SEVENSON ENVIRONMENTAL SERVICES, INC. v. DIVERSIFIED ROYALTY CORP. et al

Filing 286

MEMORANDUM ORDER Denying 256 Motion to Dismiss. Signed by Judge Renee Marie Bumb on 9/14/15. (js)

NOT FOR PUBLICATION

[Docket No. 256]

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
CAMDEN VICINAGE

SEVENSON ENVIRONMENTAL
SERVICES, INC.,
Plaintiffs,

Civil No. 08-1386 (RMB/AMD)
MEMORANDUM ORDER

v.
GORDON D. MCDONALD, et al.,
Defendants.

BUMB, UNITED STATES DISTRICT JUDGE:
This matter comes before the Court upon the Defendant BENEV
Capital Inc.’s (“BENEV”) Motion to Dismiss [Docket No. 256] the
Plaintiff’s Third Amended Complaint pursuant to the equitable doctrine
of in pari delicto.
To withstand a motion to dismiss under Federal Rule of Civil
Procedure 12(b)(6), “a complaint must contain sufficient factual
matter, accepted as true, to ‘state a claim to relief that is
plausible on its face.’”

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)

(quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
This Court, upon reviewing the Plaintiff’s allegations, “must accept
as true all well-pled factual allegations as well as all reasonable
inferences that can be drawn from them, and construe those allegations

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in the light most favorable to the plaintiff.”

Bistrian v. Levi, 696

F.3d 352, 358 n.1 (3d Cir. 2012).
In deciding a motion to dismiss under Rule 12(b)(6), this Court
may consider affirmative defenses, such as the doctrine of in pari
delicto, that appear on the face of the pleadings.

Leveto v. Lapina,

258 F.3d 156, 161 (3d Cir. 2001); ALA, Inc. v. CCAIR, Inc., 29 F.3d
855, 859 (3d Cir. 1994).

“[A]s with any affirmative defense, the

burden lies with [the] party asserting it.”

Ross v. Monge, No. CIV.

07-2693 (RMB), 2009 WL 1291814, at *3 (D.N.J. May 4, 2009) (citing
Karpiel v. Ogg, Cordes, Murphy & Ignelzi, LLP, 297 Fed. Appx. 192, 193
(3d Cir. 2008)).
Under the doctrine of in pari delicto, “a plaintiff may not
assert a claim against a defendant if the plaintiff bears fault for
the claim.”

Thabault v. Chait, 541 F.3d 512, 526 (3d Cir. 2008)

(quoting Official Comm. of Unsecured Creditors v. R.F. Lafferty & Co.,
267 F.3d 340, 354 (3d Cir. 2001)).

For purposes of this analysis, the

wrongdoing of an officer or agent is generally imputed to the
plaintiff corporation where the officer or agent commits the
wrongdoing “(1) in the course of his employment, and (2) for the
benefit of the corporation.”

Lafferty, 267 F.3d at 358.

This rule is

in turn subject to the adverse interest exception, which provides that
such wrongdoing will not be imputed to the plaintiff corporation “if
the officer's interests were adverse to the corporation and not for
the benefit of the corporation.”

Thabault, 541 F.3d at 527.

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While a finding of in pari delicto is not “always a fact issue
for the jury, or the court sitting without a jury,” it often may be.
See McAdam v. Dean Witter Reynolds, Inc., 896 F.2d 750, 758 n. 13 (3d
Cir. 1990); see also Adelphia Recovery Trust v. Bank of Am., N.A., 390
B.R. 64, 79 (S.D.N.Y. 2008) (denying motion to dismiss on the grounds
of in pari delicto because the applicability of the doctrine and the
adverse interest exception presented issues of fact).

A court may

deny a motion to dismiss on the grounds of in pari delicto “given the
fact-intensive nature of the doctrine.”

In re U.S. Mortgage Corp.,

491 B.R. 642, 676 (Bankr. D.N.J. 2013); In re Norvergence, Inc., 405
B.R. 709, 742 (Bankr. D.N.J. 2009) (denying motion to dismiss where
“the applicability of any pari delicto defense depends on an
evaluation of sensitive facts, an analysis of which must only take
place after discovery has run its course.”).
This Court has reviewed the parties’ submissions and, in light of
the above, holds that the Defendant has not established that the
defense of in pari delicto appears on the face of the pleadings.
fact, the pleadings allege the contrary.

In

See, e.g., Complaint ¶ 42

[Docket No. 226] (“Sevenson did not approve of this scheme and had no
knowledge of [it].”).

The Court further holds, consistent with its

denial of Defendant’s request for a pre-motion conference, that the
issues raised by the Defendant in the case at bar require a factintensive inquiry and are not appropriately resolved on a motion to
dismiss.

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ACCORDINGLY, IT IS HEREBY on this 14th day of September 2015,
ORDERED that BENEV’s Motion to Dismiss is DENIED.

/s/ Renée Marie Bumb
RENÉE MARIE BUMB
UNITED STATES DISTRICT JUDGE

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