Dolan et al v. PHL Variable Insurance Company et al

Filing 87

MEMORANDUM (Order to follow as separate docket entry) re Motions to Dismiss 67 64 66 65 . Signed by Honorable A. Richard Caputo on 10/25/17. (dw)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
TIMOTHY AND ANN DOLAN, et. al.,
CIVIL ACTION NO. 3:15-CV-01987
Plaintiffs,

(JUDGE CAPUTO)

v.
PHL VARIABLE INSURANCE
COMPANY, et. al.,
Defendants.
MEMORANDUM
Presently before this Court are four (4) motions to dismiss Plaintiffs’ Amended
Complaint (Doc. 56) filed by Defendants Allianz Life Insurance Company of North America
(“Allianz”) (Doc. 64), North American Company For Life and Health Insurance (“North
American”) (Doc. 65), PHL Variable Insurance Company (“PHL”) (Doc. 66), and Forethought
Life Insurance Company (“Forethought”) (Doc. 67) (collectively “Defendants”). Because the
Amended Complaint fails to comport with Federal Rule of Civil Procedure 9(b) and fails to
adequately plead a claim under the UTPCPL, Count I of the Amended Complaint will be
dismissed without prejudice. Count II of the Amended Complaint will also be dismissed
without prejudice because Plaintiffs have failed to adequately plead a fiduciary or
confidential relationship between the parties. Finally, Count III of the Amended Complaint
will be dismissed with prejudice because Plaintiffs’ negligence claims are barred by the
economic loss doctrine.
I. Background
A. Factual Background
The facts, as set forth in Plaintiffs’ Amended Complaint (Doc. 56), are as follows:
Plaintiffs Timothy and Ann Dolan, the Estate of Jean Dolan, Raymond and Elizabeth

Flannery, Robert and Linda Gruner, Virginia Hetherington, and Carmen Fierro (collectively
"Plaintiffs") are alleged victims of a scheme perpetrated by a registered financial advisor,
Joseph S. Hyduk (“Hyduk”), and his company BNA Financial Services (“BNA”).
Plaintiffs aver that Hyduk separately targeted each Plaintiff, held himself out as an
agent of Defendants, and specifically presented each Plaintiff with investment opportunities
with Defendants. Hyduk explained to Plaintiffs that their purchase of annuities with
Defendants would be a safe investment option without risk to principal. Further, Hyduk
explained to Plaintiffs that the minimum guaranteed return on these annuities would be one
percent. Plaintiffs allege that to convince them to purchase annuities issued by Defendants,
Hyduk would often present Plaintiffs with pro forma statements prepared by Defendants,
indicating the projected returns Plaintiffs would receive on their investment. Those
statements allegedly helped convince Plaintiffs to rollover their existing investments to
products issued by Defendants. Notably, Plaintiffs do not aver that the pro formas provided
false information.
To purchase annuities issued by Defendants, Plaintiffs were required to complete
applications. After having their applications approved, Plaintiffs, through Hyduk, would
purchase annuities issued by Defendants. These purchases would be accompanied by
rollover forms identifying the current plan information and the account being transferred.
Following the purchase of an annuity, Hyduk would manipulate Plaintiffs into selling
their investment for his own gain. Hyduk profited by having his clients take withdrawals
subject to substantial fees and penalties from their annuities issued by Defendants. After
receiving the refund checks, instead of purchasing alternative investment products, Hyduk
would keep those funds for his own benefit. Defendants also profited from Hyduk’s actions
because they retained fees related to Plaintiffs early withdrawal.
Plaintiffs claim that Hyduk’s rate of early withdrawals was unusually high and should

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have put Defendants on notice that Hyduk was not operating according to industry
standards or in the best interest of their customers. The withdrawals generally occurred
within the first few years following the purchase of Defendants’ annuities, thus causing
Plaintiffs to incur substantial surrender fees in connection with these transactions. It is
unclear what industry standard Plaintiffs rely on and whether defendants were able to deny
potentially fraudulent withdrawal requests.
Plaintiffs further allege that Defendants ignored countless “red flags” that may have
suggested that Hyduk was defrauding his clients. Specifically, Plaintiffs allege that
Defendants ignored numerous transactions where the sale of annuities by Hyduk’s clients
resulted in substantial surrender charges. Defendants also purportedly disregarded that
Hyduk’s clients’ repeated withdrawal requests were often unaccompanied by rollover forms
authorizing the transfer of funds to purchase different investments offered by other financial
service providers. According to Plaintiffs, the volume of transactions in which Hyduk’s
victims requested withdrawals in the absence of rollover forms was atypical and signaled
a likelihood of criminal activity. Yet, despite the absence of rollover information, Defendants
and their respective compliance departments failed to investigate Hyduk or otherwise
question the provision of services by their authorized agent. Again, it is unclear what
standard is used by Plaintiffs to deem Defendants’ conduct atypical.
Plaintiffs also allege that Hyduk converted the withdrawn funds for his own use by
asking Plaintiffs to endorse checks for the funds directly to him. Defendants, however,
allegedly ignored the fact that the withdrawal forms were not signed by the annuity holder,
and failed to conduct any due diligence as to the conduct of Hyduk and the circumstances
of these withdrawal requests.
At bottom, Plaintiffs allege that, although numerous warning signs existed,
Defendants failed to conduct even minimal due diligence with respect to Hyduk’s

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operations.
B. Procedural History
On October 16, 2013, Hyduk’s company was raided by the Federal Bureau of
Investigation. On August 4, 2014, charges were filed against Hyduk in this Court.1
Subsequently, Hyduk pled guilty to tax evasion and wire fraud. On July 30, 2015, he was
sentenced to more than five years in prison
In light of the foregoing events, on November 13, 2015, Plaintiffs filed a three-count
Complaint (Doc. 1) against Defendants. Plaintiffs’ Complaint was dismissed in its entirety
without prejudice on November 22, 2016 due to its failure to comply with Federal Rules of
Civil Procedure 8 and 9(b).
Plaintiffs timely filed an Amended Complaint on December 13, 2016. The Amended
Complaint contains the following claims: (1) Count I alleging violations of Pennsylvania’s
Unfair Trade Practices and Consumer Protection Law (“UTPCPL”); (2) Count II alleging a
breach of fiduciary duties by Defendants; and (3) Count III alleging negligence. These are
the exact claims contained in Plaintiffs’ original complaint.
Again, Defendants have moved to dismiss all claims with prejudice. (Docs. 64-67).
These motions have been fully briefed and are ripe for disposition.

2

See United States v. Hyduk, No. 3:14-cr-00189 (M.D. Pa., 2014):
“It was part of the scheme that HYDUK would improperly divert funds from his
clients to himself without his clients’ knowledge or consent. The majority of
the diverted funds was from clients who intended the money to be rolled-over
into different investments. HYDUK instructed them to make their checks
payable to BNA Financial instead of the actual new investment company and
deposited the funds into his own account and used the money for his
personal benefit. . . .” (Doc 1, at ¶ 3.)
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II. Legal Standard
A. Motion to Dismiss
Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of a complaint, in
whole or in part, for failure to state a claim upon which relief can be granted. See FED. R.
CIV. P. 12(b)(6). When considering a Rule 12(b)(6) motion, the Court's role is limited to
determining if a plaintiff is entitled to offer evidence in support of their claims. See
Semerenko v. Cendant Corp., 223 F.3d 165, 173 (3d Cir. 2000). The Court does not
consider whether a plaintiff will ultimately prevail. Id. A defendant bears the burden of
establishing that a plaintiff's complaint fails to state a claim. See Gould Elecs. v. United
States, 220 F.3d 169, 178 (3d Cir. 2000).
“A pleading that states a claim for relief must contain . . . a short and plain
statement of the claim showing that the pleader is entitled to relief.” FED. R. CIV. P. 8(a).
The statement required by Rule 8(a)(2) must give the defendant fair notice of what the . .
. claim is and the grounds upon which it rests. Erickson v. Pardus, 551 U.S. 89, 93, 127
S. Ct. 2197, 167 L. Ed. 2d 1081 (2007) (per curiam ) (quoting Bell Atl. Corp. v. Twombly,
550 U.S. 544, 555, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007)). Detailed f actual
allegations are not required. Twombly, 550 U.S. at 555, 127 S. Ct. 1955. However, mere
conclusory statements will not do; “a complaint must do more than allege the plaintiff's
entitlement to relief.” Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009).
Instead, a complaint must “show” this entitlement by alleging sufficient facts. Id. “While
legal conclusions can provide the framework of a complaint, they must be supported by
factual allegations.” Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1950, 173 L. Ed.
2d 868 (2009). As such, “[t]he touchstone of the pleading standard is plausability.”
Bistrian v. Levi, 696 F.3d 352, 365 (3d Cir. 2012).
The inquiry at the motion to dismiss stage is “normally broken into three parts: (1)

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identifying the elements of the claim, (2) reviewing the complaint to strike conclusory
allegations, and then (3) looking at the well-pleaded components of the complaint and
evaluating whether all of the elements identified in part one of the inquiry are sufficiently
alleged.” Malleus v. George, 641 F.3d 560, 563 (3d Cir. 2011).
Dismissal is appropriate only if, accepting as true all the facts alleged in the
complaint, a plaintiff has not pleaded “enough facts to state a claim to relief that is
plausible on its face,” Twombly, 550 U.S. at 570, 127 S. Ct. 1955, m eaning enough
factual allegations “‘to raise a reasonable expectation that discovery will reveal evidence
of’” each necessary element. Phillips v. County of Allegheny, 515 F.3d 224, 234 (3d Cir.
2008) (quoting Twombly, 550 U.S. at 556, 127 S. Ct. 1955). “The plausibility standard is
not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a
defendant has acted unlawfully.” Iqbal, 556 U.S. at 678, 129 S. Ct. 1937. “W hen there
are well-pleaded factual allegations, a court should assume their veracity and then
determine whether they plausibly give rise to an entitlement to relief.” Id. at 679, 129 S.
Ct. 1937.
In deciding a motion to dismiss, the Court should consider the allegations in the
complaint. In addition to the allegations found in the complaint, the court may examine
“exhibits attached to the complaint, matters of public record,” and “legal arguments
presented in memorandums or briefs and arguments of counsel.” Mayer, 605 F.3d at
230; Pryor, 288 F.3d at 560. Additionally, the Court may consider “undisputedly
authentic” documents when the plaintiff's claims are based on the documents and the
defendant has attached copies of the documents to the motion to dismiss. Am. Corp.
Soc. v. Valley Forge Ins. Co., 424 Fed. App’x. 86 (3d Cir. 2011) (citing Pension Benefit
Gaur. Corp. v. White Consol. Indus., 998 F.2d 1192, 1196 (3d Cir. 1993)). A Court m ay
also consider a “document integral or explicitly relied upon in the complaint.” In Re

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Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997) (Alito, J.). At
bottom, documents may be examined by this Court when ruling on a motion to dismiss
when Plaintiff had proper notice of the existence of the documents. Id. The Court need
not assume the plaintiff can prove facts that were not alleged in the complaint, see City
of Pittsburgh v. W. Penn Power Co., 147 F.3d 256, 263 & n.13 (3d Cir. 1998), or credit a
complaint's “‘bald assertions’” or “‘legal conclusions.’” Morse v. Lower Merion Sch. Dist.,
132 F.3d 902, 906 (3d Cir. 1997) (quoting In re Burlington Coat Factory Sec. Litig., 114
F.3d 1410, 1429–30 (3d Cir. 1997)).
III. Discussion
Defendants advance a number of identical arguments2 seeking dismissal of the
Amended Complaint in its entirety.
A. The Amended Complaint’s Compliance with the Federal Rules of Civil Procedure
1.

Federal Rule of Civil Procedure 9(b)

Defendants first argue that Counts I and II of Plaintiffs’ Amended Complaint should
be dismissed for non-compliance with Federal Rule of Civil Procedure 9(b). Remember,
Rule 9(b) was fatal to Plaintiffs’ original complaint. Defendants contend that many of the
infirmities in Plaintiffs’ Complaint were not cured by the Amended Complaint.
Federal Rule of Civil Procedure 9(b) sets forth a heightened pleading requirement
for claims of fraud or mistake. Specifically, the Rule requires that “[i]n all averments of fraud
or mistake, the circumstances constituting fraud or mistake shall be stated with
particularity.” FED. R. CIV. P. 9(b). In other words, “[a] plaintiff alleging fraud must . . . support
its allegations with all of the essential factual background that would accompany the first
paragraph of any newspaper story - that is, the who, what, when, where and how of the

2

Where a single Defendant has raised an argument not raised by its coDefendants it will be noted below.
7

events at issue.” U.S. ex rel. Moore & Co., P.A. v. Majestic Blue Fisheries, LLC, 812 F.3d
294, 307 (3d Cir. 2016) (citing In re Rockefeller Ctr. Props., Inc. Securities Litig., 311 F.3d
198, 217 (3d Cir. 2002)). Additionally, Rule 9(b) requires plaintiffs “plead with particularity
the ‘circumstances’ of the alleged fraud in order to place the defendants on notice of the
precise misconduct with which they are charged, and to safeguard defendants against
spurious charges of immoral and fraudulent behavior.” Lum, 361 F.3d at 223-24 (quoting
Seville Indus. Mach. Corp. v. Southmost Mach. Corp., 742 F.2d 786, 791 (3d Cir.1984)).
“Plaintiffs also must allege who made a misrepresentation to whom and the general content
of the misrepresentation.” Id. at 224.
This Court noted in its November 22, 2016 Memorandum that Plaintiffs’ claims
predicated on the UTPCPL and an alleged breach of a fiduciary duty implicate Rule 9(b).
The Amended Complaint has not altered this Court’s earlier analysis, and thus it is still the
opinion of this Court that these claims are subject to Rule 9(b). However, there is a question
as to whether the Amended Complaint now satisfies the mandates of the Rule.
Unfortunately, Plaintiffs have again failed to include averments that sufficiently
establish the who, what, when, where, and how of the alleged fraud and thus fail to satisfy
the requirements of Rule 9(b). This Court’s November 22, 2016 Memorandum specifically
noted that Plaintiffs needed to make clear exactly what misrepresentations or fraudulent
conduct related to each Defendant and impacted each Plaintiff. In other words, the
Amended Complaint needed to refrain from referring to the parties as collective entities, and
provide additional information regarding the who, what, when, where, and how of the
alleged fraud. While the Amended Complaint has made strides to discuss each Defendant
individually, the averments against individual Defendants are regularly asserted by a
collective set of Plaintiffs. As was explained in the earlier Memorandum, such pleading runs
afoul of Rule 9(b).

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Further, the Amended Complaint fails to identify a misrepresentation made by the
Defendants. Rather, Plaintiffs seem to rely on Defendants’ failure to realize that Hyduk was
committing a fraud. For example, a principal contention made by Plaintiffs is that
Defendants failed to identify a number of so-called “red flags” which ultimately caused injury
to Plaintiffs. To that end, Plaintiffs repeatedly refer to the “unusually high” number of early
withdrawal requests made by Hyduk as a “red flag” that should have alerted Defendants’
to a potential fraud. But, the Amended Complaint includes no averment related to the
frequency of requests, the type of requests made, or for which Plaintiffs requests were
made. Rather, the Amended Complaint supports its position through the use of generalities
(see, e.g., Am. Coml. ¶¶ 88-89 (using phrases such as “unusually high” and “on
occasion.”).) Also, Plaintiffs claim that many withdrawal forms submitted by Hyduk were
forged and “should have been easily identified by [Defendants’] compliance department[s].”
(see, e.g., Am. Compl. ¶¶ 89, 149, 267.) Plaintiffs reference no specific signature that was
forged, or injury caused by such forgery. In fact, Plaintiffs made the averment on
“information and belief,” which compounds the factual deficiency present here. See UHS
of Del., Inc. v. United Health Servs., No.12-485, 2015 WL 7294454, *7 (M.D. Pa. Nov. 19,
2015). Put simply, these “red flags” fail to meet the standard required under 9(b).
Moreover, Plaintiff liters the Amended Complaint with conclusory statements in an
attempt to satisfy the mandate of Rule 9(b). For example, Plaintiffs claim that “Hyduk was
not operating in accordance with industry standards.” (see, e.g., Am. Compl. ¶¶ 88, 148.)
No averment was made to suggest an industry standard, or show what conduct of a
Defendant was in question.
Finally, as specifically noted by Defendant North American, in some respects the
Amended Complaint created more questions than it answered. For example, in the
Amended Complaint Plaintiffs aver that the alleged misrepresentations were made “in

9

person (typically at the victim’s home) and on the telephone.” (Am. Compl. ¶¶ 57, 118, 188,
241.) Such a statement does not provide nearly enough information for a Defendant to
properly respond. In fact, it leaves this Court and Defendants with more questions: What
was discussed at these meetings?; Was each Defendants’ product pitched to a potential
victim or was it just one Defendants’ product?; Were the alleged misrepresentations made
in the home as was typical, or over the phone? The fact that these basic questions remain
unanswered illustrates why Rule 9(b) has not been satisfied.
Because the Amended Complaint fails to comply with Rule 9(b), Count I and II of the
will be dismissed.
2.

Federal Rule of Civil Procedure 8

Defendants Forethought and North American argue that Count III of Plaintiffs’
Amended Complaint remains noncompliant with the mandates of Federal Rule of Civil
Procedure 8. However, this is incorrect.
Federal Rule of Civil Procedure 8 provides “that any pleading that includes a claim
for relief shall contain a ‘short and plain statement of the claim showing that the pleader is
entitled to relief.’” In re Westinghouse Securities Litigation, 90 F.3d 696, 702 (3d Cir. 1998)
(Alito, J) (citing FED.R.CIV.P. 8(a)(2)). Rule 8 further provides that “each averment of a
pleading shall be simple, concise, and direct.” Fed.R.Civ.P. 8(e)(1). “Taken together, Rules
8(a) and 8(e)(1) underscore the emphasis placed on clarity and brevity by the federal
pleading rules.” In re Westinghouse Securities Litigation, 90 F.3d at 702 (citing Charles A.
Wright & Arthur R. Miller, Federal Practice and Procedure §1217 at 169 (2d ed. 1990)).
Further, the statement required by Rule 8(a)(2) must give the defendant fair notice of what
the plaintiff's claim is and the grounds upon which it rests. Erickson v. Pardus, 551 U.S. 89,
93 (2007). Detailed factual allegations are not required. Twombly, 550 U.S. 544, 555 (2007).
Put simply, the Amended Complaint satisfies the requirements of Rule 8. The

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infirmity identified by this Court in the original complaint has been cured. Defendants are
on fair notice of the claims asserted by Plaintiffs in Count III. And, Defendants suggestion
otherwise would be akin to requiring a heightened pleading standard, like that of Rule 9(b),
for traditional negligence claims. Such a decision would be inappropriate.
Therefore, Count III of Plaintiffs’ Amended Complaint will not be dismissed for noncompliance with Federal Rule of Civil Procedure 8.
B. Defendants’ Vicarious Liability for the Actions of Hyduk
One of the bedrock disputes between the parties is whether Hyduk should be
considered Defendants’ agent. Defendants argue that Hyduk should not be considered an
agent of their insurance companies, but rather should be considered a broker. Defendants
suggest that designating Hyduk as a broker would mean that Hyduk was Plaintiffs’ agent.
If accepted, it follows that Defendants would not be liable for any acts undertaken by Hyduk
because no agency relationship existed. Plaintiffs disagree and argue that even if Hyduk
is considered a broker, he may still be considered Defendants’ agent. Further, Plaintiffs
contend that discovery is necessary when an agency relationship is alleged, and therefore
this Court may not dismiss claims predicated on such a relationship at this stage of
litigation.
As an initial matter, this Court is able to evaluate whether or not Plaintiffs have
properly pled an agency relationship when reviewing a motion to dismiss. Plaintiffs rely on
a number of cases to suggest that “discovery is necessary when an agency relationship is
alleged,” and this Court agrees. (See, e.g., Doc. 77, at 20-21.) However, this does not mean
that a plaintiff may survive a motion to dismiss if they offer solely conclusory or insufficient
statements to imply an agency relationship. See Jurimex Kommerz Transit G.M.B.H. v.
Case Corp., 65 Fed. App’x. 803, 808 (3d Cir. 2003) (noting that plaintiffs are required to
“allege facts sufficient to allow [an agency relationship] to be proven at trial, but is not

11

required to have extensive proof at the complaint stage.”); My Space Preschool & Nursery,
Inc. v. Capitol Indem. Corp., No. 14-2826, 2015 WL 1185959, at *4 (E.D. Pa. Mar. 13, 2015)
(dismissing a claim for failure to properly allege an agency relationship). Thus, dismissal is
proper when no agency relationship is adequately alleged. For these reasons, this Court
may determine whether or not Plaintiffs have pled facts sufficient to survive a motion to
dismiss.
The Pennsylvania Supreme Court has held that an insurance broker is considered
the agent of the insured when the insured employs a broker to choose an insurer.
Transgaurd Ins. Co. of Am. Inc., v. Hinchey, 464 F. Supp. 2d 425, 431 (M.D. Pa. 2006)
(citing Taylor v. Crowe, 282 A.2d 682, 683 (Pa. 1971)). But, this does not mean that a
broker may never be considered an agent of an insurer. Rather, “in some situations, a
broker can be considered an agent for the insured in some respects and an agent for the
insurer in other respects.” Fisher v. Aetna Life Ins. & Annuity Co., 39 F. Supp. 2d 508, 514
(M.D. Pa. 1998) (Caputo, J.). “The agency status of a broker depends on the relationship
between the broker and the insured as well as the broker and the insurer.” Id. A broker will
likely be considered an agent of the insurer if there is evidence that the broker had the
insurers “apparent, if not actual authority.” Id. So, here, Plaintiffs must provide averments
related to the relationship between the Defendant-insurers and the Plaintiffs sufficient to
suggest an agency relationship exists.
Plaintiffs do provide some averments related to a potential agency relationship
between the Plaintiffs and Defendants. However, the averments made are not sufficient to
survive a motion to dismiss. Many of the averments raised by Plaintiffs are identical for each
Defendant. For example, Plaintiffs aver that “Hyduk as an agent of [Defendants], targeted
Plaintiffs for investment opportunities. . . .” (see, Am. Compl. ¶¶ 57, 118,188, 241.) Such
statement, a mere conclusion related to agency, is not considered when analyzing a motion

12

to dismiss.3 Additionally, Plaintiffs aver the existence of contractual agreements between
each Defendant and Hyduk. These agreements generally referred to Hyduk as an “agent”
and set forth the terms by which Hyduk was to sell Defendants’ annuities. Plaintiffs posit
that reference to Hyduk as an “agent” in these agreements and various other marketing
forms is sufficient to survive the instant motions to dismiss. But, this is incorrect; “[a]gency
contracts alone are not sufficient to establish agency between a broker and an insurer.”
Hartford Cas. Ins. Co. v. ACC Meat Co., LLC, No. 10-1875, 2012 WL 4506059, at *8 (M.D.
Pa Apr. 26, 2012) (citing Kairys v. Aetna Cas. & Sur. Co., 461 A.2d 269, 273 (Pa. Super.
Ct. 1983)) report and recommendation adopted 2012 WL 4504600 (M.D. Pa Oct. 1, 2012)
(Connor, J). In Hartford Casualty, a contract that permitted an “agent” to “solicit, quote, and
provide customary insurance services” on behalf of an insurer to members of the public was
insufficient to “overcome the presumption . . . that the broker is the agent of the insured, not
the insurer.” Id. The facts pled in Plaintiffs’ Amended Complaint provide a nearly identical
scenario. As was the case in Hartford Casualty, this Court will find that such a contract is
insufficient to establish an agency relationship.
Since pleading related to an agency contract and marketing materials are the only
statements offered by Plaintiffs to suggest an agency relationship, Defendants are owed
dismissal for all claims relying on an agency relationship between Hyduk and the various
Defendants.
C. Timeliness of Plaintiffs’ Amended Complaint
Defendant Allianz argues that Plaintiffs’ Amended Complaint should be dismissed
in its entirety because its claims are time-barred to the extent that they are predicated on
3

Additional conclusory statements related to agency exist across
averments against all four Defendants. For example, Plaintiffs claim that
“Hyduk’s conduct occurred during his agency relationship with
[Defendants].” Again, statements like this will not be considered during a
motion to dismiss.
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representations associated with their annuity purchases. To support their position,
Defendant Allianz has provided the contracts for annuities that were expressly implicated
by the Complaint. These documents show that all of the Allianz annuities referenced in
Plaintiffs’ Amended Complaint were purchased in 2008 and 2009; the most recent policy
issued in June of 2009. Defendants suggest that Plaintiffs’ UTPCPL claim is subject to a
six-year statute of limitations, and Plaintiffs’ remaining claims are subject to a two-year
statute of limitations. Since this action was not filed until October 13, 2015, it would follow
that all claims brought by Plaintiffs against Allianz would be time barred.
Plaintiffs do not suggest that Defendants argument is incorrect. Rather, Plaintiffs
posit that Defendants may not argue that claims are barred by the statute of limitations in
a motion to dismiss when the bar is not “apparent on the face of the complaint.” (Doc. 76,
at 25 (citing Schmidt v. Skolas, 770 F.3d 241, 249 (3d Cir. 2014)).) Plaintiffs also suggest
that the documents referenced by Defendant Allianz must not be considered to determine
whether the action is barred by the statute of limitations because the contents of those
documents are not “apparent on the face of the complaint,” and the claims asserted by
Plaintiffs are not “based” on those documents. (Doc. 76, at 25-26.) In this regard, Plaintiffs
are incorrect; these documents may be examined.4
However, Plaintiffs claims are not time-barred because the injury alleged by Plaintiff

4

It is well-settled that this Court may consider “undisputedly authentic”
documents when a plaintiff’s claims are based on the documents and a
defendant has attached copies of the documents to the motion to dismiss.
Am. Corp. Soc. v. Valley Forge Ins. Co., 424 Fed. App’x. 86 (3d Cir. 2011)
(citing Pension Benefit Gaur. Corp. v. White Consol. Indus., 998 F.2d
1192, 1196 (3d Cir. 1993)). A Court may also consider a “document
integral or explicitly relied upon in the complaint.” In Re Burlington Coat
Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997) (Alito, J.). Here,
Plaintiffs have explicitly cited to the documents in question in the
Amended Complaint. For this reason, the documents may be considered
when deciding Defendant Allianz’s Motion to Dismiss.
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is not solely based on representations made by Hyduk or Defendants at the time the
annuities were purchased, but on the withdrawal of funds and continued fraud perpetrated
by Hyduk. No dates exist on the face of the complaint, or within the documents submitted
by Defendant Allianz, to suggest that these claims would be time-barred simply because
Plaintiffs could have known that early withdrawal charges existed in 2008 and 2009. Stated
differently, the application of the statute of limitations is not “obvious,” and the application
of the statute of limitations is “reasonably susceptible to dispute.” Javaid v. Weiss, 2011 WL
6339838, at *10 (M.D. Pa. Dec. 19, 2011). As such, it would be inappropriate to dismiss
Plaintiffs’ claims against Defendant Allianz as untimely.
D. Count I: UTPCPL Claims
Pennsylvania’s UTPCPL makes it unlawful for individuals or businesses to engage
in unfair or deceptive acts or practices. Defendants contend that Count I of Plaintiffs’
Amended Complaint should be dismissed because Plaintiffs fail to plead a false statement
or misrepresentation made by Defendants and similarly fail to plead that they justifiably
relied upon Defendants’ supposed misrepresentation as required by the UTPCPL.
“In order to state a claim under the UTPCPL, a plaintiff must allege one of the unfair
or deceptive trade practices set forth in 73 P.S. §201-2(4)(i)-(xxi).” Freeny v. Disston Manor
Personal Care Home, 849 A,ed 590, 597 (Pa. Super. Ct. 2004), appeal denied, 581 Pa. 691
(2004). Plaintiffs cite four sections of the UTPCPL in the Amended Complaint. Each alleged
unfair or deceptive trade practice alleged is discussed below:
(1)

Plaintiffs fail to allege a claim under 73 P.S. §201-2(4)(v)

Plaintiffs first argue that the Amended Complaint adequately pleads a claim under
73 P.S. §201-2(4)(v). This provision of the UTPCPL notes that it is an “unfair or deceptive
act” to “[r]epresent that goods or services have sponsorship, approval, characteristics,
ingredients, uses, benefits or quantities that they do not have or that a person has a

15

sponsorship, approval, status, affiliation or connection that he does not have.” 73 P.S. §2012(4)(v). In laymans terms, it is unlawful to falsely advertise. “In order to set forth a claim
under this provision of the UTPCPL, a plaintiff must allege: (1) ‘a defendant’s representation
is false; (2) ‘it actually deceives or has a tendency to deceive’; and (3) ‘the representation
is likely to make a difference in the purchasing decision.’” Seldon v. Home Loan Servs., 647
F. Supp. 2d 451, 466 (E.D. Pa. 2009) (citing Fay v. Erie Ins. Grp., 723 A.2d 712, 714 (Pa.
Super. Ct. 1999)). As with all claims under the UTPCPL, Plaintiffs must also allege
justifiable reliance, causation, and an ascertainable loss. See Baker v. Family Credit
Counseling Corp., 440 F. Supp. 2d 392, 412 (E.D. Pa. 2006) (citing Tran v. Metro. Life Ins.
Co., 408 F.3d 130, 140-41 (3d Cir. 2005); Seldon, 647 F. Supp. 2d at 467.
Here, Plaintiffs’ claim fails because Plaintiffs have not alleged that Defendants made
a false representation. To support their claim, Plaintiffs contend that documents provided
by Defendants–such as pro formas and marketing materials–“falsely advertised that the
annuities were safe, risk free investment vehicles.” (See, e.g., Doc. 76, at 12). But, no such
allegation is made in the Amended Complaint. Rather, Plaintiffs only aver that these
documents “convinced” the defendants to purchase the annuities, and that the documents
created the impression that the annuities were “safe risk free investment vehicles.” (See,
e.g., Am. Compl. ¶¶ 203-205). There is no question that Plaintiffs regularly note that Hyduk
used these documents to support his fraud. (See, e.g., Am. Compl. ¶¶ 198-202). However,
Hyduk’s misrepresentations will not be imputed to the Defendants, and no averment exists
within the Amended Complaint to suggest that the pro formas or marketing materials
provided by Defendants were false. For this reason, the facts as pled do not support a claim
under §201-2(4)(v).
(2)

Plaintiffs fail to allege a claim under 73 P.S. §§201-2(4)(ii),(iii)

Next, Plaintiffs allege claims of misrepresentation of services and misrepresentation

16

of association under 73 P.S. §§201-2(4)(ii)-(iii). The UTPCPL defines a misrepresentation
of services as an act “causing likelihood of confusion or of misunderstanding as to the
source, sponsorship, approval or certification of goods or services.” 73 P.S. §§201-2(4)(ii)
On the other hand, a misrepresentation of association is defined as an act “causing
likelihood of confusion or of misunderstanding as to affiliation, connection or association
with, or certification by, another.” 73 P.S. §§201-2(4)(iii). Like all claims under the UTPCPL,
a plaintiff is required to plead justifiable reliance, causation, and an ascertainable loss. See
Baker, 440 F. Supp. 2d at 412; Seldon, 647 F. Supp 2d at 467.
In addition to the normal pleading requirements for a UTPCPL claim, a plaintiff
raising a claim of misrepresentation of services must plead that the defendants
“representations were likely to cause confusion or misunderstanding.” Id.; accord 73 P.S.
§§201-2(4)(ii). Here, Plaintiffs posit that the Defendants’ use of “suitability” forms or
questionnaires caused a misunderstanding that Defendants’ annuities were appropriate
investment vehicles for Plaintiffs. But, Plaintiffs never allege that the annuities were
inappropriate for Plaintiffs, or that they were confused about the meaning of the so-called
suitability forms. Rather, the core of Plaintiffs argument is that they fell victim to a fraud
perpetrated by Hyduk, not that they were confused by a representation made by
Defendants. In fact, it is undisputed that Plaintiffs were aware of the potential fees
associated with the early termination of their annuities. Any pled confusion or
misunderstanding is not attributed to the marketing efforts of Defendants, but rather to
Hyduk’s fraud. Thus, Plaintiffs have failed to adequately plead a claim for misrepresentation
of services under the UTPCPL because Plaintiffs have not adequately pled that a
representation made by Defendant likely confused Plaintiffs and caused an ascertainable
loss.
Similarly, Plaintiffs claim for misrepresentation of association fails. While Plaintiffs

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have sufficiently pled that materials provided by Defendants may have caused a
misunderstanding as to Hyduk’s “affiliation, connection or association, with” Defendants,
Plaintiffs have failed to plead that this misunderstanding caused their harm. Plaintiffs never
pled that confusion related to Hyduk’s association with the Defendants caused Plaintiffs to
suffer losses related to the early withdrawal fees assessed by Defendants. Because
Plaintiffs failed to plead a causal connection between the alleged misrepresentation and the
harm suffered, Plaintiffs claim for misrepresentation of association under the UTPCPL will
be dismissed. See Seldon, 647 F. Supp. 2d at 467 (noting that causation is an element
“essential to any UTPCPL claim”).
(3)

Plaintiffs fail to allege a claim under 73 P.S. §201-2(4)(xxi)

Finally, Plaintiffs allege a claim under the UTPCPL’s catch-all provision, 73 P.S. 2012(4)(xxi). As explained in this Court’s earlier Memorandum, this claim sounds in fraud and
requires not only pleading compliant with Federal Rule of Civil Procedure 9(b), but requires
Plaintiffs plead the common law elements of fraud. The common law elements of fraud are:
“(1) misrepresentation of a material fact; (2) scienter; (3) intention by the declarant to induce
action; (4) justifiable reliance by the party defrauded upon the misrepresentation; and (5)
damages to the party defrauded as a proximate result.” Piper v. Am. Nat’l Life Ins. Co., 228
F. Supp 2d 553, 560 (M.D. Pa. 2002). Further, the Third Circuit has held that “a defendant
cannot be held ‘derivatively liable’ under the UTPCPL for the fraudulent action of a third
party when ‘plaintiff fails to allege or present any evidence that [the defendant] ever
knowingly engaged in misrepresentation.’” Belmont v. MB Inv. Partners, 708 F.3d 470, 499
(3d Cir. 2013) (citing Canty v. Equicredit Corp. of Am., No. 01-5804,2003 WL 21243268,
at *3 (E.D. Pa. May 8, 2003)).
As discussed earlier in this Opinion, Plaintiffs have failed to meet the pleading
requirements under Rule 9(b). Therefore, this claim will be dismissed. Additionally, this

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claim will be dismissed because Plaintiffs are attempting to hold Defendants derivatively
liable for a fraud committed by Hyduk where they have not pled that Defendants “knowingly
engaged in misrepresentation.” For these reasons, Plaintiffs claim under the catch-all
provision of the UTPCPL will be dismissed.
E. Count II: Breach of Fiduciary Duty5
Next, Defendants contend that Count II of Plaintiffs’ Second Amended Complaint
should be dismissed because Plaintiffs fail to allege that Defendants entered a fiduciary or
confidential relationship with any given Plaintiff, and therefore no fiduciary duty was owed.
Defendants are correct.
In order to allege a breach of fiduciary duty, “a plaintiff must establish that a fiduciary
or confidential relationship existed between her and the defendants.” Baker, 440 F. Supp.
2d 392, 414 (E.D. Pa. 2006) (citing Harold v. McGann, 406 F. Supp. 2d 562, 571 (E.D. Pa.
2005); see Mifflinburg Tel., Inc. v. Criswell, No. 14-0612, 2017 WL 4310187, *26 (M.D. Pa.
Sept. 28, 2017). In the insurance context, contracts give rise to a fiduciary relationship
under special circumstances indicating “overmastering influence.” See In re Prudential Ins.
Co. of Am. Sales Practices Litig., 975 F. Supp. 584, 617 (D.N.J. 1996) (analyzing
Pennsylvania law). “[T]he critical question is whether the relationship goes beyond mere
reliance on superior skill, and into a relationship characterized by ‘overmastering influence’
on the one side or ‘weakness, dependence, or trust, justifiably reposed’ on the other side.”
eToll, Inc. v. Elias/Savion Advertising, Inc., 811 A.2d 10, 22 (Pa. Super. Ct. 2002) (citing
Basile v. H&R Block, 777 A.2d 95,101 (Pa. Super. Ct. 2001). A confidential relationship is
slightly different. “Although no precise formula has been devised to ascertain the existence

5

As noted above, Count II of the Amended Complaint will be dismissed
due to its failure to comply with Federal Rule of Civil Procedure 9(b). The
following analysis does not supplant, but rather supplements that analysis
and provides an alternative justification for dismissal.
19

of a confidential relationship, it has been said that such a relationship exists whenever one
occupies toward another such a position of advisor or counselor as reasonably to inspire
confidence that he will act in good faith for the other’s interest.” Silver v. Silver, 219 A.2d
659, 662 (Pa. 1966). Further, the relevant case law suggests that whether a fiduciary duty
arises “depends not on the goods or services that are the subject of the transaction, but the
character of the relationship between the parties.” See.e.g., See Hatch v. Prudential Fin.,
Inc., No. 05-2050, 2006 WL 3325636, at *4-5 (M.D. Pa. Nov. 14, 2006).
Here, neither a fiduciary nor confidential relationship has been properly pled.
First, Plaintiffs have failed to plead “special or unusual facts” that would indicate an
“overmastering influence,” and thus a fiduciary relationship. Generally, an insurance
contract–epitomizing the “quintessential arm’s-length relationship between buyer and
seller”–is not accompanied by such “special or unusual” facts as to create a fiduciary
relationship. See Keefe v. Prudential Property and Cas. Ins. Co., 203 F.3d 218, 227 (3d Cir.
2000) (“Under Pennsylvania law, a fiduciary duty. . . does not arise out of an insurance
contract until the insurer asserts a stated right to handle all claims asserted against the
insured.”); Bank Trust Life Ins. Co. v. Union Nat’l Bank, 776 F.2d 1174, 1177 (3d Cir. 1985)
(“As a general rule, a life insurance company has no fiduciary obligation to the beneficiary
. . . .”). Plaintiffs have not pled facts to suggest that special circumstances exist which would
create a fiduciary relationship between any one Plaintiff and any one Defendant. Therefore,
a fiduciary relationship has not been properly pled.
Not only did Plaintiffs fail to plead “special or unusual” facts necessary to establish
a fiduciary relationship, Plaintiffs pled facts that illustrate Defendants lack of an
“overmastering influence.” For example, Plaintiffs’ averments suggest that each Plaintiff had
the opportunity to consider annuities from each of the Defendants. In fact, the Amended
Complaint shows that many Plaintiffs obtained annuities from several different annuity

20

providers. For this reason, it is hard to imagine that any Defendant had an “overmastering”
influence over any Plaintiff when Plaintiffs had the option to–and seemingly did–seek out
alternate providers if they were not pleased with the terms offered by a given Defendant.
These facts simply do not support a finding that the Defendants were in a fiduciary
relationship with Plaintiffs.
Having failed to affirmatively plead facts necessary to establish a fiduciary
relationship, Plaintiffs argue that a per se fiduciary relationship is created when there is an
agreement between an annuity carrier (an insurer) and the beneficiaries of an annuity. To
support this position Plaintiffs rely solely on a decision by the Lackawanna County Court of
Common Pleas: Beecham v. American Life & Cas. Ins. Co., 63 D. & C. 4.th. 52, 64-65
(C.C.P. Lackawanna 2003). In Beecham, the court held that a fiduciary relationship exists
between an annuity carrier and the beneficiaries of the annuity. Id. While this case clearly
supports Plaintiffs’ position, it will not be followed here for two reasons. First, in rendering
its unpublished decision, the Beecham Court did not cite a single authority to support the
contention that a fiduciary relationship exists simply because an annuity is involved.
Second, case law within this District has suggested the opposite. See Hatch, 2006 WL
3325636, at *4-5; see also Smith v. John Hancock Ins. Co., No. 06-3876, 2008 WL
4072585, at * 7 (E.D. Pa. Sept. 2, 2008). For these reasons, this Court will not conclude that
there is a per se fiduciary relationship between an annuity carrier and holder.
Second, Plaintiffs failed to plead that any Defendant served Plaintiffs as “advisor or
counselor” as to establish a confidential relationship. Plaintiffs pled no facts to suggest that
they were counseled or advised by Defendants. The Amended Complaint includes no
allegation that Plaintiffs discussed their annuities directly with Defendants, and there is no
allegation that Plaintiffs received financial advice from Defendants. Further, Plaintiffs do not
claim that Defendants recommended surrendering their annuities. Instead, Plaintiffs suggest

21

that “pro formas and marketing materials” convinced Plaintiffs that they were being offered
“safe, risk-free investment vehicles” by Defendants. Further, Defendants have offered
documentation to suggest that they were never engaging in advisory services.6 For
example, the enrollment form provided by Defendant Forethought specifically states:
“Forethought Life Insurance Company does not offer legal, financial, tax, investment, or
estate planning advice.” Moreover, that same form notes that Plaintiffs had “the opportunity
to seek such advice from the proper sources before” purchasing the annuity. As such, no
facts pled suggest that a confidential relationship was created.
Plaintiffs alternatively suggest that this analysis is inappropriate upon review of a
motion to dismiss because the “existence of a confidential relationship requires a factsensitive inquiry not to be disposed rigidly as a matter of law.” Yenchi v. Ameriprise Fin.,
Inc., 123 A.3d 1071, 1079 (citing Basile, 777 A.2d at 101). Here, however, the question
before the Court is not whether or not a confidential relationship existed, but whether there
has been adequate pleading to support such a claim. Courts within the Third Circuit have
regularly dismissed claims for failing to properly plead a fiduciary or confidential relationship.
See, e.g., Reginella Constr. Co. Ltd. v. Travelers Cas. & Sur. Co. of Am., 949 F. Supp. 2d
599, 613 (W.D. Pa. 2013) (“Even if [Plaintiff] were to prove every fact it alleges in its
Complaint, it still would not be entitled to relief on its fiduciary duty claims, because the facts
fail to establish that a fiduciary duty existed. . . .”); Minesweaser v. Prudential Ins. Co. of
Am., No. 16-1172, 2016 WL 5792778, at *5 (W.D. Pa. Oct. 4, 2016); In re Prudential Ins.
Co. of Am. Sales Practices Litig., 975 F. Supp. 584, 617 (D.N.J. 1996) (holding that Plaintiff
failed to state a claim under Pennsylvania law and dismissal pursuant to Rule 12(b)(6) was
appropriate where no special circumstances had been pled to establish a fiduciary

6

These documents may be reviewed on a motion to dismiss. See Am.
Corp. Soc., 424 Fed. App’x. at 86; In Re Burlington Coat Factory Sec.
Litig., 114 F.3d at 1426.
22

relationship). For this reason, this Court may consider whether Plaintiffs have properly pled
facts necessary to support a fiduciary or confidential relationship.
Finally, Plaintiffs claim that Defendants entered into a fiduciary or confidential
relationship with Plaintiffs through their agent, Hyduk. As described above, Plaintiffs have
not properly pled an agency relationship between Hyduk and Defendants. As such, this
argument is unpersuasive.
Because neither a fiduciary nor confidential relationship has been sufficiently pled,
Defendants’ Motions to Dismiss should be granted with respect to Count II.
F. Count III: Negligence Claims
Defendants argue that Count III of Plaintiffs’ Amended Complaint fails to state a
claim upon which relief can be granted because Pennsylvania’s economic loss
doctrine–recognized by the Third Circuit–bars Plaintiffs’ negligence claims. Plaintiffs
disagree and argue that the economic loss doctrine is not applicable here because the
doctrine has historically applied only in products liability cases. Further, Plaintiffs contend
that courts in this Circuit have held that the doctrine does not apply to bar claims of
negligent hiring or supervision. Plaintiffs are incorrect.
At bottom, the “economic loss doctrine provides that ‘no cause of action exists for
negligence that results solely in economic damages unaccompanied by physical injury or
property damage.’” Longenecker-Wells v. Benecard Servs., 658 Fed. App’x 659, 661 (3d
Cir. 2016) (citing Excavation Techs., Inc. v. Columbia Gas Co. of Pa., 985 A.2d 840, 841
n.3 (Pa. 2009)); see Azur v. Chase Bank, USA, 601 F.3d 212, 222 (3d Cir. 2010). While it
is true that the doctrine was born out of product liability claims, the doctrine has expanded
to encompass negligence claims of a much wider variety. See Bohler-Uddeholm Am., Inc.
v. Ellwood Grp., Inc., 247 F.3d 79, 104 n.11 (3d Cir. 2001) (noting that the doctrine
“developed in the context of courts’ precluding products liability tort claims. . . .”); Lower

23

Lake Doc Co. v. Messinger Bearing Corp., 395 Pa. Super. 456, 462-63 (Pa. Super. 1990)
(stating that the doctrine “is not limited to products liability, but has equal application in
negligence cases.”).7 For example, the economic loss doctrine applies to claims of negligent
supervision. See Estate of Clark v. Toronto Dominion Bank, No. 12-6259, 2013 WL
1159014, *10 (E.D. Pa. Mar. 21, 2013) (“[B]ecause the only damages which Plaintiff alleges
it sustained as a consequence of Defendant’s alleged negligence and negligent supervision
in this case are solely economic in nature, we find that these claims are barred by operation
of the economic loss doctrine.”); Flannery v. Mid Penn Bank, No. 08-0685, 2008 WL
5113437, *7 (M.D. Pa. Dec. 3, 2008).
Conceding that a number of courts have broadened the economic loss doctrine,
Plaintiffs are forced to argue that the decisions of these courts were in error. To support this
contention Plaintiffs rely heavily on two cases: Independent Warehouse Inc. v. Professori,
No. 15-1369, 2016 WL 1569210 (W.D. Pa. Apr. 19, 2016), and Heller v. Patwil Homes, 713
A.2d 105 (Pa. Super. 1998). First, Plaintiffs’ cite Independent Warehouse to support the
notion that the “economic loss doctrine does not apply to claims for negligent hiring,

7

See, e.g., Longenecker-Wells, 658 Fed. App’x at 661-62 (applying the
doctrine to a negligence claim related to an illegal data breach that only
caused economic harm); Sovereign Bank v. BJ’s Wholesale Club, Inc.,
533 F.3d 162, 177-78 (3d Cir. 2008) (holding that the doctrine barred
plaintiff’s negligence claims arising out of a theft of credit card information
where plaintiff suffered only economic harm); Werwinski v. Ford Motor
Co., 286 F.3d 661, 681 (3d Cir. 2002) (applying the doctrine in the context
of UTPCPL cases); Enslin v. Coca-cola Co., 136 F. Supp. 3d 654, 672
(E.D. Pa. 2015) (applying the economic loss doctrine to bar a negligence
claim premised on the economic harm caused by the unlawful disclosure
of Defendant’s employees’ personal identification information); Smith v.
John Hancock Ins. Co., No. 06-3876, 2008 WL 4072585, *8 (E.D. Pa.
Sept. 2, 2008) (noting that it is well-established that the economic loss
doctrine may bar claims of negligent misrepresentation (citing Duquesne
Light Co. v. Westinghouse Elec. Corp., 66 F.3d 604, 620-21 (3d Cir.
1995)).
24

retention and supervision.” (Doc. 77, at 22). In making such conclusion, the Independent
Warehouse Court compared the applicability of the doctrine to the “gist of the action”
doctrine. Such comparison has been made by the Third Circuit in the past, but any
distinction does not provide–as Independent Warehouse suggests–that the economic loss
doctrine is reserved to cases involving products liability. Considerable precedent, identified
above, suggests the opposite. In fact, just months after Independent Warehouse was
decided, the Third Circuit held that the economic loss doctrine applied to a negligence claim
premised on an unlawful computer breach; not a products liability claim. LongeneckerWells, 658 Fed. App’x at 661. For this reason, reliance on Independent Warehouse is
misplaced.
Second, Plaintiffs cite a 1998 case from the Pennsylvania Superior Court to establish
that Pennsylvania law does not limit negligent supervision claims to cases of physical injury.
In Heller v. Patwil Homes, the court affirmed an award recovered by a Plaintiff on a theory
of negligent supervision following discovery of an investment scam orchestrated by
Defendant’s employee.

713 A.2d at 105. Notably, the court neither mentioned nor

discussed the applicability of the economic loss doctrine. See generally, id. Plaintiffs’
suggestion otherwise is simply incorrect. More significantly, having been decided in 1998,
the Heller Court rendered its opinion prior to a number of decisions applying the economic
loss doctrine to similar actions.
Here, the economic loss doctrine applies to bar Plaintiffs’ negligence claims. Plaintiffs
Amended Complaint includes no reference to physical injury or property damage as
required to bring a negligence claim susceptible to the economic loss doctrine. In fact,
Plaintiffs concede that the only damages claimed are economic damages. Because the
economic loss doctrine bars Plaintiffs’ negligence claims, Count III of Plaintiffs’ Amended
Complaint will be dismissed with prejudice.

25

G. Leave to Amend
Defendants contend that Plaintiffs should not be granted leave to amend the
Amended Complaint and request that all claims be dismissed with prejudice. However, this
Court is instructed to allow a curative amendment unless an amendment would be
inequitable or futile. Phillips v. Cnty of Allegheny, 515 F.3d 224, 237 (3d Cir. 2008). Here,
because Plaintiffs may be able to amend their pleadings to support the claims asserted, this
Court will grant Plaintiffs one final leave to amend Counts I and II of the Amended
Complaint. But, since Plaintiffs’ negligence claims are barred by the economic loss doctrine,
this Court will find that amendment would be futile. Thus, Count III of Plaintiffs’ Amended
Complaint will be dismissed with prejudice.
IV. Conclusion
For the above stated reasons, Plaintiffs Amended Complaint is dismissed in its
entirety. Notably, Count III will be dismissed with prejudice because the economic loss
doctrine bars Plaintiffs’ negligence claims.
An appropriate order follows.
October 25, 2017
Date

/s/ A. Richard Caputo
A. Richard Caputo
United States District Judge

26