ARSENAL, INC. et al v. AMMONS et al

Filing 38

MEMORANDUM AND/OR OPINION to Memorandum and/or Opinion Order (ECF No. 37) FILED ON DECEMBER 1, 2014.... SIGNED BY HONORABLE ANITA B. BRODY ON 12/2/2014. 12/2/2014 ENTERED AND COPIES VIA ECF.(mo, ) Modified on 12/2/2014 (mo, ).

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA

ARSENAL, INC., t/a ARSENAL
ASSOCIATES; and 5301 LLC.,
Plaintiffs,
v.
LARRY AMMONS; PETER
AMMONS; MELISSA
BULLARD; BEN AMMONS,
AMMONS SUPERMARKET
LLC; and WAKEFERN FOOD
CORPORATION,
Defendants.

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CIVIL ACTION
No. 14-1289

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December 2, 2014

Anita B. Brody, J.

Plaintiffs Arsenal, Inc. and 5301 LLC (collectively “Arsenal”) bring suit against
defendant Wakefern Food Corporation (“Wakefern”), as well as Larry Ammons, Peter Ammons,
Ben Ammons, Melissa Bullard, and Ammons Supermarket LLC (the latter five constituting the
“Ammons Defendants,” and all six collectively “Defendants”) for promissory estoppel and a
variety of economic torts. Arsenal claims Defendants engaged in three years of sham
negotiations with Arsenal, negatively impacting Arsenal’s proposed real estate development
project. Wakefern and the Ammons Defendants both moved to dismiss all counts. For the
reasons discussed below, I granted both motions in part and denied them in part.1

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Jurisdiction is based on diversity of citizenship under 28 U.S.C. § 1332.
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I.

BACKGROUND
Arsenal once owned2 the land comprising the Frankford Arsenal, a former U.S. Army

ammunition plant in Northeast Philadelphia responsible for armaments during the Civil War and
each of the world wars. Arsenal intended to turn the defunct plant into a large shopping center.
To that end, it negotiated with several potential businesses to lease space.
In particular, Arsenal approached Wakefern, a cooperative that owns and controls the
ShopRite trademark. Compl., ECF No. 1, Ex. E ¶ 25. Though Wakefern owns the trade name it
does not directly operate any of the stores. Instead, the forty-five members of the Wakefern
cooperative individually own and operate specific ShopRites, with permission from Wakefern to
use the ShopRite name. Arsenal alleges that Wakefern represented that the Ammons Defendants
(all members of Wakefern) were interested in becoming the operators of a ShopRite at the
Arsenal site. Id. ¶ 27.
Arsenal alleges that after approximately a year and a half of “extensive negotiations” that
the Ammons Defendants agreed to “the basic terms of a lease” and indicated that they were
going to sign a lease with Arsenal. Id. ¶¶ 34, 36, 39. Negotiations progressed to the point that
the parties became ready to execute a Letter of Intent (LOI), a typical precursor of this type of
lease. During a May 9, 2012 meeting however, Wakefern representatives and the Ammons
Defendants indicated that a LOI was not required, and that Wakefern would produce a proposed
lease to Arsenal within a week of the meeting. Id. ¶ 39.
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In May 2014, well after the events detailed in the complaint, Arsenal sold a portion of this land to
another owner, including the part that would have housed the proposed ShopRite. See ECF No. 35.
Wakefern unsuccessfully argues that this makes the case moot. The conduct complained of injured
Arsenal and its finances instead of the property itself. Because of this, a favorable decision may still offer
“meaningful relief,” even if Arsenal no longer owns that specific asset. See In re Surrick, 338 F.3d 224,
230 (3d Cir. 2003) (noting the “central question of all mootness problems” (internal quotations and
citations omitted)).
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Despite these representations, a year of “unexplained delays” took place where neither
the Ammons Defendants nor Wakefern produced a lease for Arsenal to sign. Id. ¶ 41. On
August 8, 2013, Arsenal “reiterated the terms and conditions” of the proposed lease, which had
previously been memorialized via email. Id.
At a subsequent meeting at one of the Ammons Defendants’ existing ShopRites,
Wakefern reversed course and demanded a LOI. Arsenal prepared one and sent it to Wakefern
on August 20, 2013. Id. ¶ 43. Wakefern did not sign the LOI, instead making additional
demands, forcing Arsenal to redraft the proposed agreement. Id.
Negotiations collapsed sometime in December 2013, after three years of ultimately
unproductive exchanges. Id. ¶ 25, 50. Arsenal alleges it learned that the Ammons Defendants
had been “surreptitiously negotiating with another developer” to open a ShopRite “literally
around the corner” from the proposed Arsenal ShopRite (the “Harbison Parcel”). Id. ¶ 46.
Wakefern denied to Arsenal that it knew anything about the Harbison Parcel, yet ultimately
entered into a lease to place a ShopRite there. Id. ¶ 48.
Arsenal also claims that during the protracted negotiations that it was approached by
George Zallie,3 another member of the Wakefern cooperative, who was also interested in
potentially negotiating a ShopRite lease. Zallie indicated he would be willing to sign a lease if
he received permission from the Ammons Defendants. Id. ¶ 44. Wakefern’s operating rules
allow a Wakefern member who first approaches a potential lessor to have exclusive negotiating
rights to that location. Id. ¶ 28. Other Wakefern members may pursue the lessor, but only if the
While Zallie’s name does not appear in the complaint, Arsenal identifies him as the prospective
Wakefern operator in its initial disclosures. See ECF No. 18; see also Oshiver v. Levin, Fishbein, Sedran
& Berman, 38 F.3d 1380, 1384 n.2 (3d Cir. 1994) (noting that for a motion to dismiss court may
“consider matters of public record, orders, exhibits attached to the complaint and items appearing in the
record of the case”); Publicker Indus., Inc. v. Cohen, 733 F.2d 1059, 1069 (3d Cir. 1984) (noting that
judicial records are public records); In re Cendant Corp., 260 F.3d 183, 192 (3d Cir. 2001) (noting that
documents filed with the court are judicial records).
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first Wakefern member gives her consent. Id. ¶ 44. However, this internal rule was
inapplicable---Arsenal approached the Ammons Defendants, not the other way around; any
member of the cooperative was free to negotiate with Arsenal. Id. ¶ 25. Nonetheless, Wakefern
represented that the rule applied and that the Ammons Defendants had forbidden Zallie from
pursuing negotiations with Arsenal. Id. ¶ 44.
Arsenal alleges that Defendants never intended to enter into a lease, and used the
negotiations as a pretext to prevent any supermarket from leasing Arsenal’s space to reduce
competition with the Harbison Parcel ShopRite. Id. ¶ 45.
Arsenal has filed suit against Wakefern and the Ammons Defendants alleging promissory
estoppel, tortious interference with perspective contractual relations, fraud, negligent
misrepresentation, unfair competition, and civil conspiracy. Both the Ammons Defendants and
Wakefern moved to dismiss on related grounds each count of the complaint.
II.

Legal Standard
A motion to dismiss for failure to state a claim should be granted when 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 (2007). To determine whether a plausible claim has been
pled, a court must “tak[e] note of the elements a plaintiff must plead to state a claim,” disregard
allegations that, “because they are no more than conclusions, are not entitled to the assumption
of truth,” and accept as true all factual allegations. Santiago v. Warminster Twp., 629 F.3d 121,
129-30 (citing Ashcroft v. Iqbal, 556 U.S. 662, 673-74 (2009)) (internal quotation marks
omitted); see also Great Western Mining & Mineral Co. v. Fox Rothschild LLP, 615 F.3d 159,
177 (3d Cir. 2010). This “‘does not impose a probability requirement,’ but instead ‘simply calls
for enough facts to raise a reasonable expectation that discovery will reveal evidence of’ the

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necessary element.” Phillips v. Cnty of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008) (quoting
Twombly, 550 U.S. at 556). However, while it “does not require ‘detailed factual allegations,’” a
pleading that merely offers “naked assertion[s] devoid of further factual enhancement” does not
suffice. Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 557) (internal quotations omitted).
Finally, even if a complaint is subject to dismissal pursuant to Rule 12(b)(6), a court
“must permit a curative amendment unless such an amendment would be inequitable or futile.”
Phillips, 515 F.3d at 245 (internal quotation marks omitted).
III.

Discussion
Arsenal’s complaint lists six counts: promissory estoppel, tortious interference with

prospective contractual relations, fraud, negligent misrepresentation, unfair competition, and
civil conspiracy. Defendants moved to dismiss all pending claims. I concluded that the
promissory estoppel, tortious interference, and fraud claims were adequately pled, but that the
remaining claims had to be dismissed.
A. Negligent Misrepresentation
A claim for negligent misrepresentation requires proof of: “(1) a misrepresentation of a
material fact; (2) made under circumstances in which the misrepresenter ought to have known its
falsity; (3) with an intent to induce another to act on it; and; (4) which results in injury to a party
acting in justifiable reliance on the misrepresentation.” Bortz v. Noon, 729 A.2d 555, 561 (Pa.
1999) (citing Restatement (Second) Torts § 552).
Arsenal claimed that Defendants misrepresented the future possibility or imminence of a
lease by repeatedly promising that such a lease was forthcoming. Arsenal argued that
Defendants “ought to have known” that they would change their mind and refuse to ultimately
sign a lease. Resp., ECF No. 24, at 39.

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This claim failed because Defendants never made any statements of fact. Ordinarily,
negligent misrepresentation claims involve existing facts---present and ascertainable aspects of
the world at the time the statement is made. For example:
A, a county tax clerk, in the performance of his official duties, negligently gives B
a certificate stating that the taxes on B's land have been paid. In reliance upon the
certificate, C buys the land from B and as a result suffers pecuniary loss when he
is compelled to pay the taxes. A is subject to liability to C.
Restatement (Second) of Torts § 552 cmt. k.
By contrast, Arsenal argued that Defendants are subject to liability because they
negligently made promises about a lease which did not yet exist. However, under Pennsylvania
law, “promises to do future acts” are not themselves facts; they are predictions about future
behavior. Wood v. R.R. Donnelley & Sons Co., 888 F.2d 313, 318 (3d Cir. 1989). For this
reason “[c]laims for negligent misrepresentation must be based on misrepresentations regarding
present facts, not unfulfilled promises to do acts in the future.” Jones v. Flaster/Greenberg P.C.,
No. CIV.A. 13-2771, 2013 WL 6846916, at *7-8 (E.D. Pa. Dec. 30, 2013) (citing Summit Trust
Co. v. Paul Ellis Inv. Assocs., No. 2:12-CV-6672, 2013 WL 3967602, at *6 (E.D. Pa. Aug. 2,
2013)).
In response, Arsenal argued that Defendants negligently misrepresented “their state of
mind regarding their present intention to enter into a lease agreement.” ECF No. 24, at 39
(emphasis omitted). Arsenal’s claim nonetheless failed because, even though Defendants’
present state of mind is a fact, it was never misrepresented. In order to misrepresent one’s
current state of mind, there must be a difference between a defendant’s present intention and the
statement describing that intention. Simply, a defendant must say one thing while planning to do
another. Mellon Bank Corp. v. First Union Real Estate Equity & Mortgage Investments, 951
F.2d 1399, 1410 (3d Cir. 1991). However, this reasoning collapses when the defendant’s
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intention concerns his or her future plans. “At the time that a statement is made regarding what
the speaker intends to do in the future, the speaker either intends at the moment to take the action
he is promising or not. The speaker cannot be negligent as to his future intentions.” Bennett v.
Itochu Int'l, Inc., 682 F. Supp. 2d 469, 480-81 (E.D. Pa. 2010). Even if Arsenal was correct and
Defendants subsequently changed their minds after promising to enter into a lease, no
misrepresentation ever took place: under Arsenal’s theory, at the time Defendants made their
promises they intended---however naively---to carry them out.4
Because, under this theory, defendants made no factual misrepresentations, I dismissed
the negligent misrepresentation claims against all defendants.
B. Unfair Competition:
Arsenal’s claim for unfair competition failed as a matter of law because Arsenal, a real
estate developer, and Defendants, supermarket operators, are not competitors. “[B]oth the Third
Circuit and the District Courts have concluded that in order to state a claim for unfair
competition, a plaintiff must allege that it is in competition with the defendant---that is, that the
plaintiff and the defendant ‘supply similar goods or services.’” Am. Bd. of Internal Med. v. Von
Muller, No. 10-CV-2680, 2011 WL 857337, at *11 (E.D. Pa. Mar. 10, 2011), aff’d (Sept. 12,
2013) (quoting Granite State Ins. Co. v. Aamco Transmissions, Inc. 57 F.3d 316, 320 (3d Cir.
1995)).
Arsenal responded by claiming that Defendants’ allegedly wrongful conduct fell within
the “residual” category of the Restatement (Third) of Unfair Competition, which defines “unfair”
business practices. See Restatement (Third) of Unfair Competition § 1 (1995) (allowing

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Arsenal’s fraud claim based off of these same future promises alleges a factual misrepresentation
because the promises were knowingly false at the time they were made. Defendants misrepresented their
present intent to take a future action when they said that a lease was possible even when they knew they
had no intention of ever entering into one. See Mellon Bank, 951 F.2d at 1410.
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recovery for any “act or practice[] . . . determined to be . . . unfair . . . taking into account the
nature of the conduct and its likely effect on both the person seeking relief and the public”);
Giordano v. Claudio, 714 F. Supp. 2d 508, 521 (E.D. Pa. 2010) (“[W]e recognize that the
Pennsylvania common law tort of unfair competition is coextensive with the definition set forth
in the Restatement (Third) of Unfair Competition.”). Even if this were true, it nonetheless
missed the point. The conduct, however wrongful, must emanate from a business’ competitor to
be actionable. See Granite State, 57 F.3d at 320 (“[W]e think that the Supreme Court of
Pennsylvania would hold that a competitor of the insured, but not its customer can assert a claim
. . . under ‘unfair competition’” (emphasis added)).5
Because the parties do not compete against each other, I dismissed Arsenal’s unfair
competition claims against all defendants.
C. Conspiracy
In Pennsylvania, “to state a cause of action for civil conspiracy, the following elements
are required: (1) a combination of two or more persons acting with a common purpose to do an
unlawful act or to do a lawful act by unlawful means or for an unlawful purpose; (2) an overt act
done in pursuance of the common purpose; and (3) actual legal damage.” Gen. Refractories Co.
v. Fireman’s Fund Ins. Co., 337 F.3d 297, 313 (3d Cir. 2003) (citing Strickland v. Univ. of
Scranton, 700 A.2d 979, 987-88 (Pa. Super. Ct. 1997))
Arsenal’s civil conspiracy claim was dismissed because it failed to allege that the
Ammons Defendants and Wakefern conspired with an unlawful purpose. “[M]alice is an
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It is telling that both cases Arsenal cites to rebut this argument involve claims between competitors. See
Synthes (U.S.A.) v. Globus Med., Inc., No. CIV.A. 04-CV-1235, 2005 WL 2233441, at *1 (E.D. Pa. Sept.
14, 2005) (“Two competitors in the spinal implant disc industry are accusing each other of unfair and
illegal business practices.”); Pottstown Daily News Pub. Co. v. Pottstown Broad. Co., 192 A.2d 657, 663
(Pa. 1963) (“[T]he [plaintiff] has a commercial package of news items to service its advertising business
upon which to base a cause of action in tort against a competitor allegedly converting the news items to
its own uses in pursuit of advertising.” (emphasis added)).
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essential part of a cause of action for conspiracy.” Burnside v. Abbott Labs., 505 A.2d 973, 980
(Pa. Super. Ct. 1985) (citing Thompson Coal Co. v. Pike Coal Co., 412 A.2d 466, 472 (Pa.
1979)). Under Pennsylvania law, a defendant acts with malice only when the sole purpose of the
agreement is to injure the plaintiff. Thompson, 412 A.2d 472 (dismissing civil conspiracy claim
because “[t]here [were] no facts of record which indicate[d] that [defendant] acted solely to
injure appellants”).
Arsenal failed to meet this high standard. The complaint says almost nothing about any
formal agreement between Wakefern and the Ammons Defendants besides the conclusory
statement that such an agreement exited. Compare Compl., ¶ 92 with Shankin v. Harborview
Motrg. Loan Trust Motrg. Loan Pass Through Certificate Series 2007-5 ex rel. Deutsche Bank
Nat’l Trust Co., No. 12-CV-3736, 2013 WL 3957147, at *3 (E.D. Pa. July 31, 2013) (dismissing
complaint that merely stated “Defendants acted in concert with each other to perpetuate fraud
and predatory landing” and that defendants “had an agreement” (citing Twombly, 550 U.S. at
555)).
Arsenal also did not allege that the two acted with an illegal purpose. To the contrary,
Arsenal’s theory was that Defendants conspired to achieve a legitimate end: to enrich themselves
and their existing businesses. Indeed, their complaint alleges that Defendants “conspired and
colluded to prevent another supermarket from being established in the area . . . in order to reduce
competition with their pre-existing ShopRites.” Compl., ¶ 45 (emphasis added). Though
defendants allegedly achieved this goal by unsavory, even fraudulent means, these allegations
were not enough to satisfy Pennsylvania’s standard of malice for civil conspiracy. See Barker v.
Hostetter, No. CIV.A. 13-5081, 2014 WL 1464319, at *31 (E.D. Pa. Apr. 15, 2014) (“The fact
that it may have been necessary to deceive Plaintiffs, or to otherwise willfully and maliciously

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commit various torts against them . . . does not equate to an allegation that the conspiracy was
formed with the sole intent to injure Plaintiffs.”); Morilus v. Countrywide Home Loans, Inc., 651
F. Supp. 2d 292, 313 (E.D. Pa. 2008) (“Even though Countrywide has shown that Ms. Morilus’
actions amounted to fraud, the commission of the act itself does not necessarily indicate that the
plaintiffs acted with the specific intent to injure Countrywide. The plaintiffs were guided by
personal interests separate from any alleged desire to cause harm to Countrywide.”); Spitzer v.
Abdelhak, No. CIV. A. 98-6475, 1999 WL 1204352, at *9 (E.D. Pa. Dec. 15, 1999) (dismissing
civil conspiracy claim that elsewhere included adequately pled allegations of fraud because “[a]s
Plaintiffs have stated elsewhere, the defendant’s purpose of the conspiracy was to benefit
themselves personally and professionally”).
Because an unlawful agreement with requisite intent was not sufficiently pled, I
dismissed Arsenal’s civil conspiracy claims against all defendants.
D. Claims Against Ben Ammons and Melissa Bullard
In addition to Ammons Supermarket LLC, Arsenal’s complaint also lists Larry, Peter,
and Ben Ammons, as well as Melissa Bullard, as individual defendants. Ben Ammons and
Melissa Bullard moved to dismiss on the grounds that none of the counts are adequately pled
against them as individuals.
The accusations against Ben Ammons and Melissa Bullard were the sort of “threadbare”
allegations Twombly’s heightened pleading regime seeks to police. Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009). Arsenal’s complaint mentions the two only twice. The first is while
identifying them as parties and listing their addresses. Second, Arsenal alleges that they, along
with every other defendant, attended a May 9, 2012 meeting with Arsenal. Compl., ¶ 39. At that
meeting, “all defendants” advised Arsenal that an LOI was not necessary. Id.

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Taken in isolation, these allegations were insufficient to sustain any cause of action
against them. Forcine Concrete & Const. Co. v. Manning Equip. Sales & Servs., No. CIV. A.
08-2926, 2010 WL 2470992, at *3 (E.D. Pa. June 14, 2010) (dismissing fraud claims against one
of six defendants because only one conversation was alleged that did not itself amount to fraud).
I dismissed all claims against Ben Ammons and Melissa Bullard.
IV.

Conclusion
For the reasons above, I granted Wakefern’s motion to dismiss in part and denied it in

part. I also granted the Ammons Defendants’ motion to dismiss in part and denied it in part. I
dismissed all claims against Ben Ammons and Melissa Bullard. The promissory estoppel,
tortious interference, and fraud claims against Wakefern, Ammons Supermarket LLC, Larry
Ammons and Peter Ammons were sufficient to warrant discovery. I dismissed the remaining
claims against these defendants.

s/Anita B. Brody
____________________________________
ANITA B. BRODY, J.

Copies VIA ECF on _________ to:

Copies MAILED on _______ to:

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