FELS et al v. RUTENBERG et al

Filing 26

ORDER THAT DEFENDANTS' MOTION TO DISMISS PLAINTIFFS' AMENDED COMPLAINT IS DENIED IN PART AND GRANTED IN PART AS OUTLINED HEREIN. SIGNED BY HONORABLE GERALD A. MCHUGH ON 10/29/2015. 10/29/2015 ENTERED AND COPIES MAILED TO UNREPS AND E-MAILED.(ahf)

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

WILLIAM FELS and BERNICE FELS,
Plaintiffs,

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v.
ALAN RUTENBERG d/b/a LRD
GRAPHICS, INC., et al.,
Defendants.

CIVIL ACTION
No. 15-0136

MEMORANDUM ORDER
This 29th day of October, 2015, upon consideration of Defendants’ Motion to Dismiss
Plaintiffs’ Amended Complaint, and Plaintiffs’ Response thereto, it is ORDERED that
Defendants’ Motion is DENIED IN PART and GRANTED IN PART, as follows.
In analyzing Defendants’ Motion, I must assume all of Plaintiffs’ factual allegations are
true, draw all inferences in their favor, and then determine whether they give rise to a plausible
entitlement for relief. See Ashcroft v. Iqbal, 556 U.S. 662 (2009).
Viewing the facts alleged and all inferences drawn therefrom in the light most favorable
to the non-moving party, I find that Plaintiffs have plead a plausible claim for “Negligence re:
Fire” under Count IV. Therefore, Defendants’ Motion to Dismiss Plaintiffs’ Negligence Claim
(Count IV) is DENIED without prejudice to Defendants’ right to reassert their arguments at
summary judgment should discovery reveal facts to support Defendants’ contention that the fire
was not caused by their negligence. Plaintiffs concede they must withdraw their damages claims
for “any implicit claims of physical or personal injury” under Count IV. Therefore, Defendants’
request to strike any reference to personal injuries or pre-existing conditions from Plaintiffs’
First Amended Complaint is GRANTED AS UNOPPOSED.

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Because Plaintiffs have pleaded a plausible claim for negligence, Defendant LRD
Graphics, Inc.’s Motion to Dismiss Plaintiffs’ Breach of Contract Claim (Count I) is also
DENIED without prejudice to Defendant’s right to reassert its argument at summary judgment
should discovery reveal facts to support its contention that the fire was not caused by negligence.
Defendant Alan Rutenberg’s Motion to Dismiss Plaintiff’s Breach of Contract Claim
under Count I against him in his personal capacity is GRANTED. Defendant Rutenberg,
President of LRD Graphics, Inc., signed the lease agreement at issue as an agent of the
corporation. See Plaintiff’s First Amended Complaint at Exhibit A (lease agreement signature
line appears to read, 1 “LRD Graphics, Inc., By: Alan D. Rutenberg, Pres.). Because Rutenberg
was acting within the scope of his corporate authority as President, he cannot be held personally
liable for a breach of contract claim arising out of the lease agreement at issue. Daniel Adams
Associates, Inc. v. Rimbach Pub., Inc., 519 A.2d 997, 1000–01 (Pa. Super. Ct. 1987) (“Where a
party contracts with a corporation through a corporate agent who acts within the scope of his
authority and reveals his principal, the corporate principal alone is liable for breach of the
contract.”).
Plaintiffs have failed to allege any facts that support piercing the corporate veil in order
to hold Rutenberg individually liable for breach of contract. In fact, Plaintiffs have voluntarily
withdrawn Count VI, Piercing the Corporate Veil. Moreover, “[p]iercing the corporate veil is
admittedly an extraordinary remedy preserved for cases involving exceptional circumstances.”
Vill. at Camelback Prop. Owners Assn. Inc. v. Carr, 538 A.2d 528, 533 (Pa. Super. Ct. 1988)
aff'd sub nom. Vill. at Camelback Prop. Owners Ass'n, Inc. v. Carr, 524 Pa. 330, 572 A.2d 1
(1990). Thus, I find that Plaintiffs have failed to adequately plead allegations supporting

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The Court notes that the lease agreement at issue is largely illegible and expects Plaintiffs to submit a legible copy
by the next stage of proceedings.

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Rutenberg’s liability, and Count I is therefore DISMISSED without prejudice as to Defendant
Rutenberg. Should facts exist to support Rutenberg’s individual liability under Count I that rise
to the high threshold required to pierce the corporate veil, Plaintiffs should seek leave of Court to
amend their Complaint in this capacity. Phillips v. Cnty. of Allegheny, 515 F.3d 224, 245 (3d
Cir. 2008) (“if a complaint is subject to a Rule 12(b)(6) dismissal, a district court must permit a
curative amendment unless such an amendment would be inequitable or futile”).
Defendants’ Motions to Dismiss Count II, Count V, and Count VI are each GRANTED
AS UNOPPOSED. Count II, Count V, and Count VI of Plaintiffs’ Amended Complaint are
hereby DISMISSED without prejudice.
Defendants’ Motion to Dismiss Plaintiffs’ Claim for Negligence/Negligent
Misrepresentation (Count III) is GRANTED. As explained by the Superior Court of
Pennsylvania in Pittsburgh Const. Co. v. Griffith, the “gist of the action” doctrine “operates to
preclude a plaintiff from re-casting ordinary breach of contract claims into tort claims.” 834
A.2d 572, 581–82 (Pa. Super. Ct. 2003). Tort claims “lie from the breach of duties imposed as a
matter of social policy” while contract claims “lie from the breach of duties imposed by mutual
consensus.” Id. Accordingly, “a claim should be limited to a contract claim when the parties'
obligations are defined by the terms of the contracts, and not by the larger social policies
embodied by the law of torts.” Id. Here, in support of their negligence/negligent
misrepresentation claim under Count III, Plaintiffs plead that Defendants knowingly made false
statements that they would pay rent and repair the building once they received insurance money
related to the fire. Thus, it is plain based on the allegations in the Complaint that Plaintiffs’
negligent misrepresentation claim arises out of duties imposed by the lease agreement.

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Because Plaintiffs’ Negligence/Negligent Misrepresentation claim arises out of the
parties’ obligations under the lease agreement rather than a breach of duty imposed by social
policy, Count III of Plaintiffs’ Amended Complaint is DISMISSED without prejudice. If
Plaintiffs maintain that Defendants breached an independent duty imposed by the law of torts—
as opposed to any duty created by the lease agreement itself—they should seek leave of Court to
amend their Complaint accordingly to plead facts supporting a plausible claim for negligent
misrepresentation. See Bruno v. Erie Ins. Co., 106 A.3d 48, 68 (Pa. 2014) (“The general
governing principle which can be derived from our prior cases is that our Court has consistently
regarded the nature of the duty alleged to have been breached, as established by the underlying
averments supporting the claim in a plaintiff's complaint, to be the critical determinative factor in
determining whether the claim is truly one in tort, or for breach of contract.”).
/s/ Gerald Austin McHugh
United States District Court Judge

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