SPEAR et al v. FENKELL et al

Filing 433

ORDER THAT PLAINTIFFS' MOTION TO DISMISS (DOC. NO. 231 ) IS DENIED IN PART AND GRANTED IN PART AS OUTLINED HEREIN. SIGNED BY MAGISTRATE JUDGE RICHARD A. LLORET ON 6/12/2015. 6/12/2015 ENTERED AND COPIES E-MAILED.(sg, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
SPEAR, et al.

:

CIVIL ACTION

:
v.

:
:

FENKELL, et al.

:

NO. 13-2391

ORDER
Having considered plaintiffs’ motion to dismiss, Doc. No. 231, and defendants’
response, Doc. No. 238, as well as plaintiffs’ reply, Doc. No. 243, and having heard oral
argument on April 22, 2015, I have issued with this order a memorandum explaining my
reasons for denying the motion in part and granting it in part. For the reasons
stated in my memorandum, it is on this 12th day of June, 2015,
ORDERED
1.

The motion to dismiss David Fenkell’s claims for indemnification, set forth

in the first cause of action within the counterclaim (Doc. No. 168) and in the third-party
complaint (Doc. No. 214) for his costs of defending the Chesemore litigation is
granted. David Fenkell’s claims for indemnification for the costs of defending the
Chesemore litigation are dismissed with prejudice.
2.

As to all other indemnification claims contained in the first causes of

action in the counterclaim and third-party complaint, the motion to dismiss is denied.
All remaining indemnification claims are stayed until they mature. Any party may file a
motion to lift the stay, explaining why the indemnification claims have matured.
3.

The motion to dismiss the second cause of action in the counterclaim is

granted in part and denied in part, as follows:

a. As to AHI and AH Transition, the second cause of action is
dismissed.
b. Claims for contribution against Alliance for liability arising from the
Ninth, Tenth, Thirteenth and Fourteenth claims for relief in the Amended
Complaint (Doc. No. 68), are dismissed with prejudice.
c. The motion is denied as to all other contribution claims against
Alliance.
d. Claims for contribution against Barbie Spear in her capacity as named
Trustee are dismissed.
d. Claims for contribution against Barbie Spear in any other capacity are
dismissed with prejudice.
4.

The motion to dismiss the counterclaim’s third cause of action, based on

prohibited transactions and predicated on the theory that Alliance assets were ESOP
assets, is granted, as follows:
a. To the extent the counterclaim’s third cause of action asserts a claim
arising from Barbie Spear’s status as a named Trustee of the ESOP, it is
dismissed.
b. All other claims for relief in the counterclaim’s third cause of action
are dismissed with prejudice.
5.

The motion to dismiss the counterclaim’s fourth cause of action against

Spear and Alliance is granted, and the fourth cause of action is dismissed.
6.

The motion to dismiss the third-party complaint’s second cause of action

for contribution is granted in part and denied in part, as follows:

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a. Contribution claims based on Barbie Spear’s liability as named Trustee
of the Alliance ESOP are dismissed with prejudice.
b. The motion to dismiss as it pertains to the claims for contribution
against Spear, based on a functional fiduciary or “knowing participation”
theory under Harris Trust and Savings Bank v. Salomon Smith Barney,
530 U.S. 238 (2ooo), and arising out of the Stonehenge transactions, is
denied.
c. Other contribution claims against Barbie Spear not arising from the
Stonehenge transactions are dismissed.
d. The motion to dismiss as it pertains to the claims for contribution
against Wanko and Lynn, based on a functional fiduciary or Harris Trust
theory, and arising out of the Trachte transaction, is denied.
e. Other contribution claims against Wanko and Lynn, not arising from
the Trachte transaction, are dismissed.
f. The motion to dismiss is denied as to contribution claims against
Alliance Holdings, Inc.
7.

The motion to dismiss the third-party complaint’s third cause of action,

based on prohibited transactions and predicated on the theory that Alliance assets were
ESOP assets, is granted in part and denied in part, as follows:
a. To the extent that the cause of action alleges “named” fiduciary liability
against Spear, it is dismissed with prejudice.
b. Insofar as the cause of action purports to allege “functional” fiduciary
liability on the part of Barbie Spear, the allegations of the third cause of
action are dismissed.
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c. Insofar as the third-party complaint’s third cause of action alleges
liability based on Harris Trust, the motion is denied.
8.

The motion to dismiss the fourth cause of action in the third-party

complaint, against Kenneth Wanko, Eric Lynn, and Doe Defendants, is denied.
9.

The motion to dismiss the third-party complaint’s fifth cause of action is

granted in part and denied in part, as follows:
a. The motion is granted and the fifth cause of action is dismissed as
to Barbie Spear.
b. The motion is denied as to Kenneth Wanko and Eric Lynn.
10.

The motion to dismiss the third-party complaint’s eighth cause of action,

alleging a failure to monitor Barbie Spear, is granted. The eighth cause of action is
dismissed, as follows:
a. Claims based on the counterclaim’s first and fourth causes of action
are dismissed with prejudice.
b. Claims based on the counterclaim’s second and third cause of action
are dismissed with prejudice, except that, to the extent they are based
on a theory of Ms. Spear’s fiduciary breaches as a named Trustee of the
ESOP, they are dismissed with leave to amend.
c. With respect to claims in the counterclaim’s second and third cause of
action that are based on any theory other than Ms. Spear’s fiduciary
breaches as a named Trustee of the ESOP, defendants may seek leave to
amend the eighth cause of action provided the predicate fiduciary breaches
are properly alleged by way of third-party claim.

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d. Claims based on paragraph 130 of the eighth cause of action
dismissed with prejudice.
11.

The motion to dismiss the third-party complaint’s ninth cause of action is

granted. The ninth cause of action is dismissed.
12.

The motion to dismiss the third-party complaint’s tenth cause of action is

granted. The third-party complaint’s tenth cause of action is dismissed for failure to
comply with Fed. R. Civ. Pro. 23.1.
14.

The motion to dismiss the third-party complaint’s eleventh cause of action

is denied.
16.

The motion to dismiss Fenkell’s equitable claims, based on his alleged

unclean hands, is denied.
17.

Any claim not explicitly dismissed with prejudice may be the subject of a

motion for leave to amend, filed within 14 days of the date of this order, which will
attach a proposed pleading and a memorandum in support. Any party opposing the
filing of the amended pleading will file a response, with a memorandum in support,
within 7 days of the date the proposed amended pleading and its supporting
memorandum is filed. In the event a motion for leave to amend is not filed within 14
days, any party may move for an order dismissing the claim with prejudice.
18.

The parties are encouraged to avoid multiplying causes of action

needlessly.

_s/Richard A. Llroet_________
HON. RICHARD A. LLORET
U.S. Magistrate Judge
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