SHREE VALLABH KRUPA LLC. et al v. VERMA et al
MEMORANDUM AND/OR OPINION. SIGNED BY CHIEF JUDGE PETRESE B. TUCKER ON 4/13/16. 4/13/16 ENTERED AND COPIES E-MAILED.(kw, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
SHREE VALLABH KRUPA LLC, et al.,
SANJEEV RAJ VERMA, et al.,
April 13, 2016
Presently before the Court are Defendants’ Motion for Summary Judgment (Doc. 29),
Plaintiffs’ Response in Opposition (Doc. 30), and Defendants’ Reply to Plaintiffs’ Response in
Opposition (Doc. 32). Upon consideration of the parties’ submissions and exhibits and for the
reasons set forth below, the Court GRANTS Defendants’ Motion.
In their Complaint, Plaintiffs Shree Vallabh Krupa LLC (“Shree”) and Malvern Oil LLC
(“Malvern”) allege that Defendants Sanjeev Raj Verma (“Sanjeev Verma”), Kamlesh Modh
(“Modh), Sandeep Verma (“Sandeep Verma”), Dunkin Donuts Franchising LLC (“Dunkin
Donuts Franchising”), and Lukoil North America LLC (“Lukoil”), misrepresented the length of
years provided in a lease agreement between the parties. Plaintiffs’ allege the following claims:
(1) fraud in the inducement; (2) breach of contract; (3) tortious interference; (4) unfair business
practices; and (5) breach of implied covenant of good faith. The material, undisputed facts
On or about May 12, 2008, Getty Petroleum Marketing Inc. (“Getty”), a non-party,
entered into a lease amendment and extension agreement with Morelli Enterprises LP, a nonparty, to extend its lease for the premises located at 201 Morehall Road, Malvern, Pennsylvania.
Def. Mot. for Summ. J. ¶ 2, Doc. 29. The term of the lease extended through November 12,
2017, and granted Getty two five-year options to renew the lease. Id. If both options are
exercised, the lease would extend through November 12, 2027. Verma Dec. ¶ 4, Doc. 29. After
signing the lease extension, Getty sold all of its assets, including the above-mentioned lease to
Defendant Lukoil. Def. Mot. for Summ. J. ¶ 3.
On or about October 21, 2008, Lukoil, as sub-landlord, entered into a lease with Plaintiff
Malvern, as sub-tenant, to operate a Lukoil retail gas station and convenience store at the
property located at 201 Morehall Road, Malvern, Pennsylvania. Id. ¶ 4. Plaintiff Malvern is a
Pennsylvania Limited Liability Company that was formed on September 15, 2008. Id. ¶ 1.
Malvern’s original members were Defendants Sanjeev Verma, Modh, and Sandeep Verma. Id.
The lease agreement between Malvern and Lukoil is governed by the Petroleum Marketing
Practices Act (“PMPA”) 15 U.S.C. § 2801. Id.
On or about November 30, 2008, Plaintiff Malvern, as sub sub-landlord, entered into a
Convenience Store Sub-Lease (the “Convenience Store Sub-Lease”) with Plaintiff Shree, as sub
sub-tenant, to operate a Dunkin Donuts franchise at the property located at 201 Morehall Road,
Malvern, Pennsylvania. Id. ¶ 5. The Convenience Store Sub-Lease states in pertinent part:
This Agreement shall be effective upon the date of execution hereof by each of
Host [Malvern] and Franchisee [Shree], and shall continue in effect for an initial
term (the “Initial Term”) beginning on the first day that the Satellite opens for
business (the “Commencement Date”) and ending ten (10) years thereafter (the
“Initial Termination Date”). In addition, Franchisee [Shree] shall have two (2)
five (5) year options to extend the Term of this Agreement, provided that
Franchisee [Shree] notifies Host [Malvern] of its election to so extend the Term
not less than one hundred eighty (180) days prior to the Initial Termination Date
or the expiration of the first five (5)-year option period, as the case may be, and
further provided that Host [Malvern] itself has a lease term to cover the applicable
option period(s). The Initial Term of this Agreement, as it may be extended or
terminated in accordance herewith, shall be referred to herein as the “Term.” Host
[Malvern] represents and warrants that it has the right to occupy the Store until
the Initial Termination Date.
Compl. Exh. A, ¶ 2, Doc. 1 (emphasis added). If exercised, the two five-year options would
extend the term of the Convenience Store Sub-Lease until November 30, 2028. Def. Mot. for
Summ. J. ¶ 5. On or about May 27, 2009, Plaintiff Shree entered into a Franchise Agreement
with Defendant Dunkin Donuts Franchising to operate a Dunkin Donuts, in accordance with its
Convenience Store Sub-Lease with Malvern. Id. ¶ 7.
On or about June 3, 2010, Defendants Sanjeev Verma, Modh, and Sandeep Verma, who
owned 100% of the member’s interest in Malvern, agreed to sell all of their units in Malvern to
Rajesh Adhikari (“Adhikari”). Id. ¶ 8. All parties to the transaction were represented by legal
counsel. Id. During the period of due diligence, Adhikari had access to the PMPA Sub-Lease
between Plaintiff Malvern and Defendant Lukoil, and the Convenience Store Sub-Lease between
Plaintiff Malvern and Defendant Shree. Id. ¶ 9. The Membership Unit Transfer Agreement
Prior to Closing, Purchaser [Adhikari] shall accept a new lease or lease
assignment for the existing Lease, at Landlord’s [Lukoil’s] option, executed by
the Landlord [Lukoil], which shall be subject to Purchaser’s [Adhikari’s] review
and approval, but shall be on terms which are identical [to] the existing lease.
The new lease or lease assignment shall not prohibit the current subtenant to the
premises, a Dunkin Donuts franchisee, to remain as a subtenant, with similar, if
not the same terms as their current tenancy with Sellers [Sanjeev Verma, Kamlesh
Modh, and Sandeep Verma].
Verma Dec., Exh. D ¶ 3.01. Additionally, the Membership Unit Transfer Agreement included a
provision that Adhikari would indemnify Defendants Sanjeev Verma, Modh, and Sandeep
Verma from any “all liabilities or claims relating to and arising out of the operation of the
Company and Business after the Closing Date.” Id. ¶ 7.
On or about January 24, 2013, Plaintiff Shree sought to sell its interest in the Dunkin
Donuts franchise to Kamala at Malvern, LLC (“Kamala”). Def. Mot. for Summ. J. ¶ 11. After
signing the Purchase and Sale Agreement, Kamala attempted to get a Small Business
Administration (“SBA”) loan, at which time it “discovered that there was only 5 years to go on
the Lease and not 15 years,” thus causing “[Plaintiff] Shree to substantially reduce the amount of
Lease purchase consideration.” Compl. ¶ 14(a).
In addition to the above-mentioned undisputed facts, Plaintiffs contend that Defendants
misrepresented the length of the terms of the Convenience Store Sub-Lease by stating that “the
lease had a 20 year term to be extended to, to the year 2027 and not only 8 years to the year
2017.” Id. ¶ 16. Plaintiffs further contend that as a result of the misrepresentation, Adhikari
“entered into a membership transfer agreement to buy Malvern, assume[d] the ongoing
lease/PMPA franchise with Lukoil and signed [a] Franchise Agreement with Lukoil….” Id. ¶
18(a). Plaintiffs are claiming damages in excess of $457,000.00. Id. ¶ 22(B)(1).
On August 12, 2014, Plaintiffs filed their Complaint against Defendants. Doc. 1. On
October 6, 2014, Defendant Dunkin Donuts Franchising filed a motion to dismiss all claims.
Doc. 2. On December 1, 2014, the Court granted Defendant’s Motion to Dismiss and Defendant
Dunkin Donuts Franchising was dismissed from the case. Doc. 15. On January 5, 2016,
Defendants Sanjeev Verma, Modh, Sandeep Verma, and Lukoil filed the instant Motion for
Summary Judgment. Doc. 29.
STANDARD OF REVIEW
Pursuant to Federal Rule of Civil Procedure 56, courts shall grant summary judgment in
favor of the moving party if “there is no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). A fact is “material” if it is “one
that might ‘affect the outcome of the suit under governing law.’” Smith v. Johnson & Johnson,
593 F.3d 280, 284 (3d Cir. 2010) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986)). A dispute as to a material fact is “genuine” if it “is one that ‘may reasonably be
resolved in favor of either party.’” Lomando v. United States, 667 F.3d 363, 371 (3d Cir. 2011)
(quoting Anderson, 477 U.S. at 250)).
On summary judgment, the movant has the initial “burden of identifying specific portions
of the record that establish the absence of a genuine issue of material fact.” Santini v. Fuentes,
795 F.3d 410, 416 (3d Cir. 2015). If the movant can sustain its initial burden, “the burden shifts
to the nonmoving party to go beyond the pleadings and ‘come forward with specific facts
showing that there is a genuine issue for trial.’” Id. (quoting Matsushita Elec. Indus. Co. v.
Zenith Radio Corp., 475 U.S. 574, 587 (1986)). “[A]t the summary judgment stage the [court’s]
function is not . . . to weigh the evidence and determine the truth of the matter, but to determine
whether there is a genuine issue for trial.” Anderson, 477 U.S. at 249. In doing so, the court
“must construe all evidence in the light most favorable to the nonmoving party.” Santini, 795
F.3d at 416. Nevertheless, the court must be mindful that, “[t]he mere existence of a scintilla of
evidence in support of the plaintiff’s position will be insufficient; there must be evidence on
which the jury could reasonably find for the plaintiff.” Anderson, 477 U.S. at 252. Accordingly,
the court must determine “whether the evidence presents a sufficient disagreement to require
submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.”
Id. at 251–52.
This Court has subject matter jurisdiction over the instant case because Plaintiffs are
citizens of Pennsylvania, Defendants are citizens of New Jersey and Massachusetts, and the
amount in controversy exceeds $75,000.00. 28 U.S.C. § 1332; Compl. ¶ 6. Since “[a] federal
court sitting in diversity applies the choice-of-law rules of the forum state . . . to determine the
controlling law,” this Court will apply Pennsylvania law.1 Maniscalco v. Brother Int’l (USA)
Corp., 709 F.3d 202, 206 (3d Cir. 2013).
Defendants raise the following grounds upon which it moves for summary judgment: (1)
Plaintiffs failed to prove the elements for fraud in the inducement; (2) Plaintiffs failed to
establish that Defendants breached the Convenience Store Sub-Lease; (3) Plaintiffs failed to
prove their claim for tortious interference; (4) Plaintiffs failed to provide any factual basis to
make a claim under the Pennsylvania Uniform Trade Practices and Consumer Protection Law
(“UTPCPL”); and (5) Plaintiffs cannot pursue an independent claim for breach of the implied
covenant of good faith.2 The Court will address each in turn.
A. Fraud in the Inducement
Defendants argue that Plaintiffs cannot establish a claim for fraud in the inducement
because Defendants did not make any misrepresentations regarding the terms of the Convenience
Store Sub-Lease. Under Pennsylvania law, to establish fraud in the inducement a plaintiff must
Neither party has produced the Convenience Store Sub-Lease in its entirety; therefore the Court cannot discern
whether the contract contained a choice of law provision. Both parties have assumed, however, that Pennsylvania
law applies. Accordingly, the Court finds that it is appropriate to apply the law of the forum state and will apply
Defendants also argue that summary judgment is appropriate because Plaintiffs failed to answer Defendants’
interrogatories or otherwise respond to Defendants’ discovery requests. Because the Court has concluded that
demonstrate by clear and convincing evidence: “(1) a representation; (2) which is material to the
transaction at hand; (3) made falsely, with knowledge of its falsity or recklessness as to whether
it is true or false; (4) with the intent of misleading another into relying on it; (5) justifiable
reliance on the misrepresentation; and (6) the resulting injury was proximately caused by the
reliance.” Freeman v. Pittsburgh Glass Works, LLC, 709 F.3d 240, 257 (3d Cir. 2013). In cases
alleging fraud in the inducement—as is the case here—the theory is that “since fraud induced the
agreement, no valid agreement came into being and parol evidence is admissible to show that the
alleged agreement is void.” Blumenstock v. Gibson, 811 A.2d 1029, 1036 (Pa. Super Ct. 2002).
However, “a party cannot justifiably rely upon prior oral representations yet sign a contract
denying the existence of those representations.” Id. Additionally, “[u]nsupported assertions and
conclusory accusations cannot create genuine issues of material fact as to the existence of fraud.”
Id. at 1034. Accordingly, before submitting a case to the jury, the trial court must determine
“whether plaintiffs’ evidence attempting to prove fraud is sufficiently clear, precise and
convincing to make out a prima facie case.” Beardshall v. Minuteman Press Int'l, Inc., 664 F.2d
23, 26 (3d Cir. 1981); see also Lind v. Jones, Lang LaSalle Americas, Inc., 135 F. Supp. 2d 616,
621 (E.D. Pa. 2001) (“Pennsylvania law requires the trial judge to decide as a matter of law
before he submits a case to the jury whether plaintiffs’ evidence attempting to prove fraud is
sufficiently clear, precise, and convincing to make out a prima facie case.”).
The Court concludes that Plaintiffs failed to articulate any misrepresentation concerning
the length of the Convenience Store Sub-Lease. Plaintiffs allege that Defendant Verma, as the
Lessor/Landlord, specifically misrepresented that the Convenience Store Sub-Lease had a
twenty-year term to be extended to, when there was actually only a period of approximately
summary judgment is proper based on the merits of the action, the Court need not address whether dismissal would
be an appropriate sanction for Plaintiffs’ failure to respond to Defendants’ discovery requests.
eight-years left on the lease. Compl. ¶ 10–11. Pennsylvania courts have long recognized that
“‘[i]n real estate transactions, fraud arises when a seller knowingly makes a misrepresentation,
undertakes a concealment calculated to deceive, or commits non-privileged failure to disclose.’”
Fidelity. Nat. Title Ins. Co. v. Craven, Civil Action No. 12-4306, 2012 WL 5881856, at *7 (E.D.
Pa. Nov. 21, 2012) (quoting Sewak v. Lockhart, 699 A.2d 755, 759 (Pa. Super. Ct. 1997)); see
also Gordon v. McManus, No. 972 EDA 2013, 2014 WL 10917627, at *7 (Pa. Super. Ct. June
30, 2014). Here, Plaintiffs have failed to establish that Defendants knowingly made a
misrepresentation, undertook a concealment calculated to deceive Plaintiffs, or committed nonprivileged failure to disclose.
The language in the Convenience Store Sub-Lease unequivocally provides for an initial
term of ten-years, with two five-year options to extend the lease, “provided that [Malvern] itself
has a lease term to cover the applicable option period.” Compl., Exh. A., ¶ 2. If exercised, the
two five-year options would extend the term of the Convenience Store Sub-lease until November
30, 2028, which is what is represented in the Convenience Store Sub-Lease. Id. While the Court
acknowledges that the Master Lease can only be extended to November 12, 2027, the
Convenience Store Sub-Lease states that “[Malvern] represents and warrants that it has the right
to occupy the Store until the Initial Termination Date,” which is November 30, 2018. Id. Thus,
the express terms of the Convenience Store Sub-Lease only guarantee the lease until November
30, 2018. Plaintiffs failed to produce any documents during discovery suggesting that
Defendants’ representations in the Convenience Store Sub-Lease are false or misleading.
Moreover, Plaintiffs failed to produce evidence of any specific oral misrepresentations made by
the Defendants, either before or after the signing of the Convenience Store Sub-Lease. Instead,
Plaintiffs rely solely on “unsupported assertions and conclusory accusations.” Blumenstock, 811
A.2d at 1034. Accordingly, Plaintiffs cannot establish a claim for fraud in the inducement.
B. Breach of Contract
Defendants argue that Plaintiffs cannot prove that Defendants breached a duty imposed
by the Convenience Store Sub-Lease. To establish a breach of contract claim under
Pennsylvania law, a plaintiff must prove the following: “‘(1) the existence of a contract,
including its essential terms, (2) a breach of duty imposed by the contract[,] and (3) resultant
damages.’” Ware v. Rodale Press, Inc., 322 F.3d 218, 225 (3d Cir. 2003) (quoting CoreStates
Bank, N.A. v. Cutillo, 723 A.2d 1053, 1058 (Pa. Super. Ct. 1999)). The important inquiry in
determining if a contract is enforceable, is whether the parties “‘manifested an intention to be
bound by [the contract] terms and whether the terms are sufficiently definite to be specifically
enforced.’” ATACS Corp. v. Trans World Commc’ns., Inc., 155 F.3d 659, 665 (3d Cir. 1998)
(quoting Channel Home Ctrs. v. Grossman, 795 F.2d 291, 298–99 (3d Cir. 1986)).
The existence of the Convenience Store Sub-Lease contract is undisputed. However,
Plaintiffs failed to establish that Defendants breached a duty imposed by the Convenience Store
Sub-Lease. In their Complaint, Plaintiffs generally allege that Defendants breached “obligations
and duties” pertaining to the five contracts attached to the Complaint. Compl. ¶¶ 25–26. As far
as the Court can discern, Plaintiffs’ breach of contract claim is premised on the allegation that
Defendants made misrepresentations concerning the length of the Convenience Store Sub-Lease.
The Court has already concluded, however, that Plaintiffs failed to establish any
misrepresentations concerning the length of the Convenience Store Sub-Lease. The
Convenience Store Sub-Lease states that “[Malvern] represents and warrants that it has the right
to occupy the [Dunkin Donuts] until the Initial Termination Date,” which is November 30, 2018.
Compl., Exh. A. ¶ 2. Plaintiffs have not produced any evidence indicating that the actual lease
term is less than what is provided for in the Convenience Store-Sublease. Moreover, Plaintiffs
continue to operate the Dunkin Donuts franchise under the Convenience Store Sub-Lease. Def.
Mot. for Summ. J. ¶ 12. Accordingly, Plaintiffs failed to establish a breach of contract claim.
C. Tortious Interference
Defendants argue that Plaintiffs’ claim for tortious interference must be dismissed,
because Plaintiffs’ prospective relationship with Kamala was unknown to Defendants at the time
of the Convenience Store Sub-Lease.3 Under Pennsylvania law, to prevail on a claim for tortious
interference, a plaintiff must prove:
(1) the existence of a contractual or prospective contractual or economic
relationship between the plaintiff and a third party; (2) purposeful action by the
defendant, specifically intended to harm an existing relationship or intended to
prevent a prospective relation from occurring; (3) the absence of privilege or
justification on the part of the defendant; (4) legal damage to the plaintiff as a
result of the defendant's conduct; and (5) for prospective contracts, a reasonable
likelihood that the relationship would have occurred but for the defendant's
Acumed LLC v. Advanced Surgical Servs., Inc., 561 F.3d 199, 212 (3d Cir. 2009).
To determine whether a prospective contractual relationship exists, “Pennsylvania courts
have considered whether the evidence supports a finding that there was an objectively
‘reasonable likelihood or probability’ that the contemplated contract would have materialized
absent the defendant's interference.” Id. at 213 (quoting Glenn v. Point Park Coll., 272 A.2d
Defendants also suggest that Plaintiffs’ tortious interference claim is barred by the two-year statute of limitations.
See CGB Occupational Therapy, Inc. v. RHA Health Servs. Inc., 357 F.3d 375, 383 (3d Cir. 2004) (“Pennsylvania
courts apply the two year statute of limitations of 42 Pa. Cons. Stat. § 5524(3) to tortious interference with
contractual relations claims.”). However, under Pennsylvania law, the statute of limitations begins to run on a claim
for tortious interference with a contract once the plaintiff has suffered an injury as a result of the defendant’s
conduct. William A. Graham Co. v. Haughey, 568 F.3d 425, 439 (3d Cir. 2009). In this case, Plaintiff Shree did not
seek to sell its interest to Kamala until on or about January 24, 2013, which is when Plaintiff Shree learned of the
alleged misrepresentations and was required to reduce its price in the transaction. Accordingly, the element of
damages was not present until on or about January 24, 2013, and Plaintiffs would have two-years from that date to
895, 898–99 (Pa. Super Ct. 1971)). “A ‘reasonable likelihood’ of occurrence is something less
than a contractual right but more than a mere hope that there will be a future contract.” Id.
(quoting Phillips v. Selig, 959 A.2d 420, 428 (Pa. Super. Ct. 2008)). Additionally, “[t]he
plaintiff also must plead and prove ‘a reasonable likelihood or probability that the anticipated
business relationship will be consummated.’” Int’l Diamond Importers, Ltd. v. Singularity Clark,
L.P., 40 A.3d 1261, 1275 (Pa. Super Ct. 2012) (quoting Behrend v. Bell Tel. Co., 363 A.2d 1152,
1159 (Pa. Super Ct. 1976) vacated sub nom. Behrend v. Bell Tel. Co., 374 A.2d 536 (1977)). In
International Diamond Importers, the Pennsylvania Superior Court found that because the tenant
informed the landlord that he was “‘currently negotiating both the sublease and/or assignment of
this space, as [was his] right under the above-listed documents,’” the landlord had knowledge of
the tenant’s prospective relationship. 40 A.3d at 1276. The court determined that a “jury
reasonably could have concluded” that the landlord knew of the prospective assignment, and
“therefore knew that its actions were at least likely to undermine any such deal.” Int’l Diamond
Importers, 40 A.3d at 1276.
Unlike in International Diamond Importers, Plaintiffs here have failed to produce any
evidence that would allow a jury to reasonably find that Defendants had knowledge of Plaintiffs’
prospective contractual relationship with Kamala. Importantly, Plaintiffs’ agreement with
Kamala occurred five-years after the signing of the Convenience Store Sub-Lease. Moreover,
Plaintiffs have not alleged or produced any evidence suggesting that Plaintiff Shree
communicated its intent to eventually sell its interest in the Dunkin Donut franchise to Kamala,
or any other party. Even if Plaintiff Shree contemplated selling his interests in the Dunkin
Donuts, there was not a “‘reasonable likelihood or probability’” that the contemplated contract
file their lawsuit. Since Plaintiffs filed suit on August 12, 2014, Plaintiffs’ claim is not barred by the two-year
statute of limitations.
would have materialized. See Int’l Diamond Importers, 40 A.3d at 1275 (quoting Behrend, 363
A.2d at 1159). Therefore, Plaintiffs cannot establish a claim for tortious interference.
D. Uniform Trade Practices and Consumer Protection Law
Defendants contend that summary judgment is appropriate for Plaintiffs’ claim under the
UTPCPL, because the UTPCPL does not apply to commercial transactions. Pennsylvania’s
UTPCPL seeks to prevent “[u]nfair methods of competition and unfair or deceptive acts or
practices in the conduct of any trade or commerce.” 73 Pa. Cons. Stat. § 201–3. In particular,
the UTPCPL prohibits “fraudulent or deceptive conduct which creates a likelihood of confusion
or of misunderstanding.” 73 Pa. Cons. Stat. § 201–2(4)(xxi). “To state a plausible claim under
the UTPCPL, the Complaint must allege that: ‘(1) [Plaintiff] purchased or leased goods or
services primarily for a personal, family, or household purpose; (2) [Plaintiff] suffered an
ascertainable loss of money or property; and (3) the loss occurred as a result of the use or
employment by a person of a method, act, or practice declared unlawful by the UTPCPL.’” Ries
v. Curtis, No. Civil Action No. 13-1400, 2014 WL 5364972, at *9 (E.D. Pa. Oct. 22, 2014)
(quoting Baynes v. George E. Mason Funeral Home, Inc., No. Civ. A.09–153, 2011 WL
2181469, at *4 (W.D. Pa. June 2, 2011)).
The Court finds that the Convenience Store Sub-Lease was not for a personal, family, or
household purpose, and therefore Plaintiffs cannot establish a claim under the UTPCPL.
Pennsylvania courts have been careful to distinguish between “purchases made for business
reasons, which are not actionable, from those made for ‘personal, family or household use.’”
Balderston v. Medtronic Sofamor Danek, Inc., 285 F.3d 238, 242 (3d Cir. 2002); see also
Morales v. Superior Living Prods., LLC, Civil Action No. 07-cv-04419, 2009 WL 3234434, at
*13 (E.D. Pa. Sept. 30, 2009) (“Thus, to be actionable under the UTPCPL, a purchase must be
primarily for personal, family or household purchases.”). The determination of “whether a
purchase is used primarily for household purposes . . . depends on the purpose of the purchase,
not the type of product purchased.” Carpenter v. Shu-Bee’s, Inc., Civil Action No. 10-0734,
2012 WL 2594276, at *2 (E.D. Pa. July 5, 2012); see also Morales, 2009 WL 3234434, at *13
(dismissing the plaintiff’s complaint, and finding that the plaintiff who was engaged in the
business of bathroom renovation, had purchased the bathtub for his business and not personal
Plaintiffs in this case allege that “[t]he length of the [Convenience Store Sub-Lease] is
critical to its value as an acquisition, and a possible resale in the future,” and that “it is a basic
concept of real estate valuation, that the actual value of a shopping center is directly related to
the ability of that center to have an anchor tenant.” Compl. ¶¶ 9, 22(B)(2). Plaintiffs’ Complaint
clearly evinces parties engaged in a transaction for business reasons, not a transaction for
“personal, family, or household use.” Accordingly, Plaintiff cannot establish a claim under the
E. Breach of the Implied Covenant of Good Faith
Lastly, Defendants argue that Pennsylvania does not recognize independent claims for
breach of the implied covenant of good faith, and therefore Plaintiffs’ claim must be dismissed.
The Court agrees.
Under Pennsylvania law, it is well established that a plaintiff cannot pursue an
independent claim for breach of the implied covenant of good faith, while also pursuing claims
for fraud and breach of contract. See Northview Motors, Inc. v. Chrysler Motors Corp., 227 F.3d
78, 92 (3d Cir. 2000); King of Prussia Equip. Corp. v. Power Curbers, Inc., 158 F. Supp. 2d 463,
466 (E.D. Pa. 2001). In King of Prussia Equipment Corp., the district court recognized that
“[b]ecause the actions forming the basis of [plaintiff’s] breach of contract claim and its good
faith and fair dealing claim are essentially the same, [the plaintiff] cannot pursue both causes of
action.” 158 F. Supp. 2d, at 467. Similarly, in Northview, the Third Circuit reasoned “that if a
plaintiff alleging a violation of the implied covenant of good faith also were to file a claim for
fraud based on the same set of facts, Pennsylvania courts likely would decline to proceed with
the claim alleging bad faith.” 227 F.3d at 92; see also LSI Title Agency, Inc. v. Evaluation
Servs., Inc., 951 A.2d 384, 392 (Pa. Super Ct. 2008) (holding that a claim for breach of the
implied covenant of good faith and fair dealing was “subsumed in a breach of contract claim”).
Like in King of Prussia Equip. Corp, Northview, and LSI Title Agency, Inc., the actions
giving rise to Plaintiffs’ claims for breach of contract, fraud in the inducement, and breach of the
implied covenant of good faith are indistinguishable. Accordingly, Plaintiffs’ independent claim
for breach of the implied covenant of good faith and fair dealing cannot stand, and summary
judgment should be granted.
For the reasons set forth above, the Court finds that there is no genuine issue as to any
material fact and that Defendants Sanjeev Raj Verma, Kamlesh Modh, Sandeep Verma, and
Lukoil North America LLC are entitled to judgment as a matter of law. Accordingly,
Defendants’ Motion for Summary Judgment is granted. An appropriate Order follows.
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