Mackachinis et al v. McCosar Minerals, Inc.
MEMORANDUM and ORDER granting 3 Motion to Dismiss for Failure to State a Claim. Counts I, III, and IV of the complaint are dismissed with prejudice; Count II is dismissed without prejudice; Pltfs may file an amended complaint w/i 21 days from the date of this order; Clerk of Court will be directed to close this case if amended complaint is not filed w/i time allowed.Signed by Honorable James M. Munley on 4/23/13 (sm)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
JOSEPH P. MACKACHINIS and
WILLIAM J. BRESLIN,
MCCOSAR MINERALS, INC.,
Before the court is Defendant McCosar Minerals, Inc.’s (hereinafter
“defendant”) motion to dismiss plaintiffs’ complaint pursuant to Federal Rule
of Civil Procedure 12(b)(6). (Doc. 3). The matter is fully briefed and ripe for
disposition. For the following reasons, the court will grant defendant’s motion
to dismiss all counts of the complaint, of which counts I, III and IV will be
dismissed with prejudice.
Plaintiffs Joseph P. Mackachinis and William J. Breslin (collectively
“plaintiffs”) are the recorded owners of real property consisting of 70.09 acres
in Harford Township, Susquehanna County, Pennsylvania. (Doc. 1-1, Ex. A,
Compl. (hereinafter “Compl.”) ¶ 4). Plaintiffs’ own this property pursuant to a
deed dated May 23, 2008. (Id.)
On July 6, 2009, plaintiffs entered into a “Hydrocarbon Conveyance”
(hereinafter the “contract”) with defendant. (Id. ¶ 5). The one page, pre-
preprinted contract provides, in pertinent part, as follows:
[Plaintiffs], in consideration of TEN DOLLARS ($10.00) and other
valuable consideration, the receipt of which is hereby
acknowledged, [have] granted, sold, conveyed, assigned and
delivered, and by these presents do hereby grant, sell, convey,
assign, set over and deliver unto [Defendant], its successors and
assigns, all of the right, title and interest owned by [Plaintiffs] in
and to all the oil, gas, methane, coalbed methane, and their
constituents, whether hydrocarbons or non-hydrocarbons, but
excluding coal. . . .
[Plaintiffs] acknowledge that [Defendant] made no representation
or warranties of any kind to [Plaintiffs] to execute this instrument
other than the payment of consideration therefore . . . .
The actual consideration for this transaction is $105,135.00. . . .
(Compl., Ex. D, Hydrocarbon Conveyance) (emphasis added). On November
23, 2009, defendant recorded the contract with the office of the Register of
Wills and Recorder of Deeds of Susquehanna County. (Compl. ¶ 7).
At all relevant times, plaintiffs have undertaken all obligations owed by
them under the terms of the contract. (Id. ¶ 25). Despite their performance
under the contract, as well as their requests for payment, plaintiffs have yet to
receive the actual consideration promised in the contract. (Id. ¶¶ 9-10, 13-14,
19, 26, 30). Plaintiffs allege that defendant had no intention of actually paying
plaintiffs the agreed upon actual consideration. (Id. ¶ 20). Rather, defendant
promised to pay plaintiffs $105,135 as a means to induce them to assent to
the contract. (Id. ¶¶ 20-21). Plaintiffs relied on defendant’s promise, and they
would not have agreed to the contract but for this promise. (Id. ¶¶ 22-24).
On September 6, 2012, plaintiffs initiated the instant action in the Court
of Common Pleas of Susquehanna County by filing a four-count complaint.
(Doc. 1, Notice of Removal ¶ 1). Count I alleges defendant is liable upon a
theory of “failure of consideration.” (Compl. ¶¶ 8-11). Count II charges
defendant with a breach of contract and asserts that the unique nature of the
contract precludes an adequate remedy at law. (Id. ¶¶ 12-17). Count III
charges defendant with fraud. (Id. ¶¶ 18-28). Count IV alleges defendant is
liable under a theory of a “constructive trust.” (Id. ¶¶ 29-31).
Defendant removed the instant action to this court on October 5, 2012.
On October 12, 2012, defendant filed a motion to dismiss and brief in support
thereof. Plaintiffs filed a brief in opposition to defendant’s motion on
November 19, 2012, and defendant submitted a reply brief on December 3,
2012, bringing this case to its current posture.
The court has jurisdiction pursuant to the diversity statute, 28 U.S.C. §
1332. Plaintiff Joseph P. Mackachinis is domiciled in and a citizen of
Pennsylvania. (Doc. 1, Notice of Removal ¶ 3). Plaintiff William J. Breslin is
domiciled in and a citizen of Pennsylvania. (Id. ¶ 4). Defendant McCosar
Minerals, Inc. is incorporated under the laws of the State of California with its
principal place of business in Oklahoma. (Id. ¶ 5). Because complete
diversity of citizenship exists among the parties and the amount in controversy
exceeds $75,000.00, the court has jurisdiction over the case. See 28 U.S.C.
§ 1332. As a federal district court sitting in diversity, the substantive law of
Pennsylvania shall apply to the instant case. Chamberlain v. Giampapa, 210
F.3d 154, 158 (3d Cir. 2000) (citing Erie R.R. v. Tompkins, 304 U.S. 64, 78
Standard of Review
The court tests the sufficiency of the complaint’s allegations when
considering a Rule 12(b)(6) motion. All well-pleaded allegations of the
complaint must be viewed as true and in the light most favorable to the nonmovant to determine whether, “‘under any reasonable reading of the
pleadings, the plaintiff may be entitled to relief.’” Colburn v. Upper Darby
Twp., 838 F.2d 663, 665-66 (3d Cir. 1988) (quoting Estate of Bailey by Oare
v. Cnty. of York, 768 F.2d 503, 506 (3d Cir. 1985)). The plaintiff must
describe “‘enough facts to raise a reasonable expectation that discovery will
reveal evidence of’ [each] necessary element” of the claims alleged in the
complaint. Phillips v. Cnty. of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008)
(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007)). Moreover, the
plaintiff must allege facts that “justify moving the case beyond the pleadings to
the next stage of litigation.” Id. at 234-35. In evaluating the sufficiency of a
complaint the court may also consider “matters of public record, orders,
exhibits attached to the complaint and items appearing in the record of the
case.” Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1384 n.2
(3d Cir. 1994) (citations omitted). The court does not have to accept legal
conclusions or unwarranted factual inferences. See Curay-Cramer v. Ursuline
Acad. of Wilmington, Del., Inc., 450 F.3d 130, 133 (3d Cir. 2006) (citing Morse
v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997)).
The federal rules require only that plaintiff provide “a short and plain
statement of the claim showing that the pleader is entitled to relief,” a
standard which “does not require detailed factual allegations,” but a plaintiff
must make “a showing, rather than a blanket assertion, of entitlement to relief
that rises above the speculative level.” McTernan v. N.Y.C., 564 F.3d 636,
646 (3d Cir. 2009) (citations and internal quotation marks omitted). The
“complaint must contain sufficient factual matter, accepted as true, to ‘state a
claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (quoting Twombly, 550 U.S. at 570). Such “facial plausibility”
exists “when the plaintiff pleads factual content that allows the court to draw
the reasonable inference that the defendant is liable for the misconduct
alleged.” Id. (citing Twombly, 550 U.S. at 556). “[T]he factual detail in a
complaint [cannot be] so undeveloped that it does not provide a defendant the
type of notice of claim which is contemplated by Rule 8.” Phillips, 515 F.3d at
232 (citation omitted). “Though a complaint ‘does not need detailed factual
allegations, . . . a formulaic recitation of the elements of a cause of action will
not do.’” DelRio-Mocci v. Connolly Props., Inc., 672 F.3d 241, 245 (3d Cir.
2012) (quoting Twombly, 550 U.S. at 555).
The Supreme Court has counseled that a court examining a motion to
dismiss should, “begin by identifying pleadings that, because they are no
more than conclusions, are not entitled to the assumption of truth.” Iqbal, 556
U.S. at 679. Next, the court should make a context-specific inquiry into the
“factual allegations in [the] complaint to determine if they plausibly suggest an
entitlement to relief.” Id. at 681.
In the instant motion, defendant asserts that plaintiffs’ complaint fails to
meet our minimal pleading requirements and must therefore be dismissed
pursuant to Federal Rule of Civil Procedure 12(b)(6). Plaintiffs concede that
counts I and IV should be dismissed,1 but they contest defendant’s other
Defendant avers that count I should be dismissed as duplicative of
count II. Plaintiffs do not defend against defendant’s contention that counts I
and II are duplicative; rather, plaintiffs simply state that “[t]he Court’s power to
dismiss duplicative claims is undisputed.” (Doc. 6, Pls.’ Mem. of Law at 4).
Plaintiffs are correct on this point, and ample authority supports this court’s
arguments. Therefore, the court will address whether plaintiffs state a viable
claim with respect to counts II and III.
A. Breach of Contract
In count II, plaintiffs contend that defendant breached the contract by
failing to provide plaintiffs with $105,135 and that, as a result, the contract
should be voided. (Compl. ¶¶ 12-17). Defendant argues that count II fails to
state a sufficient cause of action. Specifically defendant contends that
plaintiffs’ breach of contract claim fails to state (1) that plaintiffs cooperated
with defendant to carry out the purposes of the agreement, (2) that plausible
damages exist and (3) the existence of a sufficient legal basis for claiming the
equitable remedy of rescission.
With respect to its first two contentions, defendant attacks plaintiff’s
discretion to dismiss duplicative counts of a complaint. See, e.g., Brown &
Brown, Inc. v. Cola, 745 F. Supp. 2d 588, 626-27 (E.D. Pa. 2010) (dismissing
a count where it was “nothing more than duplicative” of other counts in a
complaint); Caudill Seed & Warehouse Co., Inc. v. Prophet 21, Inc., 123 F.
Supp. 2d 826, 834 (E.D. Pa. 2000) (dismissing a count that “merely
duplicates” another count). The court finds that plaintiffs’ count I for “failure of
consideration” is duplicative of the breach of contract claim plaintiffs allege in
count II. As such, count I will be dismissed with prejudice.
Count IV will similarly be dismissed with prejudice because a
constructive trust is not an independent cause of action. See ClubCom, Inc.
v. Captive Media, Inc., No. 02:07-cv-1462, 2009 WL 249446, at *15 (W.D. Pa.
Jan. 31, 2009) (holding that a “constructive trust is not a cause of action but a
remedy.”). Plaintiffs do not dispute this point and concede that the court
should dismiss count IV. (Doc. 6, Pls.’ Mem. of Law at 8).
breach of contract claim on the basis that the complaint fails to state the
elements needed to assert a breach of contract action in Pennsylvania.
Under Pennsylvania law, parties asserting claims for breach of contract must
allege the following three elements: “(1) the existence of a contract, including
its essential terms; (2) a breach of duty imposed by the contract; and (3)
resultant damages.” Alpart v. Gen. Land Partners, Inc., 574 F. Supp. 2d 491,
502 (E.D. Pa. 2008) (citing CoreStates Bank, N.A. v. Cutillo, 723 A.2d 1053,
1058 (Pa. Super. Ct. 1999)); see also Mavrinac v. Emergency Med. Ass’n of
Pittsburgh, No. 2:04 CV 1880, 2005 WL 2304995, at *8 (W.D. Pa. Sept. 21,
2005) (noting that to plead a breach of contract, “a plaintiff must assert the
existence of a valid and binding contract; that the plaintiff has complied with
[the] contract by performing her own obligations under it; [that] all conditions
precedent were fulfilled; [that] there was a breach of the contract; and [that]
damages were incurred” (citing Pierce v. Montgomery Cnty. Opportunity Bd.,
Inc., 884 F. Supp. 965, 970 (E.D. Pa. 1995))).
In its first argument, defendant contends that the complaint fails to
allege that plaintiffs complied with the terms of the contract. On this point, the
complaint alleges that “[a]t all relevant times, Plaintiffs have undertaken all
obligations owed by them under the terms of the Hydrocarbon Conveyance.”
(Compl. ¶ 25). This averment is sufficient under federal pleading standards to
allege compliance with the contractual obligations. Contrary to defendant’s
assertions, plaintiffs need not plead that they complied with each specific
obligation found in the contract. See McTernan, 564 F.3d at 646. Therefore,
the court does not agree with defendant’s first contention regarding count II of
The court similarly disagrees with the second ground upon which
defendant attacks count II. Defendant contends that plaintiffs failed to plead
the necessary element of resultant damages because the complaint alleges
that equitable relief is required to make plaintiffs whole. However, a plain
reading of the complaint reveals that plaintiffs alleged that they were
damaged–plaintiffs state they were denied $105,135 as a result of
defendant’s breach. (Compl. ¶¶ 9-10, 13-14, 19, 26, 30). Plaintiffs’ request
for equitable relief does not automatically invalidate their breach of contract
action. Courts interpreting Pennsylvania law have allowed the equitable
remedy of rescission to make a plaintiff whole in instances when the breach
alleged is material and involves allegations of fraud. See Keenheel v.
Commonwealth, 565 A.2d 1147, 1151 (Pa. 1989) (“[w]hen equitable
rescission is sought as a remedy for breach of contract, it must generally be
shown that the remedy at law is inadequate.” (citing Casey v. Phila. Auto
Sales Co., 236 A.2d 800 (Pa. 1968))); Stafford Invs., LLC v. Vito, No. 04-
3182, 2009 WL 1362513, at *10 (E.D. Pa. May 14, 2009) (finding that
rescission is an appropriate remedy for a breach of contract when the plaintiff
is able to establish fraud in the inducement); Cabot v. Jamie Record Co., No.
CIV. A. 96-4672, 1999 WL 236737, at *6 (E.D. Pa. April 19, 1999) (finding
that rescission is an appropriate remedy for a breach of contract when the
“‘party has suffered a breach of such fundamental and material nature that it
affects the very essence of the contract and serves to defeat the object of the
parties.’” (quoting Castle v. Cohne, 676 F. Supp. 620, 627 (E.D. Pa. 1987))).2
Thus, a fair reading of the complaint reveals that plaintiffs adequately pled the
element of resultant damages.
Unlike its first two arguments, the court agrees with defendant’s third
basis for challenging count II and finds that plaintiffs have failed to state a
claim for rescission as a matter of law. The allegations in the complaint
reveal that plaintiffs waited more than three years after they entered into the
agreement at issue to bring this action. Under Pennsylvania law, this delay
amounts to a waiver of the equitable remedy of rescission. See Sixsmith v.
Martsolf, 196 A.2d 662, 663 (Pa. 1964) (finding that an action for rescission
The court does not express an opinion with respect to whether
plaintiffs’ complaint sufficiently alleges that the instant case is an
extraordinary one in which a remedy at law is inadequate and rescission is an
appropriate remedy because defendant did not raise this argument in its
motion to dismiss.
filed twenty-five months after the agreement was entered into is legally too
late, and that a “contract secured by fraud is voidable only at the option of the
injured party, who must act promptly on the discovery of the fraud or the right
to rescind is waived.”); Wolgin v. Smith, No. CIV. A. 94-7471, 1996 WL
355338, at *3 (E.D. Pa. June 21, 1996) (“[T]o obtain a rescission, the party
must act promptly upon discovery of the fraud to restore or tender any benefit
received or the right to rescind is waived” (citations omitted)).
Accordingly, the law and the facts alleged support this court finding that
plaintiffs waived their ability to seek the equitable remedy of rescission for the
complained of breach of contract by failing to promptly bring this action.3
Because rescission is the only remedy plaintiffs seek, the court will dismiss
count II without prejudice to plaintiffs refiling an amended complaint for breach
In their brief, plaintiffs present succinct arguments regarding the
viability of the equitable remedy of rescission notwithstanding the delay in
bringing this action. (Doc. 6, Pls.’ Mem. of Law at 6). These arguments are
meritless. Without citing to any legal authority, plaintiffs contend that their
three year delay in bringing this action is excusable because defendant’s
failure to pay them constitutes an ongoing fraud. The facts alleged in the
complaint do not support plaintiffs’ contention. The complaint clearly alleges
a single fraudulent act at the time the contract was executed. (See Compl. ¶¶
19-28). Defendant’s fraudulent promise should have been discovered quickly
because the contract provides that consideration was due at the time the
agreement was executed. (Compl., Ex. D, Hydrocarbon Conveyance).
Moreover, the complaint is devoid of facts to support the conclusion that
defendant perpetrated a continuing and ongoing fraud on plaintiffs (i.e.
defendant is not alleged to have made continuing reassurances of payment to
In count III, plaintiffs recast the allegations underpinning their breach of
contract claim into a claim for fraud. Plaintiffs allege that defendant knowingly
misled them into entering into the contract by promising to pay $105,135 in
actual consideration and then failing to do so. (Compl. ¶¶ 19-28). Defendant
contends that plaintiffs’ fraud claim should be dismissed pursuant to
Pennsylvania’s “gist of the action” doctrine. For the following reasons, the
court agrees with defendant and will dismiss count III with prejudice.
In Pennsylvania, the “gist of the action” doctrine “‘maintain[s] the
conceptual distinction between breach of contract and tort claims[,]’ and
precludes plaintiffs from recasting ordinary breach of contract claims as tort
claims.” McShea v. City of Phila., 995 A.2d 334, 339 (Pa. 2010) (quoting
eToll, Inc. v. Elias/Savion Adver., Inc., 811 A.2d 10, 14 (Pa. Super Ct. 2002)).
The Pennsylvania Superior Court in eToll found that the gist of the action
doctrine precludes tort actions “(1) arising solely from a contract between the
parties; (2) where the duties allegedly breached were created and grounded
in the contract itself; (3) where the liability stems from a contract; or (4) where
the tort claim essentially duplicates a breach of contract claim or the success
of which is wholly dependent on the terms of the contract.” eToll, Inc., 811
A.2d at 19 (internal citations and internal quotation marks omitted); see also
Bruno v. Bozzuto’s, Inc. 850 F. Supp. 2d 462, 468-69 (M.D. Pa. 2012)
(dismissing claims for negligent and fraudulent misrepresentation under the
gist of the action doctrine because these claims arose from contractual
In this case, plaintiffs’ claim for fraud arises solely from the contract
between the parties. Plaintiffs’ fraud claim depends upon the same
allegations upon which the breach of contract claim is based–that defendant
promised to pay plaintiffs $105,135 and intentionally failed to do so. In an
attempt to avoid dismissal of count III under the gist of the action doctrine,
plaintiffs point to the fact that defendant recorded the contract as an
independent basis for bringing a claim of fraud. Plaintiffs, however, fail to cite
any cases supporting the contention that recording a contract transforms a
run of the mill breach of contract claim into an actionable claim for fraud.
Moreover, the allegation that the contract was recorded adds little to plaintiffs’
fraud claim. Plaintiffs’ fraud claim is dependent upon the success of their
claim that defendant is in breach for failing to pay them actual consideration.
Additionally, the court notes that plaintiffs admit elsewhere in their brief
that their claim for fraud, like the other three claims contained in their
complaint, “arise[s] from McCosar’s failure to pay Plaintiffs what McCosar
promised to pay them in exchange for Plaintiffs’ oil and gas rights, as
conveyed to McCosar via the Hydrocarbon Conveyance . . . .” (Doc. 6, Pl.’s
Mem. of Law at 4). Therefore, given plaintiffs’ admission that their fraud claim
is nothing more than a recasting of the allegations compromising the breach
of contract claim, the court will dismiss count III of the complaint with
prejudice pursuant to the gist of the action doctrine.
For the reasons stated above, the court will dismiss plaintiffs’ complaint.
Counts I, III and IV will be dismissed with prejudice. Count II will be
dismissed without prejudice to plaintiffs filing an amended complaint within
twenty-one (21) days. The amended complaint, whether it requests relief in
law or in equity, shall cure the defects identified in this memorandum. An
appropriate order follows.
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
JOSEPH P. MACKACHINIS and
WILLIAM J. BRESLIN,
MCCOSAR MINERALS, INC.,
AND NOW, to wit, this 23rd day of April 2013, Defendant McCosar
Minerals, Inc.’s motion to dismiss (Doc. 3) is hereby GRANTED. Counts I, III,
and IV of the Complaint are DISMISSED WITH PREJUDICE. Count II of the
Complaint is DISMISSED WITHOUT PREJUDICE. Plaintiffs Joseph P.
Mackachinis and William J. Breslin may file an amended complaint within
twenty-one (21) days from the date of this Order. The court will direct the
Clerk of Court to close this case if plaintiffs fail to file an amended complaint
within the time allowed.
BY THE COURT:
s/ James M. Munley
JUDGE JAMES M. MUNLEY
United States District Court
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