentionally interfered with the performance of that contract by inducing a breach or otherwise causing the third party not to perform; (3) that the defendant was not privileged to act in this manner; and (4) that the plaintiff suffered pecuniary loss as a result of the breach of contract. Fishkin v. Susquehanna Partners, G.P., 563 F.Supp.2d 547, 586 (E.D.Pa.2008) (citing Remick v. Manfredy, 238 F.3d 248, 263 (3d Cir.2001)). Tortious interference with contracts claims rest on a contractual relationship between the plaintiff and a “third person.” See Daniel Adams Assoc., Inc. v. Rimbach Publ'g, Inc., 360 Pa.Super. 72, 519 A.2d 997, 1000 (Pa.Super.1987) (citing Glenn v. Point Park Coll., 441 Pa. 474, 479, 272 A.2d 895, 898 (1971); Raab v. Keystone Ins. Co., 271 Pa.Super. 185, 189, 412 A.2d 638, 640 (Pa.Super.1980)). However, “[t]he mere existence of a contractual relationship between two parties does not preclude one from bringing a tort claim against the other.” Med. Mktg. Consultants, LLC v. Cardiac Telecom Corp., No. 06-0274, 2007 WL 1811155, at *2 (W.D.Pa. May 31, 2007) (citing Bohler-Uddeholm Am., Inc. v. Ellwood Grp., Inc., 247 F.3d 79, 104 (3d Cir.2001)). Instead, Pennsylvania law requires “that the tort claim not be a mere restatement of the contract claim; it must be a separate and independent action capable of standing alone.” Id. (citing Kalumetals, Inc. v. Hitachi Magnetics Corp., 21 F.Supp.2d 510 (W.D.Pa.1998)). If the tort claim is not separate and independent of the contract claim, the claim is barred by the gist-of-the-action doctrine. See, e.g., Brown & Brown, Inc. v. Cola, 745 F.Supp.2d 588, 621 (E.D.Pa.2010) (quoting Alpart v. Gen. Land Partners, Inc., 574 F.Supp.2d 491, 505 (E.D.Pa.2008)). In seeking dismissal, PrimeMed argues that: (1) ClinMicro fails to allege specific conduct constituting actionable interference; (2) ClinMicro fails to allege the necessary elements of knowledge and intent; and (3) the claim is barred by the gist-of-the-action doctrine. Thus, PrimeMed contends that the claim should be dismissed. PrimeMed's arguments are unpersuasive. First, ClinMicro sufficiently pleads wrongful conduct by PrimeMed that allegedly interfered with ClinMicro's contractual relationships with Salijko. Specifically, ClinMicro claims PrimeMed “encourag[ed], facilitat[ed], and abett [ed] JS to obtain and distribute to PrimeMed the confidential and other proprietary information of ClinMicro (including, without limitation, JS's collecting and distributing the aforesaid information relating to the profitable Vitamin-D Tests referred to ClinMicro) to be used by PrimeMed.” (First Am. Compl., ¶ 65.) *6 Second, the First Amended Complaint adequately alleges that PrimeMed had knowledge of Salijko's contractual relationships with ClinMicro. In particular, ClinMicro claims that PrimeMed had “actual knowledge” of its contractual relationships with Salijko, which consisted of a Confidentiality Agreement, a supplemental Confidentiality and Non-Disclosure Agreement, and a Security Policy Agreement. (Id. at ¶¶ 6-7, 64.) Lastly, the tortious interference with contracts claim against PrimeMed will not be dismissed pursuant to the gist-of-the-action doctrine. As noted, a tortious interference with contract claim that coincides directly and solely with a contractual prohibition on the identical activity will fall within the gist-of-the-action doctrine. See Brown & Brown, 745 F.Supp.2d at 621-22. Essentially, the gist-of-the-action doctrine distinguishes claims sounding in contract from those sounding in tort by determining the source of the duties allegedly breached. See Med. Mktg. Consultants, 2007 WL 1811155, at *2 (citing American Guar. & Liab. Ins. Co. v. Fojanini, 90 F.Supp.2d 615, 622 (E.D.Pa.2000)). Thus, the doctrine bars tort claims: “1) arising solely from a contract between the parties; 2) where the duties allegedly breached were created and grounded in the contract itself; 3) where the liability stems from a contract; or 4) where the tort claim essentially duplicates a breach of contract claim or the success of which is wholly dependent on the terms of a contract.” Hart v. Arnold, 884 A.2d 316, 339-40 (Pa.Super.2005) (citations omitted). Here, contrary to PrimeMed's assertions, the alleged tortious conduct with respect to the claim in Count Case 1:16-cv-01958-YK Document 24-1 Filed 11/15/16 Page 12 of 49 ClinMicro Immunology Center, LLC v. PrimeMed, P.C., Not Reported in F.Supp.2d (2012) 2012 WL 6537994 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 5 VI is unrelated to the ClinMicro/PrimeMed contractual relationship. Rather, PrimeMed's alleged tortious conduct interfered with ClinMicro's contractual agreements with Salijko, as PrimeMed allegedly encouraged Salijko to breach the terms of her Confidentiality Agreements. And, while the LMA prohibits PrimeMed from soliciting ClinMicro's employees, and such claims would thus be barred by the gist-of-the-action doctrine, the LMA does not address the encouragement or facilitation of an employee to distribute confidential and proprietary information. See, e.g., Synthes, Inc. v. Emerge Med., Inc., No. 11-1566, 2012 WL 4205476, at *10 (E.D.Pa. Sept.19, 2012) (denying motion to dismiss tortious interference claim, in part, because the non-competition agreement between the plaintiff and the defendant did not preclude the defendant from dealing with the plaintiff's vendors). As such, ClinMicro would have a tortious interference with the Confidentiality Agreements claim even if it had never contracted with PrimeMed. See, e.g., Medical Mktg. Consultants, 2007 WL 1811155, at *2 (“MMC would have a claim for tortious interference with the brokerage agreements relationship even if it had never contracted with CTC.”). Moreover, since “ ‘[c]aution must be exercised in dismissing a tort action on a motion to dismiss because whether tort and contract claims are separate and distinct can be a factually intensive inquiry,’ “ Synthes, Inc., 2012 WL 4205476, at *11 (quoting Kimberton Healthcare Consulting, Inc. v. Primary PhysicianCare, Inc., No. 11-4568, 2011 WL 6046923, at *8 (E.D.Pa. Dec.6, 2011)), the motion to dismiss Count VI will be denied. *7 As to the tortious interference claim against Salijko, she argues that the claim should be dismissed because: (1) ClinMicro fails to allege any acts by her that caused or induced the actions taken by PrimeMed; and (2) as a PrimeMed employee, she could not be liable for interfering with her employer's agreements. Because ClinMicro sufficiently pleads all necessary elements of the claim, Salijko's motion to dismiss Count VII will be denied. Here, ClinMicro alleges that Salijko had actual knowledge of the ClinMicro/PrimeMed contractual relationship, (First Am. Compl., ¶ 72), that she was not privileged to interfere with the parties' contractual relationship, (Id. at ¶ 74), and that ClinMicro suffered pecuniary loss due to PrimeMed's breach of contract. (Id . at ¶ 75.) Furthermore, ClinMicro alleges that, as a result of Salijko's conduct, PrimeMed was induced and/or caused “to refrain from referring Vitamin-D Tests to ClinMicro as provided under the LSA” and “to [dis]continue its contractual relationship with ClinMicro.” (Id. at ¶ 73.) And, despite Salijko's argument that even if she caused PrimeMed to cease sending Vitamin-D Tests to ClinMicro, she cannot be liable for interfering with ClinMicro's contractual relationship with PrimeMed while she was a PrimeMed employee, the allegedly interfering conduct occurred “between the time of her employment with ClinMicro and prior to her employment with PrimeMed.” (Id.) Thus, Salijko's wrongful acts, as alleged, were not during her employment with PrimeMed. Accordingly, as the tortious interference with contracts claim against Salijko is plausible on its face, ClinMicro will be permitted to proceed with the claim. IV. Conclusion For the above stated reasons, Defendants' motion to dismiss will be denied. An appropriate order follows. All Citations Not Reported in F.Supp.2d, 2012 WL 6537994 End of Document © 2016 Thomson Reuters. No claim to original U.S. Government Works. Case 1:16-cv-01958-YK Document 24-1 Filed 11/15/16 Page 13 of 49 Covertech Fabricating, Inc. v. TVM Building Products, Inc., Not Reported in F.Supp.3d... 2014 WL 2605427 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 1 2014 WL 2605427 Only the Westlaw citation is currently available. United States District Court, W.D. Pennsylvania. COVERTECH FABRICATING, INC., Plaintiff, v. TVM BUILDING PRODUCTS, INC., Defendant. Civil Action No. 3:13-150. | Signed June 11, 2014. Attorneys and Law Firms Brian W. Shaffer, Andrew Whitney, Morgan, Lewis & Bockius LLP, Philadelphia, PA, for Plaintiff. James M. Baggett, J. Michael Baggett, McCann Garland Ridall & Burke, Pittsburgh, PA, for Defendant. MEMORANDUM OPINION KIM R. GIBSON, District Judge. I. Introduction *1 Plaintiff Covertech Fabricating, Inc. (“Covertech”), a manufacturer of insulation products, brings this action against its former distributor, Defendant TVM Building Products, Inc. (“TVM”), for claims relating to trademark infringement, dilution, unfair competition, breach of contract, and fraud. Presently before the Court is Covertech's motion to dismiss Count IV of TVM's amended counterclaim. (ECF No. 53). For the reasons that follow, Covertech's motion will be denied. II. Jurisdiction and Venue The Court exercises diversity jurisdiction over TVM's counterclaims pursuant to 28 U.S.C. § 1332(a) because the amount in controversy exceeds $75,000, exclusive of interest and costs, and the suit is between citizens of different states. Venue is proper under 28 U.S.C. § 1391(b) (2) because a substantial portion of the events or omissions giving rise to the claims occurred in this judicial district. III. Background Covertech is a Canadian manufacturer of insulation products. Covertech markets, sells, and distributes its products through distributors and direct commercial sales. (Compl.¶ 6). TVM is an Illinois corporation with its principal place of business located in Johnstown, Pennsylvania. (Id. ¶ 7). TVM serves as a distributor of insulation and other building products manufactured by other companies. (Id. ¶ 8). Beginning in 1998, Covertech and TVM formed a business relationship in which TVM marketed and sold Covertech insulation products in the United States. (Compl.¶¶ 29- 32). According to Covertech, the parties entered into a verbal “exclusive distribution agreement” where TVM served as Covertech's exclusive distributor of RFOIL, a reflective insulation material. (Id. ¶ 30). TVM claims that, although the parties never executed a written agreement, they reached an “oral understanding that Covertech would only sell product in the United States through TVM and TVM would only market Covertech's reflective insulation products.” (ECF No. 60-2 at 4). Covertech terminated the exclusive distribution agreement in or around 2006 after allegedly discovering that TVM had been distributing insulation products made by other manufacturers. (Compl.¶ 33). TVM initially continued to serve as a non-exclusive distributor for Covertech, buying Covertech's products and selling them under its own private label. (Id. ¶ 35). Eventually, the parties ceased doing business entirely because TVM allegedly failed to pay Covertech's invoices. (Id. ¶ 39). On May 21, 2013, Covertech filed a complaint against TVM, asserting claims such as trademark infringement, breach of contract, and fraud. According to Covertech, TVM continues to use Covertech's name, trademarks, and brands in connection with the sale of insulation products made by other companies. (Compl.¶¶ 40- 53). As well, Covertech asserts that TVM fraudulently provided Covertech warranties on insulation made by other companies and that Covertech has spent thousands of dollars settling warranty claims for defective insulation that Covertech did not manufacture. (Id. ¶¶ 54-61). Even further, Covertech claims that TVM breached its agreement to pay Covertech in accordance with certain settlement agreements on warranty claims. (Id. ¶¶ 62-71). *2 In response, TVM has filed an amended counterclaim, asserting, among other things, a claim of fraud against Case 1:16-cv-01958-YK Document 24-1 Filed 11/15/16 Page 14 of 49 Covertech Fabricating, Inc. v. TVM Building Products, Inc., Not Reported in F.Supp.3d... 2014 WL 2605427 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 2 Covertech. TVM avers that, beginning in 2004, it received warranty claims from customers regarding the degradation of RFOIL. (Am.Countercl.¶¶ 199-202). Covertech allegedly informed TVM that this degradation- which consisted of cracking and flaking of the product surface-was due to sunlight emitted into open-sided buildings. In 2005, and after consulting with Covertech, TVM issued an Urgent Notice to its customers warning them not to use RFOIL in buildings “where RFOIL would be exposed to direct sunlight or reflective light from the floor.” (Id. ¶ 204). The Urgent Notice further stated that the “[u]se of these products in buildings with skylights is acceptable since UV light is diffused by the glass.” (Id.). In 2007, TVM received additional warranty claims on the RFOIL. (Am.Countercl.¶ 208). At that time, Covertech allegedly informed TVM that any exposure to sunlight- whether direct or indirect-would cause degradation to the RFOIL. (Id.). TVM further claims that, due to the RFOIL degradation problem, it has experienced a “dramatic and precipitous decline” in sales and that selling defective product has harmed its business reputation. (Id. ¶¶ 211- 12). According to TVM, it was not until a November 17, 2011 deposition of Furio Orologio-the President of Covertech-that TVM discovered the supposedly fraudulent conduct now at issue. In a separate litigation in which both Covertech and TVM were defendants, Orologio apparently testified that “Covertech was aware since 2004, and possibly as early as 1998, that the RFOIL could not withstand either direct or indirect sunlight.” (Am.Compl.¶ 214). Based on Orologio's sworn statement, TVM claims that Covertech knew since 2004 that “[a]ny type of exposure to UV rays, even through windows, skylights[,] or open doors, would cause degradation.” (Id.). In support of its fraud claim, TVM asserts that it had no reason to believe Covertech knew since at least 2004 that any type of exposure to sunlight would cause degradation to the RFOIL. (Am.Compl.¶ 215). TVM further asserts that it relied on Covertech's expertise regarding the suitability of the RFOIL and that Covertech should have known that the RFOIL would be used in buildings with skylights. (Id. ¶¶ 217-18). Finally, TVM asserts that, despite knowing the full extent of the degradation issue, “Covertech actively perpetuated its deceit by assisting in the preparation of and approval of the language contained in the Urgent Notice which advised customers that the RFOIL could be used in buildings with skylights.” (Id. ¶ 220). Covertech now moves to dismiss TVM's fraud claim under Federal Rule of Civil Procedure 12(b)(6). The motion has been fully briefed and is ripe for disposition. IV. Standard of Review The standard of review for dismissal of a counterclaim under Rule 12(b)(6) is the same as that for dismissal of a complaint. See, e.g., PPG Indus., Inc. v. Generon IGS, Inc., 760 F.Supp.2d 520, 524 (W.D.Pa.2011). *3 In determining the sufficiency of a pleading on a Rule 12(b)(6) challenge, the court must conduct a two- part analysis. First, the court must separate the factual allegations from the legal conclusions asserted. Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir.2009). Second, the court must determine whether the factual allegations show that the claimant has a “plausible claim for relief.” Id. at 211 (quotation omitted). The pleading need not include detailed allegations. 1 Phillips v. Cnty. of Alleg hen y, 515 F.3d 224, 231 (3d Cir.2008). Moreover, the court must accept as true the factual allegations in the pleading and construe them in the light most favorable to the claimant. Id. at 233. Nevertheless, “[t]hreadbare recitals of the elements of a cause of action” do not suffice. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). Rather, the claimant must allege sufficient facts that could, if established at trial, entitle her to relief. Fowler, 578 F.3d at 213. 1 Covertech does not challenge the sufficiency of TVM's fraud claim under the heightened pleading standard set forth in Federal Rule of Civil Procedure 9(b). To the extent a heightened pleading standard under Rule 9(b) applies, the pleading must “state with particularity the circumstances constituting fraud.” Fed.R.Civ.P. 9(b). V. Discussion Covertech asserts that TVM's fraud claim is time-barred by the applicable statute of limitations. Covertech also moves to dismiss TVM's claim under the gist of the action doctrine and the economic loss doctrine. The Court addresses each of these issues below. Case 1:16-cv-01958-YK Document 24-1 Filed 11/15/16 Page 15 of 49 Covertech Fabricating, Inc. v. TVM Building Products, Inc., Not Reported in F.Supp.3d... 2014 WL 2605427 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 3 A. The statute of limitations Covertech first argues that the applicable two-year statute of limitations has run on TVM's claim because TVM had “full knowledge of the UV issue in 2008, 2007, and even 2005.” (ECF No. 54 at 5). According to Covertech, the allegations contained in TVM's fraud claim are “directly contradicted by statements TVM has made in court filings and under oath in the Texas Litigation.” (Id.). Specifically, Covertech references two of TVM's court filings in that litigation: TVM's response to a motion for summary judgment and a declaration by TVM's president, Michael Boulding. (ECF No. 54-1; ECF No. 54-2). In opposing the motion to dismiss, TVM argues that Covertech has misconstrued its fraud claim. “TVM does not contend that Covertech concealed from TVM the fact that Covertech knew the RFOIL would fail when exposed to UV rays be it direct, indirect, or reflected. What Covertech failed to disclose was the fact that it knew that RFOIL could not be used in any type of structure where there was any type of exposure to UV rays and that the only suitable use was in a building that was cloaked in absolute darkness.” (ECF No. 60-2 at 8). Put another way, TVM argues that the fraudulent concealment relates to the acceptable uses of RFOIL, not to whether RFOIL degraded when exposed to direct or indirect sunlight. As an initial matter, the Court must determine whether it can even consider TVM's court filings from a separate litigation. Generally, at the motion to dismiss stage, a court may not consider matters extraneous to the pleadings. In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir.1997). Nevertheless, “an exception to the general rule is that a document integral to or explicitly relied upon in the complaint may be considered without converting the motion [to dismiss] into one for summary judgment.” Id. (internal citations and quotations omitted). Thus, a court may consider extraneous documents-such as matters of public record- if the plaintiff's claims are based on those documents. See id. at 1426; In Re Westinghouse Sec. Litig., 90 F.3d 696, 707 (3d Cir.1996); In re Donald Trump Casino Sec. Lit.,7 F.3d 357, 368 n. 9 (3d Cir.1993). *4 Here, the two court filings at issue are not integral to or explicitly relied upon in TVM's amended counterclaim. Thus, these documents are not part of the relevant record under consideration. Even if the Court considered these documents, it would find that they are not dispositive. TVM admits that it became partially aware of the degradation issue in 2005. At issue is Covertech's alleged concealment of the acceptable uses of RFOIL back in 2004-when the parties entered their distribution agreement. According to TVM, it was not until 2011 that TVM allegedly discovered that Covertech knew all along that RFOIL was not suitable for its intended uses. Under Pennsylvania's inherent fraud doctrine, the two- year statute of limitations will be tolled “until such time as the fraud has been revealed or should have been revealed by the exercise of due diligence by plaintiffs.” Sheet Metal Workers, Local 19 v. 2300 Grp., Inc., 949 F.2d 1274, 1280 (3d Cir.1991) (citations omitted). Given that TVM filed its claim within two years of allegedly discovering the fraud, the statute of limitations appears to be satisfied. 2 At minimum, TVM has met its burden of pleading sufficient facts to survive a motion to dismiss on timeliness grounds. 2 In its brief in support of the motion to dismiss, Covertech does not discuss TVM's due diligence. Thus, at this time, the Court does not consider whether TVM, in exercising due diligence, could have discovered the alleged fraud before November 2011. At a later stage of litigation, Covertech will be permitted to reassert arguments pertaining to the statute of limitations. B. The gist of the action and economic loss doctrines In addition to arguing that the applicable statute of limitations bars TVM's fraud claim, Covertech asserts that TVM's claim must be dismissed under the gist of the action doctrine and the economic loss doctrine. The Court explains the basic tenets of these Pennsylvania doctrines and then addresses whether they apply in this case. 1. Gist of the action doctrine Under Pennsylvania law, the gist of the action doctrine maintains the conceptual distinction between contract law and tort law. eToll, Inc. v. Elias/Savion Adver., Inc., 811 A.2d 10, 14 (Pa.Super.Ct.2002). 3 The reasoning for this distinction is that 3 To date, the Pennsylvania Supreme Court has not adopted the gist of the action doctrine, though the Third Circuit Court of Appeals and the Pennsylvania Superior Court have each noted its likeliness to do so. See PPG Indus., Inc. v. Generon IGS, Inc., 760 F.Supp.2d 520, 527 (W.D.Pa.2011) (collecting Case 1:16-cv-01958-YK Document 24-1 Filed 11/15/16 Page 16 of 49 Covertech Fabricating, Inc. v. TVM Building Products, Inc., Not Reported in F.Supp.3d... 2014 WL 2605427 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 4 cases). In the context of fraud, the doctrine was first applied by a Pennsylvania appellate court in etoll, Inc. v. Elias/Savion Advertising, Inc., 811 A.2d 10 (Pa.Super.Ct.2002). tort actions lie for breaches of duties imposed by law as a matter of social policy, while contract actions lie only for breaches of duties imposed by mutual consensus ... To permit a promisee to sue his promisor in tort for breaches of contract inter se would erode the usual rules of contractual recovery and inject confusion into our well-settled forms of actions. Id. (quotation omitted)). “As a practical matter, the doctrine precludes plaintiffs from recasting ordinary breach of contract claims into tort claims.” Id. The mere existence of a contract does not preclude a party from bringing a tort claim, but “the [tortious acts] ascribed to defendant must be the gist of the action, the contract being collateral.” Id. (quotation omitted). In applying the gist of the action doctrine, courts will consider the claim as a whole in determining whether the “essential ground” of the action sounds in contract or tort. Am. Guaran tee & Liab. Ins. Co. v. Fojanini, 90 F.Supp.2d 615, 622 & n. 12 (E.D.Pa.2000). Courts have consistently applied the doctrine to bar tort claims *5 (1) arising solely from a contract between the parties; (2) where the duties allegedly breached were created and grounded in the contract itself; (3) where the liability stems from a contract; or (4) where the tort claim essentially duplicates a breach of contract claim or the success of which is wholly dependent on the terms of a contract. Hart v. Arnold, 884 A.2d 316, 340 (Pa.Super.Ct.2005) (citations omitted). In the context of fraud, the Pennsylvania Superior Court has further elaborated that the focus is typically on “whether the fraud concerned the performance of contractual duties. If so, then the alleged fraud is generally held to be merely collateral to a contract claim for breach of those duties.” eToll, Inc. v. Elias/Savion Adver, Inc., 811 A.2d 10, 19 (Pa.Super.Ct.2002). 2. Economic loss doctrine The economic loss doctrine is closely related to the gist of the action doctrine. Both doctrines share the common purpose of “maintaining the separate spheres of the law of contract and tort.” New York State Elec. & Gas Corp. v. Westinghouse Elec. Corp., 387 Pa.Super. 537, 564 A.2d 919, 925 (Pa.Super.Ct.1989). As a general rule, the economic loss doctrine “prohibits plaintiffs from recovering in tort economic losses to which their entitlement flows only from a contract.” Werwinski v. Ford Motor Co., 286 F.3d 661, 671 (3d Cir.2002). Thus, “claims for only economic loss are appropriately brought as breach of contract or warranty claims rather than as tort claims.” Fid. & Deposit Co. of Maryland v. Int'l Bus. Machines Corp., CIV. 1:05-CV-0461, 2005 WL 2665326, at *2 (M.D.Pa. Oct.19, 2005). “If a claim is ... one arising from failed economic expectations, i.e. expectations that the product would perform in the manner warranted, then tort recovery is inappropriate.” Id. (quotation omitted). The economic loss doctrine usually applies in products liability cases “where one party contracts for a product from another party and the product malfunctions, injuring only the product itself.” Bohler-Uddeholm Am., Inc. v. Ellwood Grp., Inc., 247 F.3d 79, 104 n. 11 (3d Cir.2001); Air Products & Chemicals, Inc. v. Eaton Metal Products Co., 256 F.Supp.2d 329, 335 (E.D.Pa.2003). Although the Pennsylvania Supreme Court has never applied the economic loss doctrine to a fraud claim, the Third Circuit has predicted that the doctrine would likely apply in this context except “where the claims [ ] arise independent[ly] of the underlying contract.” Werwinski v. Ford Motor Co., 286 F.3d 661, 676 (3d Cir.2002); accord Air Products & Chemicals, Inc., 256 F.Supp.2d at 337. 3. Application Having defined the gist of the action doctrine and the economic loss doctrine, the Court must now determine their application to the case at hand. Covertech claims that TVM's fraud claim must be dismissed under the gist of the action doctrine because the crux of TVM's claim is a contractual dispute: Covertech did not disclose information about the products being supplied under the parties' exclusive distribution agreement. (ECF No. 54 at 11-12). Similarly, Covertech argues that the economic loss doctrine bars TVM's fraud claim because TVM's alleged losses flow from the expected benefits under the parties' exclusive distribution agreement. (Id. at 10). *6 In response, TVM asserts that its fraud claim does not stem from any agreement between the parties. TVM argues that the only distribution agreement between Case 1:16-cv-01958-YK Document 24-1 Filed 11/15/16 Page 17 of 49 Covertech Fabricating, Inc. v. TVM Building Products, Inc., Not Reported in F.Supp.3d... 2014 WL 2605427 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 5 the parties was an “oral understanding or handshake agreement that TVM would act as Covertech's exclusive distributor in the United States and [that] Covertech would not sell reflective insulations directly to United States customers.” (ECF No. 60-2 at 12). In other words, TVM argues that any alleged agreement between the parties was not intertwined with Covertech's alleged concealment of the acceptable uses of RFOIL. After reviewing the amended counterclaim in its entirety, the Court finds that it is currently premature to dismiss TVM's fraud claim under the gist of the action doctrine or the economic loss doctrine. Indeed, in the context of the gist of the action doctrine, “[c]aution must be exercised in dismissing a tort action on a motion to dismiss because whether tort and contract claims are separate and distinct can be a factually intensive inquiry.” Raymond v. Lundy, 99-5015, 2000 WL 804432 (E.D. Pa. June 22, 2000, aff'd sub nom. Lundy v. Hochberg, 79 F. App'x 503 (3d Cir.2003). 4 “It is especially inappropriate to dismiss a tort claim as duplicative of a contract claim when the contours of the agreement at issue are not clear.” Charleswell v. Chase Manhattan Bank, N.A., 308 F.Supp.2d 545, 567 (D.Vi.2004) (citations omitted). 4 For further support on this point, see CH & H Pennsylvania Properties, Inc. v. Heffernan, CIV.A. 03-CV-2349, 2003 WL 22006799, at *6 n. 6 (E.D.Pa. Aug.20, 2003) (declining to apply the gist of the action doctrine without an intensive inquiry into the facts); Charleswell v. Chase Manhattan Bank, N.A., 308 F.Supp.2d 545, 567 (D.Vi.2004) (same); Mill Run Associates v. Locke Prop. Co., Inc., 282 F.Supp.2d 278, 291 (E.D.Pa.2003) (same). Here, the alleged distribution agreement between Covertech and TVM was never reduced to writing. The parties both acknowledge that they made an oral agreement of some kind but disagree on its material terms. In any event, it is impossible to determine the contours of the parties' alleged agreement at this stage, let alone determine whether the parties entered a binding agreement at all. Given that a fact-intensive inquiry will be necessary to determine whether the gist of the action doctrine or the economic loss doctrine applies in this case, the Court will not dismiss TVM's fraud claim at this time. 5 5 The Court emphasizes that the gist of the action and economic loss doctrines are closely related, yet distinct concepts. Because the gist of the action doctrine focuses on whether a plaintiff's claim is based in contract rather than tort, the doctrine “call[s] for a fact-intensive judgment as to the true nature of a claim.” Williams v. Hilton Grp. PLC, 93 F. App'x 384, 386 (3d Cir.2004). By contrast, a court can ordinarily review the complaint to determine whether the economic loss doctrine applies because the court simply considers the contract and the alleged losses at issue. See Montanez v. HSBC Mortgage Corp. (USA), 876 F.Supp.2d 504, 519 n. 17 (E.D.Pa.2012); Air Products & Chemicals, Inc. v. Eaton Metal Products Co., 256 F.Supp.2d 329, 334-40 (E.D.Pa.2003). In this case, however, the parties dispute the relevant contract terms necessary to determine whether the economic loss doctrine applies. Therefore, it is also premature at this stage to dismiss TVM's fraud claim based on the economic loss doctrine without further inquiry into the facts alleged. VI. Conclusion For the reasons stated in this memorandum, Covertech's motion to dismiss Count IV of TVM's amended counterclaim will be denied. This denial is without prejudice to Covertech's right to reassert these defenses at a later stage of litigation. An appropriate order follows. ORDER Now, this 10th day of June 2014, upon consideration of Covertech's motion to dismiss Count IV of TVM's amended counterclaim (ECF No. 53), and for the reasons stated in the accompanying opinion, it is hereby ORDERED that the motion is DENIED. It is FURTHER ORDERED that a status conference in this case is scheduled for June 24, 2014, at 1:30 p.m. All Citations Not Reported in F.Supp.3d, 2014 WL 2605427 End of Document © 2016 Thomson Reuters. No claim to original U.S. Government Works. Case 1:16-cv-01958-YK Document 24-1 Filed 11/15/16 Page 18 of 49 Harris v. Saint Joseph's University, Not Reported in F.Supp.3d (2014) 2014 WL 1910242 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 1 2014 WL 1910242 Only the Westlaw citation is currently available. United States District Court, E.D. Pennsylvania. Brian HARRIS v. SAINT JOSEPH'S UNIVERSITY, et al. Civil Action No. 13-3937. | Signed May 12, 2013. | Filed May 13, 2014. Attorneys and Law Firms Kenneth M. Dubrow, The Chartwell Law Offices LLP, Philadelphia, PA, for Brian Harris. James A. Keller, Joshua W.B. Richards, Saul Ewing LLP, Daniel J. Rucket, John H. McCarthy, Rawle & Henederson LLP, Timothy Burke, Eckert Seamans Cherin & Mellott LLC, Philadelphia, PA, for Saint Joseph's University, et al. MEMORANDUM RESTREPO, District Judge. *1 This case arises from an internal administrative disciplinary investigation and student conduct hearing at Saint Joseph's University (“SJU”) resulting in plaintiff, Brian Harris, being found responsible for sexually assaulting defendant Jane Doe, both of whom were SJU students at the time. Plaintiff brought this action against defendants: SJU; Joseph Kalin, a Public Safety Officer at SJU; and Jane Doe. Against SJU only, plaintiff alleges: breach of contract (Count I); violation of Title IX of the Education Act Amendments of 1972 (“Title IX”), 20 U.S.C. § 1681, et seq. (Count II); negligence (Count III); and violation of Pennsylvania's Unfair Trade Practices and Consumer Protection Law (“UTPCPL”), 73 Pa.C.S.A. § 201-1, et seq. (Count IV). Against all defendants, plaintiff alleges: defamation (Count V); making public statements about plaintiff placing him in a false light (Count VI); and intentional infliction of emotional distress (“IIED”) (Count VII). Finally, against Jane Doe only, plaintiff alleges intentional interference with contractual relations (Count VIII). 1 1 Although Count VIII of the Amended Complaint was mistakenly identified as Count IX, by stipulation of the parties approved by the Court (ECF Document 22), the Amended Complaint was corrected in that regard. Pending before the Court are the Motions to Dismiss Plaintiff's Amended Complaint filed by defendants, SJU and Joseph Kalin (collectively, “University Defendants”) (ECF Doc. 23) and defendant Jane Doe (Doc. 24), under Federal Rule of Civil Procedure 12(b)(6). For the reasons which follow, defendants' motions to dismiss are granted in part and denied in part. 1. LEGAL STANDARD UNDER FED. R. CIV. P. 12(b)(6) Dismissal under Rule 12(b)(6) is proper where the Amended Complaint fails to state a claim upon which relief may be granted, such as where the plaintiff is unable to plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). The plausibility standard “asks for more than a sheer possibility that a defendant has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). Conclusory allegations are insufficient to survive a motion to dismiss. See Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir.2009). The Court must consider only those facts alleged in the complaint and accept all of those allegations as true. Wiest v. Lynch, 2014 WL 1490250, *8 (E.D.Pa.2014) (citing ALA, Inc. v. CCAIR, Inc., 29 F.3d 855, 859 (3d “Cir.1994)). However, the Court “need not accept as true unsupported conclusions and unwarranted inferences,” see id. (citing Doug Grant, Inc. v. Greate Bay Casino Corp., 232 F.3d 173, 183-84 (3d Cir.2000) (citations and internal quotation marks omitted)), and “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions,” see Iqbal, 556 U.S. at 678. 2. DISCUSSION (A) Count I-Breach of Contract Plaintiff's Amended Complaint alleges: Case 1:16-cv-01958-YK Document 24-1 Filed 11/15/16 Page 19 of 49 Harris v. Saint Joseph's University, Not Reported in F.Supp.3d (2014) 2014 WL 1910242 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 2 At all times material hereto, a contractual relationship purportedly existed between SJU and [plaintiff]. The [Student] Handbook, 2 the terms of which were unilaterally drafted by SJU, was deemed part of that contract. Pursuant thereto, SJU was required to act in accordance with the Handbook in resolving complaints of misconduct and violations of SJU's policies and regulations, in the investigation of those complaints, in the process of adjudicating complaints of sexual misconduct, and in resolving appeals brought challenging disciplinary decisions. 2 A copy of the 2012/2013 SJU Student Handbook (“Handbook”) is attached as Exhibit A to the Declaration of Joshua W.B. Richards, counsel for University Defendants, accompanying the University Defendants' brief in support of their motion to dismiss. *2 Pl.'s Am. Compl. (Document 20), ¶ 81 (footnote added). The Amended Complaint further alleges: “SJU breached its contract with Harris by failing to comply with the Handbook, a contract between Harris and SJU, including, without limitation, SJU's implicit duties of good faith and fair dealing in connection therewith, by: ...” Id. ¶ 83 (emph.added). Paragraph 83 of the Amended Complaint then includes 23 general averments regarding policies and procedures for investigation and adjudication of complaints of alleged sexual misconduct wherein plaintiff alleges SJU breached its contract with plaintiff. Id. ¶ 83(a)-(w). Finally, the Amended Complaint alleges damages as a result of SJU's alleged breach of contract including: having [plaintiff's] SJU school record improperly include a conviction and/or other finding of guilt of sexual misconduct (assault) based upon the unfounded charges brought against him, marring [his] ability to enroll in another college or university of similar or greater stature as SJU, stigmatizing [plaintiff] with a finding of guilt for an act he did not commit, and monetary losses. Id. ¶ 84. Thus, although the Amended Complaint states that “a contractual relationship purportedly existed between SJU and Harris” and that the “Handbook ... was deemed part of that contract,” id. ¶ 81, the specific allegations of breach of contract assert that “SJU breached its contract with [plaintiff] by failing to comply with the Handbook.” Id. ¶ 83 (emph.added). The breach alleged was “failing to comply with the Handbook.” Id. The parties acknowledge that to state a claim for breach of contract, a plaintiff must plead the following elements: (1) the existence of a contract, including its essential terms; (2) a breach of a duty imposed by the contract; and (3) resulting damages, see Dempsey v. Bucknell Univ., 2012 WL 1569826, *17 (M.D.Pa.2012) (citing Lackner v. Glosser, 892 A.2d 21, 30 (Pa.Super.2006)). See Univ. Defs.' Br. 8; Pl.'s Br. 10. Initially, it is noted that University Defendants “concede[ ] that ‘the relationship between a private educational institution and an enrolled student is contractual in nature,’ Swartley v. Hoffner, 734 A.2d 915, 919 (Pa.Super.1999), and here the terms of that contract are outlined in the Handbook.” 3 See Univ. Defs.' Br. 8 (footnote omitted). Thus, it appears that for purposes of the motions to dismiss, the parties agree that if plaintiff has sufficiently and properly pled a violation by SJU of the rules and regulations set forth in the Handbook, plaintiff's claim of breach of contract survives the motion to dismiss with regard to the breach of contract claim. 3 As reflected by the caselaw cited by the parties in support of their respective positions, the parties appear to agree that Pennsylvania substantive law governs plaintiff's state law claims. See, e.g., Univ. Defs.' Br. 8 n. 3 (citing cases) (“Pennsylvania substantive law governs Harris' breach of contract claim.”). Indeed, under Pennsylvania law, “[t]he relationship between a private educational institution and an enrolled student is contractual in nature; therefore, a student can bring a cause of action against said institution for breach of contract where the institution ignores or violates portions of the written contract.” Dempsey, 2012 WL 1569826, at *17 (quoting Swartley, 734 A.2d at 919). “The contract between a private institution and a student is comprised of written guidelines, policies, and procedures Case 1:16-cv-01958-YK Document 24-1 Filed 11/15/16 Page 20 of 49 Harris v. Saint Joseph's University, Not Reported in F.Supp.3d (2014) 2014 WL 1910242 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 3 as contained in the written materials distributed to the student over the course of their enrollment in the institution.” Kimberg v. Univ. of Scranton, 2007 WL 405971, *3 (M.D.Pa.2007) (quoting Swartley, 734 A.2d at 919). Thus, it appears that plaintiff has sufficiently pled the existence of a contract between plaintiff and SJU, and the remaining issue is whether plaintiff's allegations are sufficient to support a finding that SJU breached the terms of the contract as contained in the Handbook. 4 See, e.g., id.; Reardon v. Allegheny College, 926 A.2d 477, 480 (Pa.Super.2007) (“The relationship between a privately funded college and a student has traditionally been defined in this Commonwealth as strictly contractual in nature.... As such, we review the agreement between the parties concerning disciplinary procedures, contained within a portion of the student handbook ... as we would any other agreement between two private parties.”) (citations omitted). 4 In an attempt to show that there are “questions of unresolved fact” on which a denial of the University Defendants' motion may be based, see Pl.'s Resp. to Univ. Defs.' Mot. 8, plaintiff points to what he perceives to be a contradiction between SJU's concession that the Handbook is a contract and the Handbook's language that it “is not a contract,” id. at 8, 11 (quoting Handbook at 3). However, this issue appears to be a red herring with regard to resolution of the motion to dismiss. As mentioned, plaintiff specifically pleads in his Amended Complaint: “SJU breached its contract with Harris by failing to comply with the Handbook, a contract between Harris and SJU ...” See Pl.'s Am. Compl. ¶ 83 (emph.added). Thus, the allegations in the Amended Complaint upon which plaintiff basis his breach of contract claim assert that SJU breached its contract “by failing to comply with the Handbook.” Id. To the extent that plaintiff is now arguing that, based on the Handbook's language, the Handbook may not be a contract, it would appear that plaintiff's breach of contract claims- which are based on the averment that the Handbook is a contract and that SJU breached that contract- must be dismissed for failure to state a claim. *3 In evaluating whether allegations in a Complaint survive a Rule 12(b)(6) motion, the plausibility standard “asks for more than a sheer possibility that a defendant has acted unlawfully,” see Iqbal, 556 U.S. at 678, and conclusory allegations are insufficient to survive a motion to dismiss, see Fowler, 578 F.3d at 210. Here, plaintiff's breach of contract claim in the Amended Complaint relies on conclusory and insufficient allegations. See, e.g., Pl.'s Am. Compl. ¶ 83(a)-(w). For example, plaintiff alleges that SJU “breached its contract with Harris by failing to comply with the Handbook” in “[f]ailing to provide adequate policies and procedures for the investigation and adjudication of complaints,” “[f]ailing to provide adequate notice of the polices and procedures,” and “failing to provide fair notice of the parameters of the charged offense.” Id. ¶ 83(a), (b), and (e) (emph.added). Conclusory allegations such as these, with no clear averments as to what statement or regulations included in the Handbook (which the parties appear to agree for present purposes was a contract) were violated or breached, are insufficient to survive a motion to dismiss. See, e .g., Bradshaw v. Pa. State Univ., 2011 WL 1288681, *2 (E.D.Pa.2011) (giving plaintiff former student opportunity to amend her complaint to “allege specifically the terms of the contract in dispute”). To survive a motion to dismiss, Iqbal explains, “a complaint must contain sufficient factual matter,” that if accepted as true, states a claim for relief “that is plausible on its face.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 570). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. at 556. In this case, plaintiff has failed to plead sufficient factual content to support his claim that SJU breached the contract. See Am. Compl. ¶ 83(a)-(w). For example, it is not at all clear which policy(ies) or procedure(s) in the Handbook plaintiff is alleging SJU breached. “[I]f a [claim] is vulnerable to 12(b)(6) dismissal, a district court must permit a curative amendment, unless an amendment would be inequitable or futile.” Wiest, 2014 WL 1490250, at *8 (quoting Phillips v. Cnty. of Allegheny, 515 F.3d 224, 236 (3d Cir.2008)). Therefore, here, the Amended Complaint is dismissed without prejudice to plaintiff's right to amend the Complaint to include sufficient factual allegations to support his claim of breach of contract. 5 5 Plaintiff would be well-advised to include in any amended pleading factual allegations identifying the specific provisions of the 120-page Handbook that SJU allegedly breached. See, e.g., Bradshaw, 2011 WL 1288681, at *2 (dismissing without prejudice breach of contract claim where plaintiff former Case 1:16-cv-01958-YK Document 24-1 Filed 11/15/16 Page 21 of 49 Harris v. Saint Joseph's University, Not Reported in F.Supp.3d (2014) 2014 WL 1910242 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 4 student failed to sufficiently “identify in the complaint the provisions of the handbook that the defendant [University] allegedly breached,” the Court gave plaintiff an opportunity to amend the Complaint “to allege specifically the terms of the contract in dispute, the defendant's breach thereof, and the harm that resulted”). If plaintiff chooses to amend the Complaint, he should be mindful that “[w]hen a contract so specifies, generally applicable principles of contract law will suffice to insulate the institution's internal, private decisions from judicial review.” See Reardon, 926 A.2d at 480-81. The Handbook clarifies that, among other things: *4 Community Standards proceedings are not criminal or civil proceedings, but rather, internal administrative determinations of violations of institutional policy. Civil or criminal rules of procedure and evidence do not apply.... After receiving information at the hearing, the Hearing Officer, Peer Review Board, or Community Standards Board shall determine ... whether the respondent(s) is responsible for violating the Community Standards.... Subsequent reviewers shall not determine anew whether there was a Community Standards violation. Handbook 35-36 (emph.added). The Handbook further provides: “The decision made on appeal [by the Vice President for Student Life/Associate Provost (‘VPSL’) ] will be final. If the VPSL and Provost/designee find no merit to the appeal, the decision of the original hearing shall stand.” Id. at 39-40 (emph.added). Plaintiff's Amended Complaint does not appear to allege that this provision is ambiguous. Under Pennsylvania law, to the extent that the unambiguous terms of the Handbook were not breached, “[t]his clause is adequate to insulate the merits of [SJU's] decision from intensive review.” See Reardon, 926 A.2d at 482 (citing Murphy v. Duquesne Univ. of the Holy Ghost, 565 Pa. 571, 777 A.2d 418, 429 (Pa.2001)) (finding that plaintiff's request that the Court review the “private, internal decisions” of the defendant College was something that was “forbidden by the terms of both [the handbook] and case law, where a clause in the student handbook stated ‘The decision of the President is final.’ ”). 6 6 “A distinction must be made between the allegation that [SJU] breached the terms of [the Handbook] by failing to adhere to its provisions, which is a reviewable claim, and the allegation that the way in which these provisions were implemented, or the outcome arrived at by such implementation, was unfair-a claim which is not reviewable according to the provisions of [the Handbook].” See Reardon, 926 A.2d at 482 n. 5 (citing Murphy, 777 A.2d at 429). That having been said, although SJU's “internal, private decisions,” see Reardon, 926 A.2d at 480-81, on whether there was a “Community Standards violation,” see Handbook 35-36, may be insulated from judicial review, see Reardon, 926 A.2d at 480-81, by the Handbook's own terms “Community Standards proceedings are not criminal or civil proceedings, but rather, internal administrative determinations of violations of institutional policy,” see Handbook 35-36 (emph.added). Defendant Doe argues that since SJU's administrative determination that plaintiff's conduct violated Community Standards and institutional policy was “final” under the terms of the Handbook, “Jane Doe cannot be found by this court to have made any statements regarding the sexual assault that are false, defamatory, or place Harris in a false light,” or to have intentionally inflicted any emotional distress or intentionally interfered with the contract between SJU and Harris. See Doe's Br. 13 (emph. in orig.). However, defendant fails to cite specific authority or caselaw to support the proposition that because the contract (the Handbook) indicates that SJU's determination was final for purposes of making an internal administrative determination that Community Standards were violated, the Court is bound by SJU's findings of fact for purposes of plaintiff's civil action claims, such as defamation and intentional interference with contractual relations. (B) Count II-Violation of Title IX Plaintiff's Amended Complaint alleges that SJU used “impermissible gender bias against Harris in the investigation and adjudication of Doe's accusations,” see Pl.'s Am. Compl. ¶ 92, and “violated Title IX in the manner in which it improperly adjudicated the baseless charge of sexual misconduct by Doe against Harris,” id. ¶ 93, 777 A.2d 418. Thus, plaintiff alleges that plaintiff Case 1:16-cv-01958-YK Document 24-1 Filed 11/15/16 Page 22 of 49 Harris v. Saint Joseph's University, Not Reported in F.Supp.3d (2014) 2014 WL 1910242 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 5 “has been discriminated against by SJU on the basis of his gender in violation of Title IX.” Id. ¶ 95, 777 A.2d 418. Title IX provides in pertinent part: “No person ... shall, on the basis of sex, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any education program or activity receiving Federal financial assistance .” Tafuto v. N.J. Inst. of Tech., 2011 WL 3163240, *2 (D.N.J.2011) (quoting 20 U.S.C. § 1681(a)). “A plaintiff alleging racial or gender discrimination by a university [under Title IX] must do more than recite conclusory assertions.” Yusuf v. Vassar Coll., 35 F.3d 709, 715 (2d cir.1994); see Tafuto, 2011 WL 3163240, at *2 (quoting Yusuf ) (“[W]holly conclusory allegations ... [do not] suffice for purposes of Rule 12(b) (6).”). In Yusuf, two categories of claims of gender bias in university discipline were recognized: claims of an erroneous outcome from a flawed proceeding and claims of selective enforcement. Scott v. Worldstarhiphop, Inc., 2011 WL 5082410, *4 (S.D.N.Y.2011) (citing Yusuf, 35 F.3d at 714-16). However, “in neither case do wholly conclusory allegations suffice for the purposes of Rule 12(b)(6).” Id. (quoting Yusuf ). When a plaintiff claims a flawed outcome, he must allege, among other things, “particular circumstances suggesting that gender bias was a motivating factor behind the erroneous finding.” Id. (quoting Yusuf ) (emph.added). Similarly, when a plaintiff claims selective enforcement, a plaintiff must allege, among other things, “particular circumstances suggesting that gender bias was a motivating factor behind the inconsistency.” Id. (citing Yusuf ) (emph.added). Here, plaintiff fails to allege facts sufficient to meet either standard. See, e.g., Scott, 2011 WL 5082410, at *5 (“there is no nonconclusory allegation of gender bias”) (emph.added); Tafuto, 2011 WL 3163240, at *3. The averments in the Amended Complaint which purport to identify “[e]vidence of SJU's impermissible gender bias against Harris,” see Am. Comp. ¶ 92(a)-(f), do not suggest gender bias as a motivating factor. Dismissal of the Amended Complaint is proper where plaintiff fails to plead “enough facts to state a claim to relief that is plausible on its face.” See Twombly, 550 U.S. at 570; see also Iqbal, 556 U.S. at 678. Conclusory allegations are insufficient to survive a motion to dismiss. See Fowler, 578 F.3d at 210. (C) Count III-Negligence *5 Plaintiff's Amended Complaint alleges generally that SJU “had a duty to hire competent personnel, adequately train its personnel, adequately supervise its personnel, and terminate and/or sanction personnel for substandard performance,” see Am. Compl. ¶ 100, and that “SJU owed a separate duty of care to Harris to ensure that its staff and personnel were properly trained and supervised,” id . ¶ 101. The Amended Complaint further alleges that SJU was negligent and breached its duty to Harris in failing to: “hire well-trained agents and employees, including, without limitation, investigators and community standards board panel members, including, without limitation, the proper selection of student panelist with requisite knowledge and majority”; “train its employees, agents or representatives in the proper method to thoroughly investigate and adjudicate, without bias, complaints of sexual misconduct”; “properly train its employees, agents or representatives regarding the requirements of Title IX”; “properly train its employees, agents or representatives in the discovery and preservation of relevant evidence”; “properly train its employees, agents or representatives in basic due process as it pertains to the investigation, adjudication, and appeal from adjudication of complaints of sexual misconduct”; “supervise its employees, agents or representatives to ensure complaints of sexual misconduct are adequately investigated and fairly adjudicated.” Id. ¶ 102(a)-(f). Plaintiff further alleges that SJU was negligent and breached its duty to Harris in “[c]ontinuing to employ substandard employees, including investigators and community standards panel members.” Id. ¶ 102(g). SJU argues that there is no articulated basis for these alleged duties other than plaintiff's self-serving conclusory averments that SJU had a duty “because it did.” See Univ. Defs.' Br. 20. SJU further argues that even assuming the Amended Complaint identifies a plausible duty, plaintiff's negligence claims are barred by Pennsylvania's gist of the action doctrine. See Univ. Defs.' Br. 21. In Pennsylvania, the gist of the action doctrine maintains the distinction between breach of contract claims and tort claims by precluding recovery in tort in the following situations: (1) where liability arises solely from the contractual relationship between the parties; (2) when the alleged duties breached were grounded in the contract itself; (3) where any Case 1:16-cv-01958-YK Document 24-1 Filed 11/15/16 Page 23 of 49 Harris v. Saint Joseph's University, Not Reported in F.Supp.3d (2014) 2014 WL 1910242 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 6 liability stems from the contract; and (4) when the tort claim essentially duplicates the breach of contract claim or where the success of the tort claim is dependent on the success of the breach of contract claim. Dempsey, 2012 WL 1569826, at *21 (citing Sarsfield v. Citimortgage, Inc., 707 F.Supp.2d 546, 553 (M.D.Pa.2010)); see Sarsfield, 707 F.Supp.2d at 553 (citing eToll v. Elias/Savion Adver., Inc., 811 A.2d 10, 14 (Pa.Super.2002)). In Reardon v. Allegheny College, 926 A.2d 477 (Pa.Super.2007), a former student sued a college asserting, among other things, breach of contract and negligence claims against the private college and a professor arising from the college's determination that the student was guilty of plagiarizing her classmate's work. With regard to the plaintiff's negligence claim against the college and the professor, Pennsylvania's Superior Court found that “[t]he only duties owed by [the private college] and [the professor] we can discern are rooted in [the student handbook]-not some external and undefined general duty of care.... Indeed, [the handbook] represents the sole basis for the relationship between the parties -[plaintiff] promises to adhere to the Honor Code in exchange for an education at [the college], while [the college, and to a lesser degree [the professor], promises to adhere to the terms of [the handbook] in giving this education in exchange for monetary compensation.” Id . at 487 (citations omitted). Accordingly, the Superior Court found that the trial court “correctly applied the gist of the action doctrine in dismissing [the plaintiff's] negligence claim as legally defective.” Id. *6 Similarly, here, in that it appears that plaintiff's negligence claims arise from the contractual relationship between plaintiff and SJU, these negligence claims are barred by the gist of the action doctrine. 7 See id. Indeed, plaintiff's allegations regarding damages suffered as a result of the alleged negligence, see Am. Compl. ¶ 104, are identical to the alleged damages suffered as a result of the alleged breach of contract, id. ¶ 84. Furthermore, as University Defendants point out, plaintiff fails to point to any caselaw indicating that a private university owes these specific duties to its students under Pennsylvania negligence law. See, e.g., Tran v. State Sys. of Higher Educ., 986 A.2d 179, 182 (Pa.Commw.2009) (citing Reardon, 926 A.2d at 480) (“Pennsylvania courts have held consistently that the relationship between a student and a privately funded college is ‘strictly contractual in nature.’ ”) (emph.added). Moreover, other than making conclusory allegations and implications from its breach of contract claims, the Amended Complaint does not allege any facts “to support an inference that Defendant [SJU] breached a duty in the [actual] areas of hiring, training, or supervising its employees.” See, e.g., Dempsey, 2012 WL 1569826, at *22; see Iqbal, 556 U.S. at 678. Accordingly, University Defendants' motion to dismiss is granted with respect to plaintiff's claim of a Title IX violation and that claim is dismissed. 7 It is noted that Count VI of the Amended Complaint, alleging a violation of the UTPCPL, specifically alleges that SJU “[r]epresent[ed], warrant[ed] and guarantee[ed] in writing that SJU trained its employees and agents in the proper and unbiased investigation and adjudication of complaints of sexual misconduct, when in fact it had not.” See Am. Compl. ¶ 107(a) (emph.added). Arguably, this averment lends support to the contention that plaintiff's negligence claims sound in terms of breach of contract rather than tort. (D) Count IV-Violation of Pennsylvania's UTPCPL The UTPCPL creates a private right of action for “[a]ny [person who purchases or leases goods or services primarily for personal, family or household purposes and thereby suffers any ascertainable loss of money or property” as a result of the seller's deceptive or unlawful actions. Wise v. Am. Gen. Life Ins. Co., 2005 WL 670697, *7 (E.D.Pa.2005) (quoting 73 Pa.C.S. § 201- 9.2(a)). Plaintiff's Amended Complaint alleges that “SJU committed various unfair and deceptive acts and practices in violation of the [UTPCPL], including, but not limited to”: a. Representing, warranting and guaranteeing in writing that SJU trained its employees and agents in the proper and unbiased investigation and adjudication of complaints of sexual misconduct, when in fact it had not; b. Representing that Harris would receive a fair and impartial hearing in connection with any allegation of sexual misconduct, when he would not; c. Representing that Harris would receive adequate notice of and due process in connection with allegations of sexual misconduct, when he would not; and, Case 1:16-cv-01958-YK Document 24-1 Filed 11/15/16 Page 24 of 49 Harris v. Saint Joseph's University, Not Reported in F.Supp.3d (2014) 2014 WL 1910242 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 7 d. Misrepresenting SJU's compliance with Title IX[.] Pl.'s Am. Compl. ¶ 107. Initially, SJU contends that “to have standing to state a claim under the UTPCPL, a party must be, as a threshold matter, someone who ‘purchases or leases' goods or services for ‘personal, family, or household purposes,’ “ see Univ. Defs.' Br. 23 (quoting 73 Pa. Pa.C.S. § 201- 9.2(a)), and that “[i]t seems likely that Harris' parents, not Harris, paid for his tuition,” id. However, the Amended Complaint does allege that plaintiff “purchased, inter alia, educational services from SJU for which he remitted payment in the form of tuition and fees.” See Am. Compl. ¶ 108. Therefore, at this stage of the proceedings, the Complaint appears sufficient in that regard. *7 “To state a claim under the UTPCPL, a plaintiff must show: (1) deceptive conduct; (2) an ascertainable loss; (3) justifiable reliance on the defendant's wrongful conduct or misrepresentations; and (4) that such reliance caused an injury.” Pellegrino v. State Farm Fire and Cas. Co., 2013 WL 3878591, *8 (E.D.Pa.2013) (citing Caroselli, Sr. v. Allstate Prop. & Cas. Ins. Co., 2010 WL 3239356, *7 (E.D.Pa.2010)). Although SJU contends that plaintiff's averments are insufficient to make out a claim under Pennsylvania's UTPCPL, it appears that considering the facts alleged in the Complaint and accepting all of those allegations as true, see Wiest, 2014 WL 1490250, at *8 (citing ALA, Inc., 29 F.3d at 859), plaintiff has made sufficient allegations to allege a claim for a violation of the UTPCPL at this stage of the proceedings. (E) Count V-Defamation (against SJU, Doe, and Kalin) Plaintiff's Amended Complaint alleges that each of the defendants made communications about plaintiff which were defamatory in nature in that “each referred to Harris as the perpetrator of a sexual assault on Doe, even though they knew the allegations were false, or with reckless indifference to the truth or falsity of said allegations.” See Am. Compl. ¶¶ 113-114. To state a claim for defamation under Pennsylvania law, a plaintiff must establish: (1) the defamatory character of the communication; (2) its publication by the defendant; (3) its application to the plaintiff; (4) the understanding by the recipient of the defamatory meaning; (5) the understanding by the recipient that the statement refers to the plaintiff; (6) special harm resulting to the plaintiff from its publication; and (7) abuse of a constitutionally privileged occasion. Dempsey, 2012 WL 1569826, at *13 (citing 42 Pa.C.S. § 8343). “A publication is defamatory if it tends to blacken a person's reputation or expose him to public hatred, contempt or ridicule or injure him in his business or profession.” Id. (quoting Dunlap v. Phila. Newspapers, Inc., 301 Pa.Super. 475, 448 A.2d 6, 10 (Pa.Super.1982)) (citation and internal quotation marks omitted). “In order to be actionable, the words must be untrue, unjustifiable, and injurious to the reputation of another.” Id. (quoting Joseph v. Scranton Times L.P., 959 A.2d 322, 334 (Pa.Super.2008)). University Defendants argue that plaintiff's defamation claims fail because plaintiff alleges that individuals within the University shared information about allegations of sexual misconduct with one another. “In general, publication of defamatory matter is its communication intentionally or by a negligent act to one other than the person defamed.” Agriss v. Roadway Exp., Inc., 334 Pa.Super. 295, 483 A.2d 456, 463 (Pa.Super.1984). Viewing plaintiff's Amended Complaint under the appropriate motion to dismiss standard, plaintiff appears to have sufficiently alleged, see Am. Compl. ¶¶ 112-130, publication of defamatory matter “to one other than the person defamed,” see id. *8 Next, University Defendants briefly argue that plaintiff does not allege “special harm” and that his defamation claims therefore fail. See Univ. Defs.' Br. 25. The term “special harm” is defined as “actual damages which are economic or pecuniary losses.” Klimaski v. Parexel Intern., 2008 WL 2405006, *3 (E.D.Pa.2008) (citing Sprague v. Am. Bar Ass'n, 276 F.Supp.2d 365, 368- 69 (E.D.Pa.2003)). However, a “plaintiff may succeed in a claim for defamation absent proof of special harm where the spoken words constitute slander per se.” Id. There are four categories of words that constitute slander per se: words that impute (1) criminal offense; (2) loathsome disease; (3) business misconduct; or (4) serious sexual misconduct. Id. Here, applying this standard, plaintiff's allegation that “each [defendant] referred to Harris as the perpetrator of a sexual assault on Doe, even though they knew the allegations were false, or with reckless indifference to the truth or falsity of said allegations,” see Am. Compl. ¶¶ 113-114, would be considered slander per se. Case 1:16-cv-01958-YK Document 24-1 Filed 11/15/16 Page 25 of 49 Harris v. Saint Joseph's University, Not Reported in F.Supp.3d (2014) 2014 WL 1910242 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 8 “In Pennsylvania, a defendant who publishes a statement which can be considered slander per se is liable for the proven, actual harm that the publication causes.” Klimaski, 2008 WL 2405006, at *4. Actual damages are divided into two types: general and special. Id. General damages typically flow from defamation, such as “impairment of reputation and standing in the community, personal humiliation, and mental anguish and suffering.” Id. (citing Sprague, 276 F.Supp.2d at 368). Plaintiff's Amended Complaint includes averments of these types of damages caused by defendants' defamatory communications. See, e.g., Pl.'s Am. Compl. ¶¶ 128-29. Thus, in Agriss, Pennsylvania's Superior Court found that the trial court erred in granting nonsuit where the Superior Court found evidence was sufficient to show that the alleged defamatory remarks could have “impaired appellant's reputation and caused him personal humiliation and mental anguish” and that testimony “tended to show that the charge held appellant up to ridicule and speculation among fellow employees that his dismissal was imminent.” Agriss, 483 A.2d at 467. University Defendants' motion to dismiss is denied to the extent that it argues that the claim of defamation should be dismissed as failing to allege “special harm.” University Defendants further argue that truth is a defense to plaintiff's defamation claim. In particular, defendants state that “Harris' specific allegations are that the University and Kalin repeated information about ‘Harris' alleged sexual misconduct’ as reported by Doe,” and that “[t]he fact that Harris was alleged to have engaged in such sexual misconduct, however, is true-such allegations were made against Harris, and he acknowledges and pleads this himself.” See Univ. Defs.' Br. 25 (citing Am. Comp. ¶¶ 122, 67) (emph.added). However, contrary to University Defendants' contention, plaintiff's Amended Complaint alleges that “each [defendant] referred to Harris as the perpetrator of a sexual assault on Doe, even though they knew the allegations were false, or with reckless indifference to the truth or falsity of said allegations.” See Am. Compl. ¶ 114 (emph.added). Therefore, based on the allegations in the Amended Complaint, which must be taken as true at this stage in the litigation, University Defendants' contention in that regard is without merit. 8 8 It is noted University Defendants do not argue that, for purposes of plaintiff's defamation claim, the Court is bound by the findings of fact made during SJU's internal administrative determination with regard to plaintiff's violation of Community Standards and institutional policy. To the extent that defendant Doe makes that argument, it is addressed supra note 6. *9 University Defendants also point to the common interest privilege as a defense to plaintiff's defamation claim. See Univ. Defs.' Br. 26. Under Pennsylvania statutory law, someone accused of defamation may assert the affirmative defense of “the privileged character of the occasion on which [the allegedly defamatory comment] was published.” Aydin Corp. v. RGB Sales, 1991 WL 152465, *10 (E.D.Pa.1991) (citing 42 Pa.C.S. § 8343(b) (2)). As defendants and plaintiff appear to acknowledge, see Univ. Defs.' Br. 26 (citing Aydin Corp.); Pl.'s Br. 34 (citing Aydin Corp.), “[s]uch a conditional privilege attaches where the circumstances are such that facts exist which another sharing such common interest is entitled to know” and further, “a communication must be made on a proper occasion, with a proper motive, in a proper manner, and based upon reasonable cause,” see Aydin Corp., 1991 WL 152465, at *10. Accepting all of the allegations in the Amended Complaint as true, defendants' motion to dismiss the defamation claim on the basis of the common interest privilege is denied at this stage of the proceedings, without prejudice to defendants' right to raise the defense again at a later stage of the litigation. See, e.g., id. (holding at the summary judgment stage that, after reviewing evidence of record, the communications made in the course of an investigation were not defamatory in light of Pennsylvania's common interest privilege). Defendants contend that statements made regarding the alleged sexual assault “are absolutely privileged and cannot be the basis for a claim of defamation or false light invasion of privacy.” See Def. Doe's Br. 16 (emph. in orig.); see also Univ. Defs.' Br. 26. In support of this contention, defendants state that “Pennsylvania ... applies this absolute privilege to quasi-judicial proceedings.” See Doe's Br. 17 (emph. in orig.); see also Univ. Defs.' Br. 26. However, as the Third Circuit has pointed out, “under Pennsylvania law government involvement is ... a necessary condition for according quasi-judicial status to grievance procedures.” Overall v. Univ. of Pa., 412 F.3d 492, 497 (3d Cir.2005) (emph.added). Indeed, our Court of Appeals clarified that “Pennsylvania cases finding quasi- judicial privilege consistently involve proceedings before federal, state, or local governmental bodies, or proceedings held pursuant to a statute or administrative regulation.” Id . (emph.added). In that this case involves an entirely private grievance procedure, the privilege available in Case 1:16-cv-01958-YK Document 24-1 Filed 11/15/16 Page 26 of 49 Harris v. Saint Joseph's University, Not Reported in F.Supp.3d (2014) 2014 WL 1910242 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 9 Pennsylvania for communications made during quasi- judicial proceedings does not apply. Defendants' motions to dismiss are denied with regard to plaintiff's defamation claims. (F) Count VI-False Light (against SJU, Doe, and Kalin) Plaintiff's Amended Complaint avers that “SJU, Doe and Kalin each made public statements about Harris which placed him in a false light.” See Am. Compl. ¶ 132. University Defendants argue that plaintiff's false light claim is insufficient because the Amended Complaint fails to sufficiently allege the publicity element of such a claim. See Univ. Defs.' Br. 26-27. In particular, University Defendants state: *10 Although the Amended Complaint alleges in conclusory fashion that the University and Kalin “made public statements about Harris,” [see ] Am. Compl. ¶ 132, the Amended Complaint contains not a single factual allegation about that purported publication, where it was made, and to whom. The first “publicity” that has resulted from Doe's allegations, ironically, occurred when Harris filed this lawsuit. Id. at 27. In order to sustain a claim for false light, “the element of publicity must be satisfied by widespread dissemination of the material.” Jones v. City of Phila., 73 Pa. D. & C.4th 246, 256 (C.P.Phila.2005) (citing Weinstein v. Bullick, 827 F.Supp. 1193, 1202 (E.D.Pa.1993)); see Herron v. MortgageNOW Inc., 2013 WL 867177, *2 (E.D.Pa.2013) (false light claims in Pennsylvania require “publicity”). A plaintiff making such a claim must sufficiently allege “that a matter is made public by communicating it to the public at large, or to so many persons that the matter must be regarded as substantially certain to become one of public knowledge.” Id. (quoting DeBlasio v. Pignoli, 918 A.2d 822, 824 n. 3 (Pa.Commw.2007)). Publicity for purposes of a false light claim “requires more than the ‘publication’ required to sustain a claim for defamation.” Schatzberg v. State Farm Mut. Auto. Ins. Co., 877 F.Supp.2d 232, 245 (E.D.Pa.2012) (citing Harris v. Easton Pub. Co., 335 Pa.Super. 141, 483 A.2d 1377, 1384 (Pa.Super.1984)). “Rather, it requires that ‘the matter is made public by communicating it to the public at large, or to so many persons that the matter must be regarded as substantially certain to become one of public knowledge.” Id. (quoting Harris, 483 A.2d at 1384). In this case, plaintiff fails to sufficiently allege facts, see, e.g., Am. Compl. ¶¶ 131- 137 (Count VI “False Light”), to support a claim that defendants publicized information about plaintiff so as to constitute publicity for a false light claim. See Iqbal, 556 U.S. at 678; Twombly, 550 U.S. at 570. Conclusory allegations are insufficient to survive a motion to dismiss. See Fowler, 578 F.3d at 210. (G) Count VII-Intentional Infliction of Emotional Distress (“IIED”) (against SJU, Doe, and Kalin) “The elements of [IIED] are: (1) a person who by extreme and outrageous conduct (2) intentionally or recklessly causes (3) severe emotional distress to another.” Manley v. Fitzgerald, 997 A.2d 1235, 1241 (Pa.Commw.2010). In order for a plaintiff to recover on an IIED claim: [T]he conduct must be so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in any civilized society ... [I]t has not been enough that the defendant has acted with intent which is tortious or even criminal, or that he has intended to inflict emotional distress, or even that his conduct has been characterized by “malice,” or a degree of aggravation that would entitle the plaintiff to punitive damages for another tort. *11 Reardon, 926 A.2d at 488 (quoting Hoy v. Angelone, 554 Pa. 134, 720 A.2d 745, 753-54 (Pa.1998) (internal citation omitted)). “It is [the] Court's responsibility to determine if conduct alleged in the cause of action reaches the requisite level of outrageousness to support such a claim.” Britt v. Chestnut Hill College, 429 Pa.Super. 263, 632 A.2d 557, 561 (Pa.Super.1993). In addition, “the Pennsylvania Supreme Court has required that the plaintiff present competent medical evidence to support the [IIED] claim,” id. (citing Kazatsky v. King David Memorial Park, Inc., 515 Pa. 183, 527 A.2d 988 (Pa.1987)), and the extreme and outrageous conduct must result in Case 1:16-cv-01958-YK Document 24-1 Filed 11/15/16 Page 27 of 49 Harris v. Saint Joseph's University, Not Reported in F.Supp.3d (2014) 2014 WL 1910242 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 10 some physical injury, Hart v. O'Malley, 436 Pa.Super. 151, 647 A.2d 542, 554 (Pa.Super.1994) (citing cases) (“it is clear that in Pennsylvania, in order to state a claim under which relief can be granted for the tort of [IIED], the plaintiffs must allege physical injury.”). University Defendants argue that plaintiff's allegations do not rise to the requisite level of outrageousness to support a claim for IIED. Count VII of the Amended Complaint alleges in relevant part that “SJU, Doe and Kalin made public statements which were not true and took actions based upon false information to falsely portray Harris as a cruel sex offender, which was not true and caused him severe distress.” See Am. Compl. ¶ 139. The Amended Complaint avers that, “[a]s a direct and proximate result of the aforementioned extreme, outrageous, intentional, willful and malicious conduct of SJU, Doe, and Kalin, Harris suffered and will continue to suffer, inter alia, severe emotional distress, mental anguish, embarrassment and humiliation, all of which may be permanent in nature.” Id. ¶ 143, 647 A.2d 542. In Reardon, the plaintiff former student claimed that Allegheny College and a professor “intentionally and wrongly targeted and accused [her] of violations of the college's honor code,” despite their knowledge of the falsity of these allegations, and that the defendants deprived plaintiff of her “rights to a fair and impartial hearing.” See Reardon, 926 A.2d at 488. Affirming the trial court's determination that the alleged actions of the defendants were not sufficient to support an action for IIED, see id. at 487, Pennsylvania's Superior Court found that, even if accepted as true, plaintiff's allegations “do not rise to a level that could be described as “clearly desperate and ultra extreme conduct.” Id. at 488 (quoting Hoy, 720 A.2d at 754). In Stokley v. Bristol Borough School Dist., 2013 WL 4787297 (E.D.Pa.2013), plaintiff argued that “subjecting an African American student to harsher discipline than white students, particularly for an offense the African American student did not commit, is patently outrageous.” Id. at *2. The Court pointed out that, “[a]s reprehensible as deliberate discrimination can be, ‘[c]ourts in this District have repeatedly found that racial discrimination alone does not meet the extreme and outrageous conduct standard necessary to state a claim for intentional infliction of emotional distress.’ “ Id. at *3 (citing Hargraves v. City of Phila., 2007 WL 1276937, *3 (E.D.Pa.2007) (collecting cases)). “Although racial discrimination is completely unacceptable in our society, ... the plaintiff must prove that the conduct is outrageous in character, and not just in motive .” Id. (citing Forbes v. Rhode Island Brotherhood of Correctional Officers, 923 F.Supp. 315, 330 (D.R.I.1996) (emph.added)). “Discrimination cases in which accompanying [IIED] claims also are allowed to proceed involve much more egregious conduct than even that which is alleged here, most often involving assault or threats of assault.” Id. (citing e.g., DiSalvio v. Lower Merion High Sch. Dist., 158 F.Supp.2d 553 (E.D.Pa.2001) (denying motion to dismiss IIED claim when a teacher repeatedly sexually harassed a student, including by inappropriately touching her on multiple occasions); Lane v. Cole, 88 F.Supp.2d 402, 406 (E.D.Pa.2000) (noting that while “[i]nvidious discrimination is not alone sufficient to support an [IIED] claim,” “[t]he ejection of a tenant from her home with threats of violence in retaliation for her refusal to accede to racial discrimination is another matter”)). *12 In this case, the facts, as set forth by plaintiff in his Amended Complaint, are insufficient to support his claim of IIED. The averments fail to satisfy the requisite outrageous conduct for such a claim, under Pennsylvania law. Furthermore, the Amended Complaint fails to allege physical injury, see, e.g., Hart, 647 A.2d at 554 (where plaintiffs “fail[ed] to allege physical injury,” court found that “under the tort of [IIED] in Pennsylvania, [plaintiffs] have failed to state a claim”), and that defendants' conduct caused him to seek medical treatment, see, e.g., Britt, 632 A.2d at 562 (affirming the trial court's Order dismissing the IIED claim as alleging insufficient facts, the Superior Court stated “it is apparent that Appellant has failed to allege that Appellees' conduct caused him to seek medical treatment”). 3. CONCLUSION Defendants' motions to dismiss are granted in part and denied in part. The motions are granted with regard to plaintiff's claims of breach of contract (Count I), violation of Title IX (Count II), negligence (Count III), making public statements which place plaintiff in a false light (Count VI), and intentional infliction of emotional distress (Count VII). Defendants' motions to dismiss are otherwise denied. Accordingly, plaintiff may continue to pursue his claims of a violation of the UTPCPL against defendant SJU (Count IV), defamation (Count V) Case 1:16-cv-01958-YK Document 24-1 Filed 11/15/16 Page 28 of 49 Harris v. Saint Joseph's University, Not Reported in F.Supp.3d (2014) 2014 WL 1910242 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 11 against all defendants, and intentional interference with contractual relations (Count VIII) against defendant Jane Doe only. 9 9 Although defendant Jane Doe argues that plaintiff cannot bring a claim of intentional interference of contractual relations against her in light of SJU's finding that plaintiff violated institutional policy, as explained above, the fact that the contract indicates that SJU's determination that plaintiff's conduct violated institutional policy was “final” for purposes of the internal administrative determination under the contract does not mean that the Court is bound by SJU's findings for purposes of plaintiff's civil action claims in this Court. See supra note 6. Therefore, plaintiff may continue to pursue the intentional interference with contractual relations claim against defendant Doe as alleged in the Amended Complaint. As mentioned, “if a [claim] is vulnerable to 12(b) (6) dismissal, a district court must permit a curative amendment, unless an amendment would be inequitable or futile.” Wiest, 2014 WL 1490250, at *8 (quoting Phillips, 515 F.3d at 236). Therefore, plaintiff's claims of breach of contract, violation of Title IX, negligence, making public statements placing plaintiff in a false light, and intentional infliction of emotional distress (Counts I through III, and VI & VII) are dismissed without prejudice to the right of plaintiff to file a Second Amended Complaint to include any of these claims if he can within the confines of Rule 11(b), see Fed.R.Civ.P. 11(b), within twenty (20) days. 10 Otherwise, these claims are dismissed with prejudice. 10 The University Defendants request that defendant Kalin be dismissed in his individual capacity in that SJU “concedes an agency relationship with Kalin, and concedes that if Kalin were liable under any theory pleaded in the current Amended Complaint, [SJU] would be liable for Kalin's acts pursuant to principles of respondeat superior.” See Univ. Defs.' Br. 29. However, defendants' request is declined as premature at this juncture, especially in light of the dismissal of the aforementioned claims without prejudice. An appropriate Order follows. ORDER AND NOW, this 12th day of May, 2014, upon consideration of the Motions to Dismiss of Defendants, Saint Joseph's University and Joseph Kalin (“University Defendants”) (ECF Document 23) and Defendant Jane Doe (Document 24), and plaintiff's opposition thereto, for the reasons explained in the accompanying Memorandum, it is hereby ORDERED that: 1. Defendants' Motions to Dismiss Plaintiff's Amended Complaint (Docs. 23 & 24) are GRANTED in part and DENIED in part; 2. Defendants' motions (Docs. 23 & 24) are GRANTED with respect to Plaintiff's claims of breach of contract (Count I), violation of Title IX (Count II), negligence (Count III), making public statements placing plaintiff in a false light (Count VI), and intentional infliction of emotional distress (Count VII), and those claims are DISMISSED without prejudice to filing a Second Amended Complaint, if Plaintiff can do so under the confines of Fed.R.Civ.P. 11(b), within twenty (20) days of the filing of this Memorandum and Order. Otherwise, these claims are dismissed with prejudice; *13 3. Defendants' motions (Docs. 23 & 24) are otherwise DENIED; 4. Plaintiff may continue to pursue his claims of a violation of the UTPCPL (Count IV), defamation (Count V), and intentional interference with contractual relations (Count VIII). All Citations Not Reported in F.Supp.3d, 2014 WL 1910242 End of Document © 2016 Thomson Reuters. No claim to original U.S. Government Works. Case 1:16-cv-01958-YK Document 24-1 Filed 11/15/16 Page 29 of 49 K.A. ex rel. Allebach v. Upper Perkiomen School Dist., Not Reported in F.Supp.2d (2012) 2012 WL 2362565 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 1 2012 WL 2362565 Only the Westlaw citation is currently available. United States District Court, E.D. Pennsylvania. K.A. a minor, by her guardians and natural parents Jennifer ALLEBACH and Brian Allebach v. UPPER PERKIOMEN SCHOOL DISTRICT, et al. Civil Action No. 11-2610. | March 12, 2012. Attorneys and Law Firms Steven F. Marino, Marino & Associates PC, Philadelphia, PA, for K.A. a minor, by her guardians and natural parents Jennifer Allebach and Brian Allebach. Joseph P. Connor, Steven M. Liero, Connor Weber & Oberlies, PC, Paoli, PA, for Upper Perkiomen School District, et al. REPORT AND RECOMMENDATION M. FAITH ANGELL, United States Magistrate Judge. *1 Presently before this Court is Defendant's Motion to Dismiss Counts V through XVI of the Plaintiffs' Complaint. For the reasons which follow, it is recommended that the Motion to Dismiss be DENIED for counts V, VI, VII, VIII, IX, and X, and GRANTED for counts XI, XII, XIII, XIV, XV, and XVI. I. Background This case involves the alleged sexual abuse of a minor, K.A., by her teacher, Brian Miller, while K.A. attended Upper Perkiomen Middle School. Plaintiffs allege that K.A.'s music teacher, Mr. Miller, established a pattern of “inappropriate, immoral and sexual conduct” with K.A beginning in 2005. 1 The alleged inappropriate conduct consisted of sexually charged electronic messages as well as direct sexual interaction. 2 The alleged behavior persisted until discovered by K.A.'s family members in March of 2009. 3 Plaintiffs further alleges that Duane Wickard, the school's acting Principal, Arthur Vigilante, the school's acting assistant Principal, and Timothy Kirby, the school district's acting superintendant, knew, or should have known, of the alleged sexual conduct between Miller and K.A., and that they failed to act in sufficient time to prevent injuries to the child. 4 1 Pls.'s Compl. ¶ 24. 2 See Pls.'s Compl. ¶¶ 25-35 (describing alleged conduct ranging from sexually charged text messages to the physically touching of the student's breasts and vaginal area). 3 Pls.'s Compl. ¶ 38. 4 Pls.'s Compl. ¶¶ 42-57. Plaintiff initiated the instant case on April 15, 2011. On June 23, 2011, Defendants filed their Motion to Dismiss Counts V through XVI of the Plaintiff's Complaint. Plaintiff does not contest the Motion with regards to Counts XI, XII, XIII, XIV, XV, and XVI and those counts are not discussed below. 5 5 See Pls.'s Resp. 1. II. Discussion A. Standard The purpose of a 12(b)(6) motion to dismiss is to test the legal sufficiency of the claims, not the merits. Nelson v. Temple Univ., 920 F.Supp. 633 (E.D.Pa.1996). To survive a motion to dismiss, plaintiff must allege sufficient facts that, if accepted as true, state a claim to relief that is plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). A claim has facial plausibility when a plaintiff pleads facts that allow the court to draw the reasonable inference that the defendant may be liable for the misconduct alleged. Id. at 1949. However, the court is “not bound to accept as true a legal conclusion couched as a factual allegation.” Iqbal, 129 S.Ct. at 1950 (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2009)); see also Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir.2009). It is on these standards that this Court has reviewed the Defendants' Motion. B. State Claims-Endangering the Welfare of a Child and Failure to Supervise Case 1:16-cv-01958-YK Document 24-1 Filed 11/15/16 Page 30 of 49 K.A. ex rel. Allebach v. Upper Perkiomen School Dist., Not Reported in F.Supp.2d (2012) 2012 WL 2362565 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 2 It is a general rule of tort law that one does not have an affirmative duty to rescue and that such a duty can only be created by the existence of a special relationship. E.g., Brown v. Dep't of Emergency Med. Servs. Training Inst., 318 F.3d 473, 477 (3d Cir.2003); accord RESTATEMENT (SECOND) OF TORTS § 314. Such a duty may arise from common law, statute, or contract. Emerson v. Adult Cmty. Total Servs., Inc., 842 F.Supp. 152, 155 (E.D.Pa.1994). Where a duty does exist, one may face liability for a failure to take action. See, e.g., Simmons v. City of Phila., 947 F.2d 1042, 1083-84 (3d Cir.1991) (interpreting common law to require jail authorities who know or should know that a prisoner, unless forestalled, is likely to harm himself, must exercise reasonable care to ensure that the harm does not occur). *2 Plaintiffs contend that their endangering the welfare of a child and failure to supervise counts are supported by the Restatement (Second) of Torts §§ 314A(4) 6 and 324A 7 as adopted in Pennsylvania. 8 Pleadings require no technical form and the title of a cause of action does not solely control. E.g., F.R.C.P. 8(d)(1). Most relevant are the contents of the complaint and the substantive allegations made. 6 The pertinent section states: (4) One who is required by law to take or who voluntarily takes the custody of another under circumstances such as to deprive the other of his normal opportunities for protection is under a similar duty to the other. 7 Section 324A states: One who undertakes, gratuitously or for consideration, to render services to another which he should recognize as necessary for the protection of a third person or his things, is subject to liability to the third person for physical harm resulting from his failure to exercise reasonable care to protect his undertaking, if (a) his failure to exercise reasonable care increases the risk of such harm, (b) or he has undertaken to perform a duty owed by the other to the third person, or (c) the harm is suffered because of reliance of the other or the third person upon the undertaking. 8 Plaintiffs cite to Hamil v. Bashline, 392 A2.d 1280 (Pa.Super.1978), for the proposition that Pennsylvania courts have adopted § 324A. However, the Hamil court adopted § 323 of the Restatement, a related but different Restatement section. Nonetheless, § 324A has been adopted in Pennsylvania. See Farabugh v. Pa. Turnpike Comm'n., 590 Pa. 46, 68, 911 A.2d 1264 (2006) (discussing the general acceptance of 324A). Plaintiffs have provided sufficient support in their complaint to state a cause of action under sections 314A and 324A. Plaintiffs have alleged that the school district, through its employees, knew and had the opportunity to intervene on behalf of K.A., but did not do so in breach of duty of reasonable care. 9 The facts as pled provide that K.A. was under the supervision and custody of the school district and that the variously pled defendants all maintained supervisory responsibilities towards K.A. throughout the district's chain of command. While Pennsylvania may not recognize a civil cause of action for endangering the welfare of a child and failure to supervise as titled in the instant case, such causes of action are in accordance with the Restatement provisions. For these reasons, drawing all reasonable inferences in favor of the Plaintiffs, a cause of action is supported for counts V, VI, VII, VIII, IX, and X. 9 Pls.'s Compl. ¶¶ 135-39; 143-47; 151-55; 159-65; 169- 75; 178-85. C. Political Subdivision Tort Claims Act Under The Pennsylvania Political Subdivision Tort Claims Act (“PSTCA”), government entities like the Upper Perkiomen School district, its agencies, and employees are generally immune from damages liability. The Act provides, inter alia, “no local agency shall be liable for any damages on account of any injury to a person or property caused by any act of the local agency or an employee thereof or any other person.” 42 Pa.C.S. § 8541. The general rule under 8541 is subject to several exceptions. Immunity is excepted where both “(1) damages would be recoverable at common law or under a statute creating a cause of action if the injury were caused by a person not protected by immunity, and (2) the claim falls within one of the statutory exceptions to governmental immunity in Section 8542(b) of the [Tort Claims] Act.” Gremo v. Karlin, 363 F.Supp.2d 771, 793 (E.D.Pa.2005) (alterations in original). Immunity is also excepted where, under § 8550, “the act of the employee caused the injury and that such an act constitute[es] a crime, actual fraud, actual malice or willful misconduct.” (emphasis added). Willful misconduct has generally been defined by the Pennsylvania Courts Case 1:16-cv-01958-YK Document 24-1 Filed 11/15/16 Page 31 of 49 K.A. ex rel. Allebach v. Upper Perkiomen School Dist., Not Reported in F.Supp.2d (2012) 2012 WL 2362565 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 3 as synonymous with term “intentional tort.” See id. at 793-94 (explaining the changes in interpretation of the term willful misconduct); accord Hayes v. Erie Cnty., 497 F.Supp.2d 684, 705 (W.D.Pa.2007). To qualify as willful misconduct, “[t]he governmental employee must desire to bring about the result that followed his conduct or be aware that it was substantially certain to follow.” Lyons v. City of Phila., 1998 WL 767451 (E.D.Pa. Nov.4, 1998) (unpublished) (quoting Kuzel v. Krause, 658 A.2d 856, 859 (Pa.Commw.Ct.1995)). *3 In counts V through X Plaintiffs have pled both “endangering the welfare of the child” and “failure to supervise.” Where these counts sound in negligence, they are excluded by the PTSCA as such conduct does not fall into the exception of § 8542 or § 8550. Gremo, 363 F.Supp.2d. at 793-794. However, Plaintiffs have not based their claims on negligence. Plaintiffs' Complaint seeks to address the alleged intentional conduct of the individual defendants. Therefore, the pertinent issue under this motion is whether the Plaintiffs have pled sufficient facts to move their cause of action into the realm of willful misconduct, i.e., intentional tort. Plaintiffs' Complaint contains adequate factual allegations to plausibly support their intentional tort claims. For defendants Mr. Wickard, Mr. Vigilante, and Dr. Kirby, the Complaint alleges that their alleged endangerment of the welfare of a child and failure to supervise were “willful” and “intentional.” 10 The Complaint further alleges that defendants “knew” or “knowingly” engaged in the alleged breaches of duty. 11 While the “mere incantation” of the term willful misconduct is not sufficient to bring a claim within the realm of intentional tort, the standard is not as stringent as argued for by the Defendants. As explained in Hayes, the specific intent requirement may be met by showing that either the actor desired to bring about the result that followed or that the result was substantially certain to follow. 497 F.Supp.2d at 705. Under the facts as pled, the Plaintiffs have alleged that at least six employees of the school district with knowledge of the misconduct reported said conduct to school district “policy-makers” including Mr. Wickard. 12 The Complaint further alleges that Mr. Wickard communicated said misconduct up the chain of command to Mr. Vigilante and Dr. Kirby. 13 The defendants are alleged to have known, or should have known, of the inappropriate conduct between K.A. and Mr. Miller, but consciously chose not to act. 14 It is clear that the Plaintiffs have included more than a mere token inclusion of the words “willful” and “intentional” into their complaint. Given the totality of facts as pled by the Plaintiffs and drawing all reasonable inferences there from, Plaintiffs' have pled sufficient facts to fall under the PSTCA's § 8550 willful misconduct exception to damages liability. 10 Pls.'s Compl. ¶¶ 138, 139, 146, 147, 154, 155, 164, 165, 174, 175, 184, 185. 11 See, e.g., Pls.'s Compl. ¶ 137 (“Defendant ... Wickard knowingly endangered the welfare of plaintiff K.A ....) (emphasis added). 12 Pls.'s Compl. ¶¶ 43-53. 13 Pls.'s Compl. ¶ 55. 14 E.g., Pls.'s Compl. ¶ 55-56. D. Punitive Damages Lastly, Defendants argue that punitive damages are not allowed under the PSTCA. As concluded supra, the Plaintiffs' claims with regards to counts V, VI, VII, VIII, IX, and X are not shielded by PSTCA because the Plaintiffs pled sufficient facts to bring their claims within the PSTCA's § 8550 willful misconduct exception. Punitive damages may be recoverable as permitted under § 8550 and relevant tort law. See Udujih v. City of Phila., 513 F.Supp.2d 350, 358 (E.D.Pa.2007) (holding that punitive damages are available under the PSTCA on claims alleging commission of intentional torts by individual public employees). RECOMMENDATION *4 For the reasons set above, it is recommended that the Motion to Dismiss be DENIED for counts V, VI, VII, VIII, IX, and X, and GRANTED for counts XI, XII, XIII, XIV, XV, and XVI. All Citations Not Reported in F.Supp.2d, 2012 WL 2362565 Case 1:16-cv-01958-YK Document 24-1 Filed 11/15/16 Page 32 of 49 K.A. ex rel. Allebach v. Upper Perkiomen School Dist., Not Reported in F.Supp.2d (2012) 2012 WL 2362565 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 4 End of Document © 2016 Thomson Reuters. No claim to original U.S. Government Works. Case 1:16-cv-01958-YK Document 24-1 Filed 11/15/16 Page 33 of 49 Suessenbach Family Ltd. Partnership v. Access Midstream..., Not Reported in... 2015 WL 1470863 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 1 KeyCite Yellow Flag - Negative Treatment Distinguished by Church Mutual Insurance Company v. Alliance Adjustment Group, E.D.Pa., July 11, 2016 2015 WL 1470863 Only the Westlaw citation is currently available. United States District Court, M.D. Pennsylvania. The SUESSENBACH FAMILY LIMITED PARTNERSHIP, James S. Suessenbach, individually and on behalf of himself and all others similarly situated, and Gina M. Suessenbach, individually and on behalf of all others similarly situated, Plaintiffs v. ACCESS MIDSTREAM PARTNERS, L.P., and Chesapeake Energy Corporation, Defendants. Civil Action No. 3:14-1197. | Signed March 31, 2015. MEMORANDUM MALACHY E. MANNION, District Judge. *1 Pending before the court are a motion to dismiss the plaintiffs' complaint filed on behalf of Chesapeake Energy Corporation, (“Chesapeake Energy”), (Doc. 23 ), and a motion to dismiss the plaintiffs' complaint filed on behalf of Access Midstream Partners, L.P., (“Access Midstream”), (Doc. 26 ). Based upon the court's review of the motions and related materials, the motions will be denied in large part, with the only exception being the plaintiffs' claim of honest services fraud alleged as a predicate offense in support of their RICO claim. I. PROCEDURAL HISTORY By way of relevant background, on June 20, 2014, the plaintiffs, individually and behalf of all others similarly situated, brought the instant action against Chesapeake Energy and Access Midstream, in which they assert the following causes of action: violations of the Racketeer Influenced and Corrupt Organizations Act, (“RICO”), 18 U.S.C. §§ 1961-1968; conspiracy to violate the RICO Act, 18 U.S.C. § 1962(d); unjust enrichment; conversion; and civil conspiracy. (Doc. 1). On August 26, 2014, Chesapeake Energy filed a motion to dismiss the plaintiffs' complaint pursuant to Fed.R.Civ.P. 12(b)(6), (Doc. 23 ), along with a supporting brief, (Doc. 24 ). That same day, Access Midstream filed a motion to dismiss the plaintiffs' complaint pursuant to Fed.R.Civ.P. 12(b)(6), (Doc. 26 ), along with a supporting brief, (Doc. 27 ). The plaintiffs filed a combined brief responsive to the defendants' motions to dismiss on October 3, 2014. (Doc. 41 ). On October 30, 2014, Access Midstream and Chesapeake Energy filed their reply briefs, (Doc. 44, Doc. 45, respectively). II. STANDARD OF REVIEW The defendants' motion to dismiss is brought pursuant to the provisions of Fed.R.Civ.P. 12(b)(6). This rule provides for the dismissal of a complaint, in whole or in part, if the plaintiff fails to state a claim upon which relief can be granted. The moving party bears the burden of showing that no claim has been stated, Hedges v. United States, 404 F.3d 744, 750 (3d Cir.2005), and dismissal is appropriate only if, accepting all of the facts alleged in the complaint as true, the plaintiff has failed to plead “enough facts to state a claim to relief that is plausible on its face,” Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (abrogating “no set of facts” language found in Conley v. Gibson, 355 U.S. 41, 45-46 (1957)). The facts alleged must be sufficient to “raise a right to relief above the speculative level.” Twombly, 550 U.S. at 544. This requirement “calls for enough fact[s] to raise a reasonable expectation that discovery will reveal evidence of” necessary elements of the plaintiff's cause of action. Id. Furthermore, in order to satisfy federal pleading requirements, the plaintiff must “provide the grounds of his entitlement to relief,” which “requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Phillips v. County of Allegheny, 515 F.3d 224, 231 (3d Cir.2008) (brackets and quotations marks omitted) (quoting Twombly, 550 U.S. 544, 127 S.Ct. at 1964-65). *2 In considering a motion to dismiss, the court generally relies on the complaint, attached exhibits, and matters of public record. See Sands v. McCormick, 502 F.3d 263 (3d Cir.2007). The court may also consider “undisputedly authentic document[s] that a defendant attaches as an exhibit to a motion to dismiss if the plaintiff's claims are based on the [attached] documents.” Pension Benefit Case 1:16-cv-01958-YK Document 24-1 Filed 11/15/16 Page 34 of 49 Suessenbach Family Ltd. Partnership v. Access Midstream..., Not Reported in... 2015 WL 1470863 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 2 Guar. Corp. v. White Consol. Indus., 998 F.2d 1192, 1196 (3d Cir.1993). Moreover, “documents whose contents are alleged in the complaint and whose authenticity no party questions, but which are not physically attached to the pleading, may be considered.” Pryor v. Nat'l Collegiate Athletic Ass'n, 288 F.3d 548, 560 (3d Cir.2002). However, the court may not rely on other parts of the record in determining a motion to dismiss. See Jordan v. Fox, Rothschild, O'Brien & Frankel, 20 F.3d 1250, 1261 (3d Cir.1994). Generally, the court should grant leave to amend a complaint before dismissing it as merely deficient. See, e.g., Fletcher-Harlee Corp. v. Pote Concrete Contractors, Inc., 482 F.3d 247, 252 (3d Cir.2007); Grayson v. Mayview State Hosp., 293 F.3d 103, 108 (3d Cir.2002); Shane v. Fauver, 213 F.3d 113, 116-17 (3d Cir.2000). “Dismissal without leave to amend is justified only on the grounds of bad faith, undue delay, prejudice, or futility.” Alston v. Parker, 363 F.3d 229, 236 (3d Cir.2004). III. DISCUSSION A. Plaintiffs' Allegations The following allegations are taken directly from the plaintiffs' complaint. As set forth above, the court accepts any factual allegations as true for purposes of the instant motions to dismiss. Induced hydraulic fracturing, commonly known as hydrofracking or fracking, is a technique used to release petroleum, natural gas (including shale gas, tight gas, and coal seam gas), or other substances for extraction. The technique creates fractures from a wellbore drilled into reservoir rock formations. Fracking enables the production of natural gas and oil from rock formations below the earth's surface, generally 5,000 to 20,000 feet. At such depth, there may not be sufficient permeability or reservoir pressure to allow natural gas and oil to flow from the rock into the wellbore at economic rates. Given the extremely low natural permeability of shale, creating fractures in the rock is critical to extract gas from shale reservoirs. Large deposits of natural gas have been discovered in various shale deposits throughout the United States, including in Pennsylvania, and several oil and gas exploration and development companies have been actively accessing these deposits due to the development of fracking technology that allows the deposits to be exploited. The Marcellus Shale formation located in and beyond Pennsylvania is one of the largest natural gas reserves in the world. Plaintiffs' lands are located in the Marcellus Shale. Gaining access to the deposits in the shale regions, including the Marcellus Shale, typically involves purchasing or leasing land or mineral rights in the vicinity of suspected deposits and attempting to develop profitable wells. Once a natural gas deposit is reached, a wellhead is placed on the deposit. After a wellhead is in place, natural gas can be moved from the well through gathering pipes and ultimately transported through an intrastate transmission pipeline. Intrastate transmission pipelines connect to major interstate transmission pipelines which transport natural gas throughout the United States. The transport and processing steps which follow removal of natural gas from the wellhead, but precede entry of the gas into an interstate transmission pipeline, are sometimes referred to as “gathering.” Access Midstream operates between the lessors at the wellhead and the interstate pipeline system. *3 Processing can also include certain services to make gas suitable for entry into the interstate pipeline system, such as dehydration when the natural gas has a high water content. Access Midstream as indicated, however, “[i]n general, the natural gas in the northern Marcellus Shale is lean and typically requires little to no treatment to remove contaminants.” While federal rules limit fees that can be charged on the interstate pipelines to prevent gouging, drilling companies levy fees on local pipelines, known as gathering lines. However, even where such fees are deducted, they must be reasonable and actual. On August 3, 2010, Chesapeake Energy formed Access Midstream and began spinning off its midstream assets, which included its natural gas gathering and intrastate pipeline operations, through a series of sales to Access Midstream in order to fund its ongoing operations. During this time, Chesapeake Energy was using its subsidiaries to artificially inflate deductions charged to lessors. In December 2011, Chesapeake Energy completed the sale of Appalachia Midstream Services, L.L.C., (“AMS”), a wholly owned subsidiary of Chesapeake Case 1:16-cv-01958-YK Document 24-1 Filed 11/15/16 Page 35 of 49 Suessenbach Family Ltd. Partnership v. Access Midstream..., Not Reported in... 2015 WL 1470863 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 3 Midstream, and AMS's Marcellus Shale midstream assets for $865 million in total consideration. In February 2012, Chesapeake Energy announced its intent to sell additional midstream assets, and on December 20, 2012, Chesapeake Energy completed the sale of its subsidiary Chesapeake Midstream Operating, L.L.C., (“CMO”), to Access Midstream, including CMO's Marcellus Shale midstream assets, for $2.16 billion in total consideration. When Chesapeake Energy sought to spinoff its gathering operations, it turned to J. Michael Stice, the President and Chief Operating Officer of Chesapeake Midstream and Senior Vice President of Natural Gas Projects for Chesapeake Energy from November 2008 through December 2012, to run the operation. Mr. Stice then became the Chief Executive Officer of Access Midstream following its acquisition of the CMO midstream assets. Domenic J. Dell'Osso, Jr., was the Executive Vice President and Chief Financial Officer of Chesapeake Energy since November 2010 and Chief Financial Officer of Chesapeake Midstream from August 2008 to November 2010. Both Stice and Dell'Osso have served as directors of Access Midstream's general partner, Access Midstream Partners GP, L.L.C., since July 2012 and July 2011, respectively. According to an article published by ProPublica 1 , an independent nonprofit organization, post-spinoff agreements between Chesapeake Energy and Access Midstream guarantee that Chesapeake Energy and certain of its subsidiaries and affiliates get a rebate of some of the monies they will pay out to Access Midstream in the form of payments for services and additional assets. Among other things, Access Midstream received a guarantee from Chesapeake Energy that personnel and employees would be made available to it during a transitional period and that certain services would be provided to Access Midstream that would be paid going forward. Access Midstream is managed and directed by former and current Chesapeake Energy officers, has made extensive use of other Chesapeake Energy employees in conducting its operations, and continues to pay Chesapeake Energy and affiliates and subsidiaries for a variety of services. 1 Lustgarten, Abrahm, “Chesapeake Energy's $5 Billion Shuffle”, ProPublica, March 13, 2014, available at http://www.propublica.org/ar ticle/ chesapeake-energys-5-billion-shuffle, last accessed March 19, 2015. *4 In connection with Access Midstream's acquisition of Chesapeake Midstream's operating assets, Access Midstream replaced Chesapeake Midstream as the beneficiary of certain contractual obligations and entered into gas gathering agreements with several Chesapeake Energy subsidiaries, (“Gathering Agreements”). Pursuant to the Gathering Agreements, Chesapeake Energy's subsidiaries agreed to pay Access Midstream for natural gas gathering and transportation services, including intrastate transport. For example, under the Gathering Agreement covering CMO's former Marcellus Shale assets (“Marcellus Gathering Agreement”), Chesapeake Appalachia's 2 payments to Access Midstream for gas gathering and transportation services are referred to as the “Marcellus fee” and described as “a cost-of-service based fee.” However, the ProPublica report details that the fee is not actually “cost-of-service” based, but was instead intended to provide Access Midstream with a guaranteed, above-market return as an incentive and consideration for the payments it made to Chesapeake Energy. Explained in the ProPublica article, “[a]n executive at a rival company who reviewed the deal at ProPublica's request said it looked like Chesapeake had found a way to make the landowners pay the principal and interest on what amounts to a multi-billion loan to the company from Access Midstream.” 2 Chesapeake Appalachia is a subsidiary to Chesapeake Energy. In fact, the Marcellus Gathering Agreement has a 15- year term and provides that on January 1 of each year, the Marcellus fee will be recalculated to provide “a specified pre-income tax rate of return on invested capital.” In other words, it was structured to insure a guaranteed rate of return to Access Midstream for a 15- year period. ProPublica has reported the 15% rate of return: “Chesapeake pledged to pay Access enough in fees to repay the $5 billion plus a 15 percent return on its pipelines.” Chesapeake's ability to follow through on its promise to lock in Access Midstream's rate of return relies on continued inflation of gathering costs and other services paid to Access Midstream and deducted from oil and gas lessors' royalty payments. Fully aware of the true market rates of such services, Chesapeake Energy and its subsidiaries agreed to this above-market rate of return and then Chesapeake Energy agreed to pay Access Midstream supra-competitive prices Case 1:16-cv-01958-YK Document 24-1 Filed 11/15/16 Page 36 of 49 Suessenbach Family Ltd. Partnership v. Access Midstream..., Not Reported in... 2015 WL 1470863 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 4 for natural gas gathering and transportation services, as part of the renewed agreement with Access Midstream to repay the off-balance sheet loan provided by Access Midstream to Chesapeake Energy. Chesapeake Energy's subsidiaries, such as Chesapeake Appalachia, have, in turn, passed the costs of the services along to Pennsylvania oil and gas lessors, such as plaintiffs, by deducting the inflated expenses built into the Marcellus fee from lessors' royalty payments. The ProPublica article details how Chesapeake Energy's subsidiaries have deducted amounts far in excess of their payments to Access Midstream for gas gathering and transportation services. Chesapeake Energy's subsidiaries have paid fees, which are then charged to lessors, for gas pipeline transport to Access Midstream that are many multiples (in some cases, more than 30 times) of Access Midstream's actual costs. These “wrongful” royalty deductions are detailed in the plaintiffs' royalty statements, upon which the plaintiffs relied and assumed were reasonable. These deductions were inflated, improper, completely unrelated to the “cost of services,” did not serve to enhance the marketability of the gas, and instead, merely served to enrich the co-conspirators who devised the scheme. Access Midstream's predominant source of revenue is gathering fees and Chesapeake Energy accounts for approximately 84% of Access Midstream's business. *5 The Suessenbachs entered into an oil and gas lease with Anadarko E & P Company LP, (“Anadarko”), on or about May 11, 2006, covering 135.6 acres of their property, (“Primary Lease”). Prior to May 28, 2010, Chesapeake Appalachia entered into an agreement with Anadarko to purchase a portion of the Suessenbach's leasehold and thereby became bound by its terms. Separately, on or about December 19, 2008, the Suessenbachs entered into a Paid Up Oil & Gas Lease directly with Chesapeake Appalachia for a 2-acre parcel of land not previously covered by the Primary Lease. In order to facilitate Chesapeake Energy's drilling and fracking operations in the Marcellus Shale formation, Chesapeake Energy's subsidiaries, such as Chesapeake Appalachia, enter into agreements to lease land from Pennsylvania residents. In some cases, Chesapeake Energy's subsidiaries purchase rights to existing leases to which it becomes a party as lessee. These lease agreements, such as those originally entered into by the Suessenbachs, give Chesapeake Energy's subsidiaries the right to extract oil and natural gas from lessors' lands and to transport and sell the oil and gas. In return for the right to extract oil and gas, the lease agreements promise a royalty to the lessors based on the price ultimately realized by Chesapeake Energy's subsidiaries for the oil and gas. Pursuant to Pennsylvania's Guaranteed Minimum Royalty Act, (“GMRA”), that amount is the minimum permissible by law and requires leaseholders to receive at least 12.5%, or one-eighth, of the sales price of the gas extracted from their land. The Suessenbach's Primary Lease states: LESSEE shall pay the LESSOR on oil and liquid hydrocarbons produced and saved from the premises ... the market value at the well of one eighth (1/8) of the oil and liquid hydrocarbons so used or sold. In no event shall the gas royalty payable hereunder be computed on the basis of a price the collection of which by LESSEE is unlawful or prohibited by order or regulation of any governmental authority having jurisdiction, and market value at the well shall not exceed the amount realized by LESSEE for such production computed at the well ... LESSEE may pay all taxes and fees levied upon LESSOR'S royalty share of production of oil and gas, and deduct the amount so paid from any monies payable to LESSOR hereunder. The 2-Acre Lease states: [Lessee agrees] [t]o pay Lessor an amount equal to one-eighth (1/8) of the revenue realized by Lessee for all gas and the constituents thereof produced and marketed from the Leasehold, less the cost to transport, treat and process the gas and any losses in volumes to point of Case 1:16-cv-01958-YK Document 24-1 Filed 11/15/16 Page 37 of 49 Suessenbach Family Ltd. Partnership v. Access Midstream..., Not Reported in... 2015 WL 1470863 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 5 measurement that determines the revenue realized by Lessee. The Primary Lease allows deductions for the “production of oil and gas” and the 2-Acre Lease identifies deductions for “the cost to transport, treat and process the gas,” but nowhere does either lease permit deductions in excess of actual cost or which are unreasonable. Royalty deductions must be reasonable and must be proportionate to lessors' minimum guaranteed royalty under the GMRA, i.e., lessors' post-production deductions cannot exceed 12.5% of total post-production costs. Notwithstanding these limitations, defendants, under the guise of Chesapeake Energy's subsidiaries' agreements with lessors, exploited deductions language from the lease agreements to, among other things, shift repayment of Chesapeake Energy's off-balance sheet loan from Access Midstream to the lessors. Plaintiffs allege their royalty statements reflect the following: *6 • October 23, 2012 deduction of approximately 23% from the royalty payment; • November 21, 2012 deduction of approximately 25% from the royalty payment; • February 21, 2013 deduction of approximately 19% from the royalty payment; • April 23, 2013 deduction of approximately 21% from the royalty payment; • May 23, 2013 deduction of approximately 19% from the royalty payment; • October 23, 2013 deduction of approximately 24% from the royalty payment; and • January 31, 2014 deduction of approximately 39% from the royalty payment. By taking these and other deductions, and thereby reducing royalty payments, defendants capitalized on a contract to which they were not parties, but through which they could produce guaranteed revenue by forcing the plaintiffs to pay grossly inflated deductions. Chesapeake Energy reported to investors in September 2013 that its expenses related to pipeline and marketing business roughly doubled in the months after it sold certain pipelines and that its revenues for that part of the business also increased accordingly, covering the new costs. Industry analysts could not explain the change in revenues and expenses. According to the allegations in the plaintiffs' complaint, the “scheme” alleged above constitutes mail and/or wire fraud in violation of 18 U.S.C. §§ 1341 and 1343. To this extent, the plaintiffs allege that the conduct of defendants and their co-conspirator, Chesapeake Appalachia, constituted the execution of a scheme and artifice to deprive oil and gas lessors in Pennsylvania of royalties properly due them by means of fraudulent pretenses and representations through the use of the United States mail in violation of 18 U.S.C. § 1341. Their use of the mails formed a central feature of the scheme and included sending oil and gas lessors royalty statements and royalty payments which reflected deductions for artificially inflated gas gathering and transportation fees pursuant to the Gathering Agreements. According to the plaintiffs' complaint hundreds, and likely many thousands, of such royalty statements and royalty payments have been sent to Pennsylvania lessors through the mails and wires across state lines. Each of these statements and payments fraudulently represented that deductions for gas gathering and transportation costs were legitimately incurred and constituted permissible deductions from royalties under the oil and gas leases. Moreover, defendants and their co-conspirator, Chesapeake Appalachia, made fraudulent and untrue statements regarding deductions and volume adjustments for marketing that were represented to reflect legitimate costs rather than the scheme as alleged, including by multiple email transmissions. The plaintiffs allege that each of the royalty statements sent to plaintiffs represent an instance of mail fraud. The plaintiffs allege that the defendants' conduct constituted multiple violations of mail fraud under 18 U.S.C. § 1341, which is a predicate offense for purposes of 18 U.S.C. § 1962(c). *7 In addition, defendants and their co-conspirator, Chesapeake Appalachia, have on a monthly basis transferred payments between themselves by wire, which payments were made pursuant to the non-arm's length and conspiratorial agreements described above. The plaintiffs allege that this conduct constituted multiple violations of wire fraud under 18 U.S.C. § 1343, which is also a predicate offense for purposes of 18 U.S.C. § 1962(c). The plaintiffs also claim that the scheme, as alleged above, constitutes “honest services” fraud in violation Case 1:16-cv-01958-YK Document 24-1 Filed 11/15/16 Page 38 of 49 Suessenbach Family Ltd. Partnership v. Access Midstream..., Not Reported in... 2015 WL 1470863 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 6 of 18 U.S.C. § 1346. At all relevant times, defendants and their co-conspirator, Chesapeake Appalachia, owed legal duties to render services to lessors. In all cases, those duties included extracting oil and natural gas and deducting expenses only where appropriate. The value of these services depended on defendants and Chesapeake Appalachia rendering those services in an honest manner. Nevertheless, the plaintiffs allege that defendants misused their position and thereby breached their obligation to render “honest services” to lessors. The plaintiffs allege that defendants devised a scheme or artifice to defraud plaintiffs and other landowners of their intangible right to Chesapeake Appalachia's honest services through these inflated deductions. Based upon the above allegations, the plaintiffs set forth five causes of action. First, the plaintiffs allege that the defendants' actions amounted to violations of the RICO Act. Specifically, they allege that the plaintiffs and each member of the purported class are “persons” as that term is defined in 18 U.S.C. §§ 1961(3) and 1962(c). The plaintiffs allege that, for purposes of this claim, the RICO “enterprise” is an association-in-fact, as the term is defined in 18 U.S.C. §§ 1961(4) and 1962(c), consisting of defendants, including their respective officers, directors, employees, agents, and direct and indirect subsidiaries, (the “Enterprise”). The Enterprise was separate and distinct from the persons that constituted the Enterprise and was primarily managed by Chesapeake Energy, which organized the fraudulent scheme and procured the involvement of Access Midstream. Each of the defendants, however, agreed to, and did, participate in the conduct of the Enterprise, and carried out their roles using broad and independent direction. The companies and individuals that constitute the Enterprise were associated for the common purpose of defrauding leaseholders by overcharging them for costs associated with extraction of oil and natural gas which the co-conspirators deemed to be expressly permitted by leaseholder agreements between lessors and Chesapeake Appalachia. At all relevant times, the Enterprise was engaged in, and its activities affected, interstate commerce. The proceeds of the Enterprise were distributed to its participants, including Chesapeake Energy and Access Midstream. The Enterprise has operated since at least 2010, and its operation is ongoing. The Enterprise has an ascertainable structure separate and apart from the pattern of racketeering in which defendants engaged. *8 The plaintiffs allege that at all relevant times, in violation of 18 U.S.C. § 1962(c), the defendants conducted the affairs of the Enterprise through a pattern of racketeering activity as defined in RICO, 18 U.S.C. § 1961(5), by virtue of the conduct set forth above. The defendants have conducted the affairs of the Enterprise and participated in the operation and management thereof at least through the following conduct: • defendants knew that the fees charged by Access Midstream, including under the Marcellus Gathering Agreement, were far in excess of the market rates of such fees; • defendants knew and agreed that Access Midstream would rebate a portion of these inflated fees to Chesapeake Energy and its subsidiaries and affiliates, ostensibly for the use of other equipment and services; • defendants knew and agreed that the inflated gas gathering and transportation fees would be passed along to Pennsylvania oil and gas lessors by Chesapeake Appalachia in the form of cost deductions from the lessors' royalty payments; • the unlawful conduct by defendants, through the alleged association-in-fact Enterprise, deprived thousands of lessors of their rightful royalty payments, was continuous and open-ended, and was intended to continue and continues today; and • plaintiffs and the members of the class were the intended targets of the scheme that was facilitated by the knowing and purposeful involvement of defendants. The financial harms suffered by plaintiffs and members of the class were the direct result of that conduct and were the intended and reasonably foreseeable consequence of such conduct. The pattern of racketeering activity consisted of mail and/ or wire fraud in violation of 18 U.S.C. §§ 1341 and 1343. Specifically, defendants engaged in an intentional scheme or artifice to defraud lessors and to obtain money or property from said lessors through false or fraudulent pretenses, representations, and promises. Case 1:16-cv-01958-YK Document 24-1 Filed 11/15/16 Page 39 of 49 Suessenbach Family Ltd. Partnership v. Access Midstream..., Not Reported in... 2015 WL 1470863 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 7 The conduct of defendants in violation of the mail and wire fraud statutes included without limitation, a fraudulent scheme to deprive the lessors of their intangible rights to Chesapeake Appalachia's “honest services” in violation of 18 U.S.C. § 1346. As alleged in the complaint, Chesapeake Appalachia owed a contractual obligation to render services to the lessors. Chesapeake Appalachia owed a duty to render those services in an honest manner. Nevertheless, defendants misused their position to interfere with the contractual obligations to which the lessors were entitled. Chesapeake Appalachia thereby was caused to breach its obligations to render “honest services.” Defendants also owed a duty not to charge unreasonable fees to Chesapeake Appalachia which, known by defendants, would be passed on to lessors. Each of the defendants intentionally and willfully conspired and participated in the “honest services” violations. Specifically, each of the defendants participated in devising and carrying out the scheme through the activities alleged in the complaint. *9 The plaintiffs allege that it was reasonably foreseeable to the defendants that the mails and/or wires would be used in furtherance of the scheme, and the mails and/or wires were in fact used to further and execute the scheme. The nature and pervasiveness of the Enterprise necessarily entailed frequent wire and/or mail transmissions. The plaintiffs allege that the precise dates of such transmissions cannot be determined without access to the books and records of the defendants. For the purpose of furthering and executing the scheme, the defendants regularly transmitted and caused to be transmitted by means of wire communication in interstate commerce writings, electronic data, and funds, and also regularly caused matters and things to be placed in post offices or authorized depositories, or deposited or caused to be deposited matters or things to be sent or delivered by a private or commercial interstate carrier. Defendants used the mails and/or wires for the purpose of furthering and executing the scheme. The plaintiff's royalty statements attached to the complaint are examples of instances of the pattern of racketeering activity consisting of mail and/or wire fraud violations engaged in by the defendants. Each electronic and/or postal transmission was incident to an essential part of the scheme. Additionally, each electronic and/or postal transmission constituted a predicate act of wire and/or mail fraud in that each transmission furthered and executed the scheme to defraud lessors. Defendants each participated in the scheme to defraud knowingly, willfully, and with a specific intent to defraud lessors into paying and/or incurring falsely inflated, unauthorized charges in connection with their oil and gas leases. The predicate acts of mail and wire fraud constitute a pattern of racketeering activity as defined in 18 U.S.C. § 1961(5). The predicate acts were not isolated events, but were related acts aimed at the common purpose and goal of defrauding lessors to pay and incur the falsely inflated, unauthorized charges with respect to oil and gas leases and thereby enable defendants to reap illicit profits. Defendants were common participants in the predicate acts and their activities amounted to a common course of conduct, with similar pattern and purpose, intended to deceive lessors. As a direct and proximate result of violations of 18 U.S.C. § 1962(c) by defendants, plaintiffs have been injured in their business or property within the meaning of 18 U.S.C. § 1964(c). Plaintiffs paid falsely inflated, unauthorized royalty deductions by reason, and as a direct, proximate, and foreseeable result, of the scheme alleged. Plaintiffs' continued payment of inflated and unreasonable deductions evidence their reliance on the defendants' misstatements. Moreover, the overcharging of plaintiffs for gathering services was an integral and necessary part of the scheme, as those overcharges constituted repayment of, among other things, the cash payment made by Access Midstream to Chesapeake Energy. *10 In their second cause of action, the plaintiffs allege that the defendants violated 18 U.S.C. § 1362(d) by conspiring to violate 18 U.S.C. § 1362(c), the substantive elements of which are alleged above. The plaintiffs' third cause of action is a state law claim for unjust enrichment. In support of this claim, the plaintiffs allege that the defendants, by their policies and actions, benefitted from, and increased their profits by effecting a scheme which deprived plaintiffs of the full royalties due to them. Chesapeake benefitted from the royalty amounts wrongfully withheld by its subsidiary, Chesapeake Appalachia, whose financial results are included in Chesapeake Energy's and whose costs were Case 1:16-cv-01958-YK Document 24-1 Filed 11/15/16 Page 40 of 49 Suessenbach Family Ltd. Partnership v. Access Midstream..., Not Reported in... 2015 WL 1470863 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 8 substantially reduced by not paying the proper royalty amounts. Access Midstream benefitted from the royalty amounts wrongfully withheld by Chesapeake Appalachia because some of the monies which should have been paid to oil and gas lessors were instead paid to Midstream Access. Defendants accepted and received the benefits of royalty monies properly due plaintiffs. The plaintiffs allege that it is inequitable and unjust for defendants to retain these monies, which were procured by fraudulent pretenses and representations. According to the plaintiffs, they are entitled to relief for this unjust enrichment in an amount equal to the benefits unjustly retained by defendants plus interest on these amounts. As their fourth cause of action, the plaintiffs allege the state law claim of conversion. Specifically, the plaintiffs allege that defendants wrongfully and intentionally caused deductions to be taken from their royalty payments and that they were entitled to receive the wrongfully deducted amounts pursuant to leasehold contracts. Plaintiffs allege that defendants collected these wrongful deductions through agreements between affiliates of Chesapeake Energy and Access Midstream that resulted in charges assessed against lessors' royalty payments by Chesapeake Appalachia. Defendants have retained these funds unlawfully without the consent of plaintiffs and have deprived them from exercising control over these funds which belong to the plaintiffs. The plaintiffs allege that the defendants intend to permanently deprive plaintiffs of these funds. The funds are specific and readily identifiable pursuant to royalty statements largely in the control of defendants or Chesapeake Appalachia. The plaintiffs allege that the funds taken by Chesapeake Appalachia ultimately were received by defendants as part of the coordinated conduct alleged above. The plaintiffs' final cause of action is a state law civil conspiracy claim which alleges that defendants have conspired and combined with each other, and with third parties, to make wrongful deductions from leaseholders' royalty payments, and have achieved a meeting of the minds, through either express or tacit agreement, on an object or course of action of the conspiracy, including depriving plaintiffs of their right to royalties pursuant to leasehold contracts. The plaintiffs allege that defendants have formed and operated a civil conspiracy with each other, performing as part of the conspiracy numerous overt acts in furtherance of the common design, including one or more unlawful acts which were performed to accomplish a lawful or unlawful goal, or one or more lawful acts which were performed to accomplish an unlawful goal. The plaintiffs allege that the defendants conspired to convert their property and intended to injure, and succeeded in injuring, plaintiffs to the extent of the wrongful deductions alleged in the complaint without legal justification. B. Defendants' Motions to Dismiss 3 3 In large part, the defendants' motions to dismiss are duplicative and are therefore given consolidated consideration. *11 The defendants have filed motions to dismiss the plaintiffs' complaint pursuant to Fed.R.Civ.P. 12(b)(6) arguing that, for several reasons, the plaintiffs' complaint does not state a RICO claim. The federal RICO statute creates a civil remedy, including an award of treble damages, costs, and attorneys fees, for “any person injured in his business or property” by a violation of one of RICO's substantive provisions. 18 U.S.C. § 1964(c). Pursuant to 18 U.S.C. § 1962(c), it is unlawful for “ ‘any person’ who is employed by or associated with ‘any enterprise’ affecting interstate commerce to ‘participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity.’ “ Genty v. Resolution Trust Corp., 937 F.2d 899, 906 (3d Cir.1991) (quoting 18 U.S.C. § 1962(c)). The RICO statute defines racketeering activity by a list of crimes, or “predicate offenses,” including federal crimes such as bribery, mail fraud and wire fraud. 18 U.S.C. § 1961(1). In this case, the plaintiffs allege that the predicate offenses consisted of mail and wire fraud. The elements of mail and wire fraud are: (1) a scheme or artifice to defraud for the purpose of obtaining money or property, (2) participation by the defendant with specific intent to defraud, and (3) use of the mails or wire transmissions in furtherance of the scheme. United States v. Riley, 621 F.3d 312, 329 (3d Cir.2010); United States v. Yusuf, 536 F.3d 178, 187-88 & n. 14 (3d Cir.2008). The defendants argue that the plaintiffs have failed to allege cognizable injury because the gathering rate related to the royalties did not increase after the defendants entered into the Marcellus Agreement in December 2012. 4 Upon review, the plaintiffs have alleged the Marcellus Gathering Agreement, through which they allege the inflated gathering expenses were justified under Case 1:16-cv-01958-YK Document 24-1 Filed 11/15/16 Page 41 of 49 Suessenbach Family Ltd. Partnership v. Access Midstream..., Not Reported in... 2015 WL 1470863 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 9 the guise of legitimacy, “provides that, on January 1 of each year, the Marcellus fee will be recalculated.” They have further alleged that the deductions from their royalty statements jumped from 24% in October 2013 to 39% in January 2014. The plaintiffs allege that this increase in deductions is consistent with Chesapeake's report “to investors in September 2013 that its expenses related to pipeline and marketing business roughly doubled in the months after it sold certain pipelines”, as well as statements by industry analysts who were unable to explain the “staggering” increase in gathering and transportation expenses. At this stage of the proceedings, the court finds the plaintiffs have sufficiently pleaded an injury. Thus, the defendants' motions to dismiss will be denied on this basis. 4 In support of this argument, Chesapeake Energy provides that an effective relevant gathering rate can be calculated from the face of the plaintiffs' royalty statements attached to the complaint which evidences that the plaintiffs' gathering rate did not increase after December 2012. (Doc. 24, p. 11; Doc. 45, p. 5). Whether the royalty statements appended to the plaintiff's complaint can, in fact, be demonstrated to support the plaintiffs' claim of decreased royalty payments after the defendants' entered into the gathering agreements, or whether Chesapeake Energy's calculation is the accepted method by which to calculate such gathering rate, are questions of fact which the court is not to resolve on a motion to dismiss. The plaintiffs have alleged that deductions from their royalties increased after the defendants entered into certain gathering agreements. This is sufficient to allege injury at this stage of the proceedings, and it will be for the plaintiff to establish those injuries further on in the litigation. Even assuming that the plaintiffs have alleged injury, the defendants argue that the complaint does not plausibly allege that defendants' alleged predicate acts of mail and wire fraud caused the plaintiffs' injuries. The defendants argue that there is a disconnect between the harm alleged, i.e., the gathering charges that were too high, and the predicate acts which the plaintiffs allege, i.e., the mailing of royalty statements. According to the defendants, this is because the plaintiffs' actual claim is that they were harmed by the Gathering Agreement itself and not the mailings that followed. Chesapeake Energy argues the plaintiffs' failure to allege that the predicate acts actually caused their harm is fatal to their RICO claim. *12 RICO plaintiffs must demonstrate that their injuries were the direct result of the defendants' predicate acts. See Anza v. Ideal Steel Supply Corp., 547 U.S. 451, 457 (2006) (quoting Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 497 (1985)) (“The compensable injury flowing from a violation of [§ 1962(c) ] ‘necessarily is the harm caused by predicate acts sufficiently related to constitute a pattern, for the essence of the violation is the commission of those acts in connection with the conduct of an enterprise.’ ”). The plaintiffs cannot establish liability merely by showing that they suffered harm from an otherwise legal action of the enterprise unconnected to the predicate acts. See V-Tech Svcs ., Inc. v. Street, 215 Fed.App'x. 93, 96 (3d Cir.2007). Instead, the plaintiffs must demonstrate that the predicate acts directly and proximately caused the injury of which the plaintiffs complain. See id. (“[P]roximate cause requires a direct relation between the injury claimed and the injurious conduct alleged.”); see also Smith v. Berg, 247 F.3d 532, 539 (3d Cir.2001). Three factors govern whether the plaintiffs have established the requisite proximate cause for a RICO claim: (1) whether the plaintiffs were directly harmed by the defendants' predicate acts, (2) whether damages are speculative or concrete, and (3) whether alternative potential plaintiffs exist who could better redress the harm alleged. See Allegheny Gen. Hosp. v. Philip Morris, Inc., 228 F.3d 429, 443 (3d Cir.2000). Upon review of the plaintiffs' filings, the plaintiffs have alleged that the defendants conspired to provide Chesapeake Energy with needed cash by effecting an off-balance sheet loan and satisfying repayment of the loan by disguising inflated deductions from lessors' royalty payments. Specifically, it is alleged that the defendants conspired to “extract billions of dollars in royalties owed to Plaintiffs and other lessors by artificially manipulating and deducting from royalty payments the cost of ‘marketing,’ ‘gathering,’ and ‘transporting’ natural gas. The plaintiffs allege that the mailings at issue in this case were incident to an essential part of the scheme. In order to carry out the scheme, defendants sent through the mail statements reflecting the artificially inflated deduction for gas gathering and transportation fees. According to the plaintiffs' complaint, the mailings were a key component in disguising the true nature of the deductions from the plaintiffs' royalty payments. The plaintiffs allege that the defendants artificially inflated the gathering and transportation costs so that the amounts reflected on the royalty statements sent to the plaintiffs Case 1:16-cv-01958-YK Document 24-1 Filed 11/15/16 Page 42 of 49 Suessenbach Family Ltd. Partnership v. Access Midstream..., Not Reported in... 2015 WL 1470863 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 10 did not reflect the true cost-of-service, but instead reflected the cost-of-service with significant additional amounts added on so that Chesapeake Energy could repay Access Midstream. According to the plaintiffs, these mailings were further designed to lull plaintiffs and other lessors into believing that no fraudulent scheme had occurred. In fact, the Third Circuit has found that mailings “designed to lull victims into a false sense of security, postpone their ultimate complaint to the authorities, and therefore make the apprehension of the defendants less likely than if no mailings had taken place” are sufficient to support a claim for mail fraud. See U.S. v. Lebovitz, 669 F.2d 894, 896 (3d Cir.1982) (quoting U.S. v. Maze, 414 U.S. 395, 403 (1974). The plaintiffs argue that the mailings here, in fact, provided a “cloak of legitimacy” to an otherwise fraudulent scheme deceitfully conveying to the plaintiffs that the deductions from their royalties were authorized. *13 The court finds that, at this stage of the proceedings, the plaintiffs have sufficiently pleaded the requisite proximate cause for a RICO claim. To this extent, they allege that the predicate mailings transmitted the fraudulent royalty statements, as well as the royalty underpayments which were based on the statements. The plaintiffs have further alleged that the harm caused by the fraudulent mailings and wires is concrete and measurable. Finally, the plaintiffs allege that they were directly harmed by the defendants' RICO violations and that others are no better situated to redress the harm alleged. The defendants' motions to dismiss will be denied on this basis. The defendants next argue that the plaintiffs' complaint should be dismissed because the complaint does not adequately allege a scheme to defraud. A scheme to defraud has been defined as “any deliberate plan of action or course of conduct by which someone intends to deceive or cheat another or by which someone intends to deprive another of something of value.” Coleman v. Commonwealth Land Title Ins. Co., 684 F.Supp.2d 595, 614-15 (E.D.Pa.2010). The plaintiffs may satisfy their burden by showing a scheme to defraud involving “some sort of fraudulent misrepresentation or omissions reasonably calculated to deceive persons of ordinary prudence and comprehension .” Id. (quoting Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1415 (3d Cir.1991)). Deceitful statements, half truths, or the knowing concealment of material facts are all actionable under the mail and wire fraud statutes. Id. (citing United States v. Townley, 665 F.2d 579, 585 (5th Cir.1982)). The statements need not be false or fraudulent on their face, and the accused need not misrepresent any fact, since all that is necessary is that the scheme be reasonably calculated to deceive a person of ordinary prudence and comprehension, and that the mail service of the United States be used in the execution of the scheme. Id. Moreover, the plaintiffs must allege that the defendants acted with an intent to defraud, which is to act knowingly and with the intention to deceive or to cheat. Id. (citing United States v. Hoffecker, 530 F.3d 137, 181 (3d Cir.2008)). “An intent to defraud is ordinarily accompanied by a desire or a purpose to bring about some gain or benefit to oneself or some other person or by a desire or a purpose to cause some loss to some person.” Id. (citing United States v. Leahy, 445 F.3d 634, 644 (3d Cir.2006)). Here, the defendants argue that the plaintiffs' claims are barred by the Third Circuit's decision in Kolar v. Preferred Real Estate Invs., Inc., 361 Fed.App'x. 354 (3d Cir.2010), in which the court found that plaintiffs cannot “transmute” a contract claim into a RICO action “by simply appending the terms ‘false’ and ‘fraudulent’ “ to their allegations. Id. at 363-64. However, as set forth in the section outlining the allegations of the plaintiff's complaint, as well as in the section immediately above, the plaintiffs are alleging something more than a simple breach of contract claim. To this extent, the plaintiffs are alleging that the defendants entered into an unlawful agreement to purposefully charge inflated gathering and transportation costs for the specific purpose of disguising the true nature of the deductions from lessors' royalty payments. Thus, beyond the terms of their contracts, of which the defendants are not parties, the plaintiffs allege that the defendants engaged in fraudulent transactions specifically to disguise the fact that the defendants were deducting monies that they were not legally entitled to and were unlawfully profiting at the plaintiffs' expense. These allegations, even if connected to the leases, concern a specific intent to defraud and deceive the lessors. These Case 1:16-cv-01958-YK Document 24-1 Filed 11/15/16 Page 43 of 49 Suessenbach Family Ltd. Partnership v. Access Midstream..., Not Reported in... 2015 WL 1470863 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 11 actions, whether or not they also constitute a breach of contract, appear to go beyond a simple breach of contract claim and bring them into the realm of *14 RICO. The court finds that these allegations are sufficient to allege a scheme to defraud and the defendants' motions to dismiss will be denied on this basis. Along this same line, defendant Access Midstream separately argues that, because the plaintiffs' claims sound in contract, until any breach of contract claim is resolved, any damages under RICO are speculative and therefore the RICO claim must be dismissed. As indicated above, the plaintiffs claims go beyond a breach of contract claim. Moreover, to the extent that the plaintiffs can establish their RICO claim, damages related to inflated gathering and transportation costs are readily calculable and therefore not speculative. As such, defendant Access Midstream's motion to dismiss on this basis will be denied. The defendants also argue that the plaintiffs cannot establish “honest services” fraud. (Doc. 24, pp. 18- 19). As indicated previously, the plaintiffs have alleged that the defendants engaged in honest services fraud pursuant to 18 U.S.C. § 1346, which provides that a “ ‘scheme or artifice to defraud’ includes a scheme or artifice to deprive another of the intangible right of honest services.” In Skilling v. United States, 561 U.S. 358, 408-11 (2010), the Supreme Court held that § 1346 criminalizes “fraudulent schemes to deprive another of honest services through bribes or kickbacks.” Id. The plaintiffs here argue that they allege two distinct sets of kickbacks that deprived them of honest services. First, they argue that instead of engaging in arms' length business transactions, Chesapeake Energy paid artificially inflated gathering and transportation fees to Access Midstream for the purpose of rewarding its willingness to provide Chesapeake Energy with a $5 billion loan-with both Access Midstream and Chesapeake Energy knowing fuIl well that the cost of the unreasonably high-priced gathering and transportation costs would be wrongfully assessed to lessors. Second, the plaintiffs argue that Access Midstream rebated a portion of these inflated fees to Chesapeake Energy to induce the continued inflation of gathering and transportation costs. The plaintiffs argue that these kickbacks sufficiently establish that defendants breached their obligations to render honest services. In considering the plaintiffs' claims, while it has been found that the honest services fraud statute covers bribery or kickback schemes involving private individuals, as well as public individuals, the consensus is that there must be shown a fiduciary duty in order to sustain such a claim. Pre-Skilling, courts recognized the viability of a honest services claim against a private individual when the individual stands in a fiduciary relationship with the victim of the fraud. See e.g. United States v. Williams, 441 F.3d 716, 721-724 (9th Cir.2006) (citing United States v. Rybicki, 354 F.3d 124 (2d Cir.2003) (citing precedent from the Second, Eighth, and Tenth Circuits in which the honest services fraud statute was applied to various fiduciary relationships)). Subsequently, in Skilling, the Court limited the honest services conduct to that addressed in cases pre-dating McNalley v. United States, 483 U.S. 350 (1987), the case which prompted Congress to pass § 1346, in order to avoid concerns about unconstitutional vagueness. In its discussion, the Court noted that the ‘solid core’ of honest services precedent involved ‘offenders who, in violation of a fiduciary duty, participated in bribery or kickback schemes.’ Skilling, 561 U.S. at 407 (emphasis added). The plaintiffs have not alleged such a fiduciary relationship in this case. Therefore, the court will grant the defendants' motions to dismiss on this basis. *15 The defendants further argue that the plaintiffs' complaint does not allege a “pattern of racketeering activity” or a “threat of continued criminal activity” as RICO requires and, therefore, it must be dismissed. A pattern of racketeering activity requires proof of two predicate acts, committed within a ten year period, that are “related, and ... amount to or pose a threat of continued criminal activity.” Kehr Packages, Inc. v. Fideicor, Inc., 926 F.2d 1406, 1411-12 (3d Cir.) ((quoting H.J. Inc. v. Northwestern Bell Telephone Co., 492 U.S. 229, 239 (1989)), cert. denied, 501 U.S. 1222 (1991); Bardsley v. Powell, Trachtman, Logan, Carrie & Bowman, P.C., 916 F.Supp. 458, 463 (E.D.Pa.1996), aff'd, 106 F.3d 384 (3d Cir.1996). Predicate acts are “related if they ‘have the same or similar purposes, results, participants, victims, or methods of commission, or otherwise are interrelated by distinguishing characteristics and are not isolated events.’ “ Tabas v. Tabas, 47 F.3d 1280, 1292 (3d Cir.1995) (quoting H.J., Inc., 492 U.S. at 240 ). Continuity can be either an “open ended” or a “closed ended” pattern. Case 1:16-cv-01958-YK Document 24-1 Filed 11/15/16 Page 44 of 49 Suessenbach Family Ltd. Partnership v. Access Midstream..., Not Reported in... 2015 WL 1470863 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 12 Here, the plaintiffs allege a “closed ended” pattern. The “closed ended” pattern simply refers to a “closed period of repeated conduct” and requires a showing of events occurring over a “substantial” period of time. H.J., Inc., 492 U.S. at 241; Tabas, 47 F.3d at 1292. In the Third Circuit, a period of time less than twelve months will not satisfy the close ended requirement. See Tabas, 47 F.3d at 1293. The defendants argue that the plaintiffs' claims all relate to a purported quid pro quo surrounding the Marcellus Gathering Agreement. Because this was a one- time transaction, the defendants argue that it cannot constitute a pattern of racketeering activity. According to the defendants, the continued mailings are of no consequence because the “pattern” requirement is not satisfied just because “a particular fraudulent scheme involved numerous otherwise ‘innocent’ mailings, rather than only a few.” The defendants argue that the court must look beyond the mailings to determine whether the complaint alleges one scheme or separate fraudulent actions. For this same reason, the defendants argue that the complaint does not allege a threat of continued criminal activity. Because the plaintiffs have not alleged that Chesapeake Energy's sale of its midstream assets to Access Midstream will be repeated, the defendants argue that there is no threat of continued activity. The plaintiffs counter that their RICO claims are not simply predicated on the singular act of the defendants entering into the Gathering Agreement, but are predicated as well on the long term and continued deduction of excessive amounts from the plaintiffs' royalty checks under the guise of legitimacy. The plaintiffs allege that the royalty statements and emails had a similar purpose and result, that is to falsely withhold amounts due lessors under the guise of legitimacy. The plaintiffs further allege that they were sent from the same participants, Chesapeake Energy and its affiliates, to similar victims, the lessors, and were part of a grand scheme, which was the creation and repayment of an off-balance sheet loan for Chesapeake Energy. The plaintiffs allege that the defendants' scheme has persisted for several years and that the fifteen year term of the Marcellus Gas Gathering Agreement ensures that the predicate acts will pose a continued threat of criminal activity well into the future. *16 The court is aware, as the defendants cite, of the case law which directs that, in cases involving allegations of mail fraud, the court should look beyond innocent mailings and examine the underlying scheme or artifice to determine whether there is a pattern of racketeering activity. See Kehr Packages, Inc. v. Fidelcor, Inc., supra. However, in this case, the allegations suggest that the mailings are not simply ‘innocent’ mailings, but are in themselves fraudulent in that they contain inflated fees in order to enable the defendants to falsely withhold amounts due lessors under the guise of legitimacy. The court finds the plaintiffs' allegations at this stage of the proceedings, to allege a pattern of racketeering activity. As such, the defendants' motions to dismiss will be denied on this basis. The defendants also argue that the plaintiffs' complaint does not adequately allege that it conducted or participated in the affairs of a RICO enterprise through a pattern of racketeering. The defendants argue that the plaintiffs' allegations that they committed RICO violations through a purported “association- in-fact ... consisting of Defendants, including their respective officers, directors, employees, agents, and direct and indirect subsidiaries” does not allege facts sufficient to establish the “direction” and “nexus” RICO requires. Specifically, Chesapeake Energy argues that the complaint does not adequately allege facts capable of establishing that it “directed” the affairs of the alleged enterprise. A plaintiff must establish that the defendants were associated with and participated in the “operation or management” of the enterprise to bring a cause of action pursuant to civil RICO. Reves v. Ernst & Young, 507 U.S. 170, 184 (1993). In order for a defendant “to conduct or participate” in the affairs of a RICO enterprise, a defendant must, in some capacity, direct the affairs of the enterprise. Id. at 178-79. A defendant will not be liable simply because he provides services that benefit the enterprise; instead, there “must be a nexus between the person and the conduct in the affairs of an enterprise. The operation or management test goes to that nexus. To say it another way, the person must knowingly engage in ‘directing the enterprise's affairs' through a pattern of racketeering activity.” University of Maryland at Baltimore v. Peat, Marwick, Main & Co., 996 F.2d 1534, 1539 (3d Cir.1993). That does not always mean that a defendant must have a managerial position in the enterprise, but only that he or she “knowingly further[s] the illegal aims of the enterprise by carrying out the Case 1:16-cv-01958-YK Document 24-1 Filed 11/15/16 Page 45 of 49 Suessenbach Family Ltd. Partnership v. Access Midstream..., Not Reported in... 2015 WL 1470863 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 13 directives of those in control.” United States v. Parise, 159 F.3d 790, 796 (3d Cir.1998). Here, the plaintiffs have sufficiently alleged that the defendants participated in the conduct of the Enterprise. To this extent, they allege that Chesapeake Energy sought an off-balance sheet loan from Access Midstream, its former subsidiary, disguised as asset sales with repayment to be unlawfully funded by inflated charges to the plaintiffs. The purpose of the off-balance sheet loan was to hide Chesapeake Energy's need for cash without alerting the market to its financial troubles. Instead of repaying the loan with legitimate funds, the plaintiffs allege that Chesapeake Energy, through its wholly owned subsidiary, Chesapeake Appalachia, and Access Midstream entered into gathering agreements knowing that the fees to be charged by Access Midstream were far in excess of the market rates of the fees; knowing that Access Midstream would rebate a portion of the inflated fees to Chesapeake Energy and its subsidiaries and affiliates; knowing that the inflated gas gathering and transportation fees would be passed along to lessors in the form of cost deductions from the lessors' royalty payments; and knowing that the plaintiffs were the intended targets of the scheme. The plaintiffs allege that Chesapeake Energy and Access Midstream were aware that Chesapeake Energy's affiliates had the authority to deduct certain expenses from the lessors' royalty payments and they conspired to abuse that authority to deduct unlawful amounts from lessors' royalty payments in order to enrich themselves. In light of these allegations, the defendants' motions to dismiss will be denied on this basis. *17 The defendants also argue that because the plaintiff's substantive RICO claim fails, so too must their RICO conspiracy claim. With respect to this argument, a RICO conspiracy is not a mere conspiracy to commit the underlying predicate acts. It is a conspiracy to violate RICO-that is, to conduct or participate in the activities of a corrupt enterprise. See Salinas v. United States, 522 U.S. 52, 62 (1997) (“Before turning to RICO's conspiracy provision, we note the substantive RICO offense, which was the goal of the conspiracy [.]” (emphasis added)); Banks v. Wolk, 918 F.2d 418, 421 (3d Cir.1990) (“[A] defendant can be liable under RICO's conspiracy provision for agreeing to the commission of a pattern of racketeering activity.” (emphasis added)); United States v. Elliott, 571 F.2d 880, 902 (5th Cir.1978) (“[T]he object of a RICO conspiracy is to violate a substantive RICO provision here, to conduct or participate in the affairs of an enterprise through a pattern of racketeering activity and not merely to commit each of the predicate crimes necessary to demonstrate a pattern of racketeering activity.”). Thus, if the plaintiff's claim under § 1962(c) does not state a cognizable claim, their § 1962(d) conspiracy claim must necessarily fail. See Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153, 1191 (3d Cir.1993). Here, the court has found that, at this stage of the proceedings, the plaintiffs are entitled to go forward with their substantive RICO claim. In the alternative, Chesapeake Energy argues that the plaintiffs have failed to allege the requisite agreement to sustain a RICO conspiracy claim. In their complaint, the plaintiffs allege that each of the defendants agreed to enter into a scheme which they all knew would require inflated charges to be passed along to lessors under the guise of valid royalty deductions in order for Chesapeake Energy to meet its obligations under the gathering agreements. The plaintiffs' allegations are sufficient for present purposes to allege the requite agreement in order to continue with their RICO conspiracy claim. As such, the defendants' motions to dismiss the plaintiffs' complaint on this basis will be denied. Next, the defendants argue that the plaintiffs' state law claim for unjust enrichment fails because their claim arises under leases and they are therefore limited to a breach of contract claim. Because the leases can provide the plaintiffs with recourse against Chesapeake Appalachia, with which the plaintiffs entered into the leases, the defendants argue that they cannot seek recovery from them through a claim of unjust enrichment. “[T]o establish a claim for unjust enrichment under Pennsylvania law, a party must show ‘benefits conferred on defendant by plaintiff, appreciation of such benefits by defendant, and acceptance and retention of such benefits under such circumstances that it would be inequitable for defendant to retain the benefit without payment of value.’ “ Stoeckinger v. Presidential Financial Corp. of Delaware Valley, 948 A.2d 828, 833 (Pa.Super.Ct.2008)); see also Allegheny Gen. Hosp. v. Philip Morris, Inc., 228 F.3d 429, 447 (3d Cir.2000). “To prevail, ‘a claimant must show that the party against whom recovery is sought has received a benefit that would be unconscionable for [it] to retain.’ “ Mass. Mut. Life Ins. Co. v. Curley, 459 Fed.Appx. 101, 108 (3d Cir.2012) (citations omitted)). Case 1:16-cv-01958-YK Document 24-1 Filed 11/15/16 Page 46 of 49 Suessenbach Family Ltd. Partnership v. Access Midstream..., Not Reported in... 2015 WL 1470863 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 14 *18 Here, the plaintiffs have alleged that a substantial monetary benefit was conferred upon the defendants derived from the inflated gathering costs paid by the plaintiffs which were used by Chesapeake Energy to repay the $5 billion loan to Access Midstream along with a guaranteed rate of return. In addition, they have alleged that the defendants appreciated the benefit from the inflated gathering expenses deducted from the plaintiffs' royalty payments in that Chesapeake Energy was able to obtain needed cash through an off-balance sheet loan while Access Midstream was guaranteed to recover $5 billion plus a 15% return all paid through the inflated royalty deductions. Finally, the plaintiffs have alleged that it is inequitable for the defendants to retain the benefit because it is they who have wrongfully paid the price for the defendants' benefit. While the plaintiffs did enter into leases with Chesapeake Appalachia, the allegations of the complaint are that Chesapeake Energy and Access Midstream were the parties that unjustly benefited from the profits generated from the inflated royalty deductions. Because the plaintiffs are not in contractual privity with either Chesapeake Energy or Access Midstream, the plaintiffs' claim for unjust enrichment may proceed against them. See Baker v. Family Credit Counseling Corp., 440 F.Supp.2d 392, 420 (E.D.Pa.2006) (allowing claims for unjust enrichment to proceed against defendants who were not parties to the original contract) (citing Com. ex rel. Pappert v. Tap Pharm. Products, Inc., 885 A.2d 1127, 1137-38 (Pa.Cmwlth.Ct.2005)). Thus, the court will deny the defendants' motion to dismiss the plaintiffs' unjust enrichment claim. The defendants also argue that the plaintiffs' claim for conversion fails because Pennsylvania law does not permit a plaintiff to convert a breach of contract into a tort action. Along this line, the defendants argue that the conversion claim is barred by the gist of the action doctrine and under the economic loss doctrine. (Doc. 24, pp. 28-30). Pennsylvania courts have defined “conversion as an act of willful interference with a chattel, done without lawful justification, by which any person entitled thereto is deprived of use and possession.” Norriton East Realty Corp. v. Central-Penn Nat'l Bank, 254 A.2d 637, 638 (Pa.1969). A defendant need not engage in “conscious wrongdoing,” but can be liable for conversion through “an intent to exercise a dominion or control over the goods which is in fact inconsistent with the plaintiff's rights.” Id. (citations omitted). The “gist of the action” doctrine is “designed to maintain the conceptual distinction between breach of contract claims and tort claims.” eToll, Inc., v. Elias/Savion Adv., Inc., 811 A.2d 10, 14 (Pa.Super.Ct.2002) (“Tort actions lie for breaches of duties imposed by law as a matter of social policy, while contract actions lie only for breaches of duties imposed by mutual consensus agreements.”). The doctrine bars tort claims “(1) arising solely from a contract between the parties; (2) where the duties allegedly breached were created and grounded in the contract itself; (3) where the liability stems from a contract; or (4) where the tort claim essentially duplicates a breach of contract claim or the success of which is wholly dependent on the terms of a contract.” Reed v. Dupuis, 920 A.2d 861, 864 (Pa.Super.Ct.2007). *19 Similar to the gist of the action doctrine, under the “economic loss doctrine,” a plaintiff may not recover in tort for what is otherwise an allegation sounded in contract. This is especially true when there is no personal injury or property damage. Werwinski v. Ford Motor Co., 286 F.3d 661, 671 (3d Cir.2002) (interpreting Pennsylvania law); Reilly Foam Corp. v. Rubbermaid Corp., 206 F.Supp.2d 643, 658 (E.D.Pa.2002) (same). “Although the Pennsylvania Supreme Court has not ruled on the issue, the Third Circuit has predicted that it would not create an exception to the economic loss doctrine for intentional torts.” Tubman v. USAA Cas. Inc. Co., --- F.Supp.2d ----, 2013 WL 1809345, at *4 (E.D.Pa. Apr. 20, 2013) (citing Werwinski v. Ford Motor Co., 286 F.3d 661, 680-81 (3d Cir.2002). While the Werwinski court predicted that the Pennsylvania Supreme Court would not adopt a blanket exception to the economic loss doctrine for intentional fraud, it also noted with approval an “emerging trend” that “recognize[s] a limited exception to the economic loss doctrine for fraud claims, but only where the claims at issue arise independent[ly] of the underlying contract.” Werwinski, 286 F.3d at 676 (citations omitted). Such an exception would allow a plaintiff to bring a fraud claim “only if the fraud is ‘extraneous to the contract,’ not ‘interwoven with the breach of contract.’ “ Id. (citations omitted). Nevertheless, there remains a split among courts in Pennsylvania and the federal district courts regarding the applicability of Case 1:16-cv-01958-YK Document 24-1 Filed 11/15/16 Page 47 of 49 Suessenbach Family Ltd. Partnership v. Access Midstream..., Not Reported in... 2015 WL 1470863 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 15 the economic loss doctrine to intentional fraud claims. See, e.g., Oldcastle Precast, Inc. v. VPMC, Ltd., 2013 WL 1952090, at *11 (E.D.Pa. May 13, 2013) (collecting cases). With respect to the instant action, the court initially notes here that there is no contract between the plaintiffs and defendants. Moreover, it is not apparent at this stage of the litigation that the gist of the claim sounds in contract as opposed to tort. As such, it is premature to dismiss the plaintiffs' conversion claim under the gist of the action doctrine. “[I]n the context of the gist of the action doctrine, ‘[c]aution must be exercised in dismissing a tort action on a motion to dismiss because whether tort and contract claims are separate and distinct can be a factually intensive inquiry.’ “ Covertech Fabricating, Inc. v. TVM Bldg. Products, Inc., 2014 WL 2605427, at *6 (W.D. Pa. June 11, 2014) (citing Raymond v. Lundy, 2000 WL 804432 (E.D. Pa. June 22, 2000, aff'd sub nom.Lundy v. Hochberg, 79 F. App'x 503 (3d Cir.2003)). See also CH & H Pennsylvania Properties, Inc. v. Heffernan, 2003 WL 22006799, at *6 n. 6 (E.D.Pa. Aug. 20, 2003) (declining to apply the gist of the action doctrine without an intensive inquiry into the facts); Mill Run Associates v. Locke Prop. Co., Inc., 282 F.Supp.2d 278, 291 (E.D.Pa.2003) (same). Moreover, as with the gist of the action doctrine, the conversion claim will not be dismissed on account of the economic loss doctrine. Thus, the defendants' motions to dismiss based upon the gist of the action and economic loss doctrines will be denied. *20 Finally, the defendants argue that the plaintiffs' complaint does not state a civil conspiracy claim because the plaintiffs have failed to plead an actionable underlying tort, because they have not plausibly pled malice, and because their contradictory pleading prevents a finding that “two or more conspirators” agreed to commit an unlawful act. As discussed above, the court has found that the plaintiffs have alleged an actionable tort at this stage of the proceedings. Thus, the defendants' initial basis for dismissing the civil conspiracy claim is without merit. As to the defendants' malice argument, under Pennsylvania common law, a civil conspiracy requires that two or more conspirators reached an agreement to commit an unlawful act or perform a lawful act by unlawful means. See Thompson Coal Co. v. Pike Coal Co., 412 A.2d 466, 472 (Pa.1979); Burnside v. Abbott Laboratories, 505 A.2d 973, 980 (Pa.Super.1985). Additionally, a plaintiff must show an overt act and actual legal damage. Phillips v. Selig, 959 A.2d 420 (Pa.Super.2008) (internal citations omitted). Finally, “[p]roof of malice, i.e., an intent to injure, is essential in proof of a conspiracy.” Commerce Bank/Pennsylvania v. First Union Nat. Bank, 911 A.2d 133, 143 (quoting Thompson Coal Co., 412 A.2d at 472). “Malice requires ... that the sole purpose of the conspiracy was to injure the plaintiff,” and that this intent was without justification. Doltz v. Harris & Assoc., 280 F.Supp.2d 377, 389 (E.D.Pa.2003). Here, the plaintiffs allege that the defendants engaged in a scheme to defraud and deprive the plaintiffs of duly owed royalty payments by manipulating and misrepresenting certain post-production costs incurred and charged. The plaintiff's allege that these inflated costs were deducted from the plaintiff's royalties and used by the defendants to unjustly enrich themselves in relation to the deal made on the $5 billion off-balance sheet loan made by Access Midstream to Chesapeake Energy. No justification has been shown to exist for this scheme. These actions allegedly harmed the plaintiffs. Moreover, knowingly misusing another's property for one's own ends qualifies as malice. See e.g., Strayer v. Bare, 2008 WL 1924092 (M.D.Pa. April 28, 2008). If the plaintiffs can prove their allegations, they would be entitled to relief against the defendants. Therefore, the defendants' motion to dismiss will be denied on this basis. Lastly with respect to this claim, as argued by the plaintiffs, the defendants' argument that the civil conspiracy claim must fail because the plaintiffs have alleged a RICO enterprise, is without merit. Courts have found at the motion to dismiss stage that RICO and civil conspiracy claims can coexist. See e.g., Freedom Medical, Inc. v. Gillespie, 634 F.Supp.2d 490, 517-18 (E.D.Pa.2007); Cranberry Promenade, Inc. v. Cranberry Twp., 2010 WL 653915, *6 (W.D.Pa. Feb. 22, 2010); Marshal v. Fenstermacher, 388 F.Supp.2d 536, 553- 54 (E.D.Pa.2005). Therefore, the defendants' motion to dismiss will be denied on this basis. IV. CONCLUSION *21 Based upon the foregoing, the defendants' motions to dismiss will be granted in part and denied in part. An appropriate order shall issue. Case 1:16-cv-01958-YK Document 24-1 Filed 11/15/16 Page 48 of 49 Suessenbach Family Ltd. Partnership v. Access Midstream..., Not Reported in... 2015 WL 1470863 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 16 All Citations Not Reported in F.Supp.3d, 2015 WL 1470863 End of Document © 2016 Thomson Reuters. No claim to original U.S. Government Works. Case 1:16-cv-01958-YK Document 24-1 Filed 11/15/16 Page 49 of 49 IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA ADAM DOBSON Plaintiff, v. THE MILTON HERSHEY SCHOOL, and THE HERSHEY TRUST COMPANY, AS TRUSTEE OF THE MILTON HERSHEY SCHOOL TRUST, Defendants. : : : : : : : : : : : : : : : : : C.A. NO.: 2016-cv-1958-YK JURY TRIAL DEMANDED LOCAL RULE 7.8 WORD COUNT CERTIFICATION I, Gregory F. Cirillo, Esquire, do hereby certify that the foregoing Response to Defendants’ Motion to Dismiss Plaintiff’s Amended Complaint (“Response”) complies with the 5,000 word limit provided by Local Rule 7.8. The Word Count feature of Microsoft Word 2010, which was used to prepare the Response, indicates that the number of words in the Response is 4,962, inclusive of subject headings. Dated: November 15, 2016 Respectfully submitted: /s/ Gregory F. Cirillo DILWORTH PAXSON LLP Attorneys for Plaintiff, Adam Dobson Case 1:16-cv-01958-YK Document 24-2 Filed 11/15/16 Page 1 of 1 IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA ADAM DOBSON Plaintiff, v. THE MILTON HERSHEY SCHOOL, and THE HERSHEY TRUST COMPANY, AS TRUSTEE OF THE MILTON HERSHEY SCHOOL TRUST, Defendants. : : : : : : : : : : : : : : : : : C.A. NO.: 2016-cv-1958-YK JURY TRIAL DEMANDED PROPOSED ORDER AND NOW this _________________ day of _______________________, 2016 upon consideration of Defendants’ Motion to Dismiss Counts V, VII, VIII, IX, X, XI, and XII of Plaintiff’s Amended Complaint and any responses thereto, it is hereby ORDERED that said Motion is DENIED. BY THE COURT: J. Case 1:16-cv-01958-YK Document 24-3 Filed 11/15/16 Page 1 of 1 IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA ADAM DOBSON Plaintiff, v. THE MILTON HERSHEY SCHOOL, and THE HERSHEY TRUST COMPANY, AS TRUSTEE OF THE MILTON HERSHEY SCHOOL TRUST, Defendants. : : : : : : : : : : : : : : : : : C.A. NO.: 2016-cv-1958-YK JURY TRIAL DEMANDED CERTIFICATE OF SERVICE I, Gregory F. Cirillo, Esquire, do hereby certify that the foregoing Response to Defendants’ Motion to Dismiss Amended Complaint and accompanying Word Count Certification were filed electronically via the ECF system, and served via electronic mail and regular mail on the date set forth below and, therefore, made available to all counsel of record, as follows: Justin G. Weber, Esquire Thomas B. Schmidt, III, Esquire PEPPER HAMILTON LLP 100 Market Street, Suite 200, P.O. Box 1181 Harrisburg, PA 17108-1181 Emails: weberjg@pepperlaw.com schmidtt@pepperlaw.com Case 1:16-cv-01958-YK Document 24-4 Filed 11/15/16 Page 1 of 2 119321334_1 2 Attorneys for: THE MILTON HERSHEY SCHOOL and THE HERSHEY TRUST COMPANY, AS TRUSTEE OF THE MILTON HERSHEY SCHOOL TRUST /s/ Gregory F. Cirillo Gregory F. Cirillo, Esquire Dated: November 15, 2016 This document has been electronically filed and is available for viewing and downloading from the ECF system. Case 1:16-cv-01958-YK Document 24-4 Filed 11/15/16 Page 2 of 2