MCDONALD v. GORDON et al
Filing
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OPINION filed. Signed by Judge Anne E. Thompson on 8/13/2018. (mps)
RECE~VED
NOT FOR PUBLICATION
AUG 13 2018
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
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MICHAEL MCDONALD,
Plaintiff,
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Civ. No. 18-9398
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v.
DANIEL GORDON, et al.,
AT 8:30
WILLIAM T. WALSH
CLERK
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OPINION
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Defendants. .
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THOMPSON, U.S.D.J.
INTRODUCTION
This matter comes before the Court upon the motion to dismiss by Defendants Michael
Gordon and GLD Foremost Holdings, LLC. (ECF No. 5.) Plaintiff Michael McDonald
("Plaintiff') opposes, and in the alternative seeks leave to amend his Complaint. (ECF No. 12.)
The Court has decided this Motion based on the written s:ubmissions of the parties without oral
argument pursuant to Local Civil Rule 78.l(b). For the reasons stated below, the Motion to
Dismiss is granted. Plaintiff is granted leave to file an amended complaint.
BACKGROUND
This case arises from a written contract between Plaintiff and Defendants ForeMost
Industries, LLC ("Foremost") and Ralph Michael, executed on September 20, 2013. Under the
terms of the contract, Foremost, Ralph Michael, Laura Myers, and Karl Schreiber (collectively,
"Foremost Defendants") would construct a modular home for $125,495. (Compl. ,, 4-6, Ex. A,
ECF No. 3-1.) Plaintiff paid $65,495 up-front, as per the contract. (Id., 7.) Plaintiff alleges that
no work was done to meet the contract deadlines, and that he made repeated efforts to contact
Defendants to no avail. (Id.
1if 8-9.) In May 2014, it was mutually agreed that Foremost would
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return Plaintiffs deposit and the contract would be terminated. (Id. ,, 10--11.) The Foremost
Defendants informed Plaintiff that it wouid withhold $i0,000 of his deposit to put towards a
future home purchase within two years; Plaintiff agreed, and a letter of September 15, 2014
confirmed this agreement. (Id. ,, 12-14.) Plaintiff again attempted to contact Foremost, to no
avail, to use this $10,000. (Id.
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15-16.) On the basis of these facts, Plaintiff brought claims
against the Foremost Defendants both for violations of the New Jersey Consumer Fraud Act,
N.J.S.A. § 56:8-1 et seq. (Count One), and for breach of contract (Count Two). (See generally
Compl.)
Plaintiff names two other defendants in the Count Two breach of contract claim: Daniel
Gordon and GLD Foremost Holdings, LLC (collectively, "GLD Defendants" or "Moving
Defendants"). (Id.,, 20--26.) Plaintiff does not claim that the GLD Defendants were original
parties to the contract. Rather, he asserts the following two facts to establish these parties'
liability: First, that "subsequent to Plaintiff signing the contract with the ForeMost Defendants,
ForeMost Industries was sold to [the GLD Defendants]." (Id. , 23.) Second, that "the GLD
Defendants have assumed the obligations ofForeMost Industries, Inc., including those
obligations owed to Plaintiff wider the Contract, and subsequent agreements, which Plaintiff
entered into with the ForeMost Defendants." (Id.
~ 24.)
On June 4, 2018, the GLD Defendants moved to dismiss the breach of contract claim
against them, arguing that they were not parties to the contract and that Plaintiff does not plead
sufficient facts to support their liability for breach of contract. (ECF Nos. 5, 6.) Plaintiff opposed,
and Defendant replied. (ECF Nos. 12, 13.) This Motion is presently before the Court.
LEGAL STANDARD
A motion under Federal Rule of Civil Procedure 12(b)(6) tests the sufficiency of a
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complaint. Kost v. Kozakiewicz, 1F.3d176, 183 (3d Cir. 1993). The defendant bears the burden
of showing that no claim has been presented. Hedges v. United States, 404 F.3d 744, 750 (3d Cir.
2005). When considering a Rule 12(b)(6) motion, a district court should conduct a three-part
analysis. Malleus v. George, 641 F.3d 560, 563 (3d Cir. 2011). "First, the court must 'take note
of the elements a plaintiff must plead to state a claim."' Id. (quoting Ashcroft v. Iqbal, 556 U.S.
662, 675 (2009)). Second, the court must "review[] the complaint to strike conclusory
allegations." Id.; see also Iqbal, 556 U.S. at 679. Finally, the court must assume the veracity of
all well-pleaded factrial allegations and "determine whether the facts are sufficient.to show that
plaintiff has a 'plausible claim for relief."' Fowler v. UPMC Shadyside, 578 F.3d 203, 211
(quoting Iqbal, 556 U.S. at 679); see also Malleus, 641 F.3d at 563. If the complaint does not
demonstrate more than a "mere possibility of misconduct," it must be dismissed. See Gelman v.
State Farm Mut. Auto. Ins. Co., 583 F.3d 187, 190 (3d Cir. 2009) (quoting Iqbal, 556 U.S. at
679).
Although a district court generally must confine its review on a Rule 12(b)(6) motion to
the pleadings, see Fed. R. Civ. P. 12(d), "a court may consider certain narrowly defined types of
material" beyond the pleadings, in re Rockefeller Ctr. Props., Inc. Sec. Litig., 184 F.3d 280, 287
(3d Cir. 1999), including matters incorporated by reference or integral to the claim, items subject
to judicial notice, matters of public record, orders, and items appearing in the record of the case.
Buckv. Hampton Twp. Sch. Dist., 452 F.3d 256, 260 (3d Cir. 2006) (internal citation omitted).
DISCUSSION
Under New Jersey law, 1 a breach of contract claim requires proof that, among other
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When a contract specifies a choice oflaw, the court will honor that.choice so long as doing so
would not violate public policy. Curtiss-Wright Corp. v. Rodney Hunt Co., 1 F. Supp. 3d 277,
284 (D.N.J. 2014) (citing Instructional Sys., Inc. v. Comput. Curriculum Corp., 614 A.2d 124,
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things, a contract existed between the parties. Frederico v. Home Depot, 507 F .3d 188, 203 (3d
Cir. 2007) (citing Video Pipeline, Inc. v. Buena Vista Home Entm 't, Inc., 210 F. Supp. 2d 552,
561 (D.N.J. 2002)). In the complaint, then, a plaintiff must plead facts sufficient to show that
such a contract plausibly existed. See Plastic Surgery Ctr., P.A. v. Cigna Health & Life Ins.,
2018 WL 2441768, at *2, *4--6 (D.N.J. May 31, 2018) (finding pleading sufficient where it
named a specific agreement by defendant that established defendant's contractual obligation to
plaintiff); Fischer v. Nat'/ Sur. Corp., 2017 WL 4711471, at *2-3 (D.N.J. Oct. 20, 2017)
(finding pleading sufficient where it alleged that defendant acted on behalf of the contracting
party in its dealings with plaintiff, and that defendant was responsible for servicing the contract);
Greenberger v. Varus Ventures LLC, 2014 WL 6991993, at *5-6 (D.N.J. Dec. 10, 2014) (finding
pleading sufficient where it alleged that plaintiff entered into agreements with defendantindividuals acting in their personal capacities, not merely on behalf of a corporation).
Here, Plaintiff does not allege that Moving Defendants were original parties to the
contract. Instead, Plaintiff asserts that ( 1) Moving Defendants bought Foremost Industries after
Plaintiff had signed the contract with Foremost, and (2) Moving Defendants "assumed the
obligations ofForeMost Industries, Inc., including those obligations owed to Plaintiff under the
Contract." (Compl. W23-24.)
The first assertion fails to· state a claim upon which relief can be granted. A party's
ownership of a corporation does not, by itself, make that party personally liable for the
corporation's contractual obligations. N.J. Dep't ofEnvtl. Prot. v. Ventron Corp., 468 A.2d 150,
133 (N.J. 1992)). In this dispute neither party has asserted that the contract in question contained
a choice of law provision, the contract itself has not been introduced to the record, and Moving
Defendants presume that New Jersey law applies (Ders Br. at 9 n.2, ECF No. 6). Later
revelation may require application of the law of a state other than New Jersey, but presently the
court applies New Jersey law.
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164 (N.J. 1983). Similarly, a parent corporation is typically not liable for its subsidiary's
obligations. Id. at 164--65. While the corporate veil may be pierced under some circumstances,
making owners personally liable for the corporation's liabilities, id., Plaintiff does not plead facts
to support a veil-piercing theory. See Pathfinder Mgmt. v. Mayne Pharma PTY, 2008 WL
3192563, at *6, *18 (D.N.J. Aug. 5, 2008).
The second assertion also fails to demonstrate a contract between Plaintiff and Moving
Defendants. To state that "the GLD Defendants have assumed the obligations ... under the
Contract" is merely to assert a legal conclusion, cf Cot(et v. Newark Hous. Auth., 422 F. App'x
95, 98 (3d Cir. 2011) (finding the allegation that the parties had "previously negotiated an
agreement" to be a legal conclusion in a breach of contract case), and legal conclusions are not to
be considered when determining the sufficiency of a complaint. Iqbal, 556 U.S. at 679; Malleus,
641 F.3d at 563. After the Court properly ignores this conclusory statement, no factual
allegations remain to support that Moving Defendants were parties to the contract. 2
Plaintiff has failed to plead sufficient factual material to show the existence of a contract
between itself and the GLD Defendants. 3 Moving Defendants' motion to dismiss must therefore
be granted.
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Defendant attaches the Stock Purchase Agreement, governing the sale ofForemost's stock.
(Defs.' Br., Ex. B, ECF No. 5-2.) Even assuming that the Court may consider this document
while reviewing a Motion to Dismiss, the Stock Purchase Agreement does not indicate that either
of the GLD Defendants became a party to the contract through this purchase.
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Plaintiff suggests in its opposition to the Motion that liability to Moving Defendants may be
appropriate on a number of bases, including fraud justifying piercing the corporate veil,
Gordon's position as an officer at Foremost, other litigation concerning ownership ofForemost's
debts, and liability under the New Jersey Consumer Fraud Act. (See generally ECF No. 12.) But
none of these assertions are contained in the Complaint, and so the Court may not properly
consider them. Pennsylvania ex rel. Zimmerman v. PepsiCo, Inc., 836 F.2d 173, 181 (3d Cir.
1988) (internal citation omitted) ("It is axiomatic that a plaintiff cannot amend its pleading in an
opposition brief on a motion to dismiss.").
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Federal Rule of Civil Procedure 15(a)(2) allows amendment of the pleadings with the
court's leave, which should be given freely. Alvin v. Suzuki, 227 F.3d 107, 121 (3d Cir. 2000).
Plaintiff is therefore granted leave to file an amended complaint addressing the deficiencies
discussed above, in accordance with Local Civil Rule 15.l(b).
CONCLUSION
For the foregoing reasons, Defendants' Motion is granted. An appropriate Order will
follow.
Date:
Isl Anne E. Thompson
ANNE E. THOMPSON, U.S.D.J.
8/13/2018
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