CHINA MAX INC. et al v. SOUTH HILLS CN LLC et al
Filing
27
ORDER. For the reasons stated in the Memorandum Order filed herewith, Defendants' Motion to Dismiss and Motion to Strike (Doc. 16 ) is GRANTED IN PART AND DENIED IN PART. Defendants' Motion to Dismiss Counts II-IX as time-barred is DENIED . Defendants' Motion to Strike Plaintiffs' prayer for attorneys' fees and punitive damages at Counts IV, VI, and IX construed as a Motion to Dismiss the same is GRANTED with prejudice. IT IS SO ORDERED. Signed by Judge Cathy Bissoon on 5/27/15. (rld)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
CHINA MAX, INC., and DE DONG
ZHENG,
Plaintiffs,
v.
SOUTH HILLS CN LLC, ROSS PARK
CC LLC, JING ZHU, DAVID WU,
and MAGIC WOK MALL LLC,
Defendants.
)
)
)
)
)
)
)
)
)
)
)
)
Civil Action No. 14-211
Judge Cathy Bissoon
MEMORANDUM ORDER
I. MEMORANDUM
For the reasons that follow, Magic Wok Mall LLC and David Wu’s Motion to Dismiss
and Motion to Strike (Doc. 16) will be granted in part and denied in part.
BACKGROUND
China Max, Inc. and De Dong Zheng (“Plaintiffs”) seek injunctive relief, declaratory
relief, replevin and money damages against South Hills CN LLC, Ross Park CC LLC, Jing Zhu
and Magic Wok Mall LLC for identity theft; invasion of privacy by misappropriation of name;
tortious interference with contract; breach of contract; breach of fiduciary duty; breach of
implied duty of good faith and fair dealing; civil conspiracy; unfair competition; and unjust
enrichment arising from Defendants’ alleged misappropriation of Plaintiff’s name and signature
as the guarantor of two commercial leases. Am. Compl. (Doc. 15) at ¶ 16. Defendants Magic
Wok Mall LLC and David Wu (“Defendants”) filed a Motion to Dismiss and Motion to Strike
Plaintiffs’ First Amended Complaint. Def.’s Mot. (Doc. 16). As the Court writes primarily for the
parties, we will review only the facts most significant to Defendants’ pending Motion.
Plaintiffs allege that around August or September of 2009, they enlisted the assistance of
Defendants in the negotiation of a franchise and lease agreement with South Hills Village Associates,
L.P. Am. Compl. at ¶ 47. Plaintiffs sought to use the China Max name for a restaurant in South
Hills Village Mall. Id. at ¶ 48. In the course of negotiations, Plaintiff Zheng shared his personal
information with Defendant Wu; Plaintiff Zheng additionally signed an application form. Id. at ¶ 49.
Plaintiffs paid Defendants a deposit of $80,000 to facilitate the negotiation. Id. at ¶ 51. In May,
2010, Defendant Wu informed Plaintiffs that he failed to secure a franchise agreement on their
behalf, and the $80,000 deposit was returned. Id. at ¶¶ 56-57.
Plaintiffs allege that Defendants used Plaintiff Zheng’s personal information and forged his
signature in order to name him as the guarantor on two leases – the “Ross Park Lease Agreement”
and the “South Hills Lease Agreement,” both executed in December of 2009. Id. at ¶¶ 20-46, Exs. B,
C.1 The leases allegedly were executed without Plaintiffs’ knowledge or consent. Id. at ¶¶ 20-46.
The latter of those two leases pertained to the rental of the very location in South Hills Village Mall
that Plaintiffs were attempting to lease in order to open a China Max restaurant. Id. at ¶ 60.
Plaintiffs further allege that Defendants’ fraudulent activities interfered with the prospective
contractual relationship between Plaintiffs and South Hills Village Mall, and breached the contract
executed between Plaintiffs and Defendants in which Defendants agreed to assist Plaintiffs in
securing a franchise and lease agreement. Id. at ¶ 93-107.
1
The Court notes that Plaintiffs attached exhibits A-D to their original Complaint, filed at
Document 1. Plaintiffs’ First Amended Complaint, filed at Document 15, cites said exhibits but
does not contain attachments. The Court references exhibits A-D filed at Document 1, as it
appears that Plaintiff’s First Amended Complaint references those same documents. Counsel is
directed that in the future, when filing an amended complaint, all attachments must be refiled as
well.
2
Plaintiffs also allege that prior to discovery of the fraud, they engaged in extensive due
diligence in order to determine who was causing their injury.2 See Pl.’s Br. in Opp’n (Doc. 20) at 46. Plaintiffs allege that nothing concerning their direct interactions with Defendants, seeking a China
Max franchise agreement, appeared fraudulent. Pl.’s Br. in Opp’n at 3-4. Plaintiff Zheng was not
successful in securing a China Max franchise in the South Hill Village Mall, but Defendant Wu
returned his deposit in May of 2010, and communicated that he simply was not successful; this raised
no red flags for Mr. Zheng. Id. at 4. In March of 2012, two years after the return of the deposit,
Plaintiff became aware that he was a guarantor to the Ross Park Lease Agreement when he was
named in a lawsuit. Am. Compl. at ¶ 20. Plaintiff then retained an attorney and began to investigate
the provenance of said lease agreement. Pl.’s Br. in Opp’n at 5. The signature of the signee on
behalf of Ross Park CC LLC was illegible. Id. at ¶ 33. Further, Plaintiff investigated and discovered
that Ross Park CC LLC was a sham corporation not registered in any state. Id. at ¶ 32. Plaintiff
Zheng traveled from his home in Virginia, to New York and Pennsylvania, in order to investigate this
lease. Pl.’s Br. in Opp’n at 5. He contacted police departments and attorney general offices, but was
unable to determine who perpetrated the alleged fraud. Id. Through his investigations, Mr. Zheng
learned that he was also named as a guarantor on the South Hills Lease Agreement, without his
knowledge or consent. Am. Compl. at ¶ 34-35. The signature on behalf of South Hills CN LLC was
illegible, and South Hills CN LLC appeared to be a sham corporation as well. Id. at ¶ 43; Pl.’s Br. in
Opp’n at 6.
Plaintiffs argue that “Zheng did not discover and had no reason to discover his injury and the
cause of his injury at least until August 2013”. Id. at 16. Plaintiffs contend that it was not until after
2
It is also alleged that Plaintiff Zheng is an immigrant with only an elementary education. Pl.’s
Br. in Opp’n at 3. He does not speak, read or understand the English language. Id. To further
complicate matters, Mr. Zheng’s primary language is Fuzhou dialect; he does not speak
Cantonese Chinese, and speaks only very limited Mandarin, which impeded his ability to seek
assistance in his investigation of these matters. Id. at fn. 1.
3
Plaintiff Zheng contacted Defendant Wu, in July or August of 2013, in order to question him about
the Ross Park and South Hills Lease Agreements, that Mr. Zheng discovered the fraud. Id. at 15-16;
see also Am. Compl. at ¶¶ 62-75. After being questioned about the improper naming of Mr. Zheng
as a guarantor, Defendant Wu allegedly sent Plaintiff Zheng a “Revised South Hills Lease
Agreement,” which contained indicia of further fraud. Compl. at ¶¶ 62-75. It was only after
receiving this Revised South Hills Lease Agreement that Plaintiff Zheng discovered that
Defendants were responsible for his injuries, allegedly by way of fraudulent acts which began in
December of 2009. Id. Plaintiffs allege that this discovery occurred in August of 2013 at the
earliest. Pls’ Br. in Opp’n at 16. Plaintiffs filed the instant suit on August 11, 2014. Defendants
filed a Motion to Dismiss and Motion to Strike Plaintiffs’ Complaint.
ANALYSIS
Motion to Dismiss
“To survive a motion to dismiss, a 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 Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
When faced with a motion to dismiss, a court “must accept all of the complaint’s well-pleaded
facts as true, but may disregard any legal conclusions.” Fowler v. UPMC Shadyside, 578 F.3d
203, 210-11 (3d Cir. 2009).
Defendants move to dismiss Counts II – IX3 on the basis that they are time-barred. Def.’s
Mot. at ¶¶ 23-52. In the Third Circuit, a limitations defense may be raised in a 12(b)(6) motion
to dismiss, “but only if ‘the time alleged in the statement of a claim shows that the cause of
action has not been brought within the statute of limitations.’ ‘If the bar is not apparent on the
3
Defendants do not move to dismiss or strike Count I, which seeks declaratory judgment
regarding the invalidity of the Ross Park and South Hills Lease Agreements guaranties. Compl.
at ¶¶ 77-83.
4
face of the complaint, then it may not afford the basis for a dismissal of the complaint under Rule
12(b)(6).’” Robinson v. Johnson, 313 F.3d 128 (3d Cir. 2002) (quoting Bethel v. Jendoco
Constr. Corp., 570 F.2d 1168, 1174 (3d Cir. 1978), Hanna v. U.S. Veterans’ Admin. Hosp., 514
F.2d 1092, 1094 (3d Cir.1975)).
Defendants move to dismiss the challenged counts under statutes of limitations ranging
from one to four years. Def.’s Br. in Support (Doc. 17) at 5-11. A cause of action accrues when
a plaintiff could have first maintained the action to a successful conclusion. Kapil v. Ass’n of
Pa. State Coll. and Univ. Faculties, 470 A.2d 482 (Pa. 1983). However, “state tolling principles
are generally to be used by a federal court when it is applying a state limitations period.” Vernau
v. Vic’s Market, Inc., 896 F.2d 43, 45 (3d Cir. 1990). Plaintiffs argue that the statute of
limitations period has not expired, pursuant to the continuous violation doctrine; the discovery
rule; and the fraudulent concealment doctrine. See Pl’s Br. in Opp’n.
The discovery rule provides an exception to the general rule that the statute of limitations
begins to run as soon as the right to institute and maintain suit occurs, “the salient point giving
rise to its application [being] the inability of the injured, despite the exercise of reasonable
diligence, to know that he is injured and by what cause.” Fine v. Checcio, 870 A.2d 580 (Pa.
2005) (emphasis added). The Pennsylvania Supreme Court has further held that:
when a court is presented with the assertion of the discovery rule[’]s application,
it must address the ability of the damaged party, exercising reasonable diligence,
to ascertain that he has been injured and by what cause. Since this question
involves a factual determination as to whether a party was able, in the exercise of
reasonable diligence, to know of his injury and its cause, ordinarily, a jury is to
decide it. Where, however, reasonable minds would not differ in finding that a
party knew or should have known on the exercise of reasonable diligence of his
injury and its cause, the court determines that the discovery rule does not apply as
a matter of law.
Id. at 858-59.
5
Taking all of Plaintiffs’ allegations as true – as we must at this stage – the Court finds
that the relevant statutes of limitation began to run after Mr. Zheng received the Revised South
Hills Lease Agreement. It was that agreement which contained the indicia of fraud leading to
Mr. Zheng’s discovery of Defendants’ alleged role in the claims contained in the Amended
Complaint. Reasonable minds could not find that Plaintiffs were able to know what caused the
injuries alleged, with the exercise of reasonable diligence, prior to that. As the Revised South
Hills Lease Agreement was not provided to Plaintiffs until after Mr. Zheng communicated with
Mr. Wu in July or April of 2013, it would be inappropriate to dismiss Plaintiffs’ claims at this
early stage in the proceedings.4 Defendants’ Motion to Dismiss Counts II through IX as timebarred will be denied.
Motion to Strike
Defendants move to strike from the Amended Complaint Plaintiffs’ requests for
attorneys’ fees, punitive damages, “and allegations related to them . . . where the legal claims
pled do not support them” pursuant to Federal Rule of Civil Procedure 12(f). Def.’s Br. in
Support at 12. Specifically, Defendants assert that Plaintiffs impermissibly seek punitive
damages and attorneys’ fees in their contract and quasi-contract claims at Counts IV, VI and IX.
Plaintiffs request punitive damages and attorneys’ fees for breach of contract (Count IV), breach
of implied duty of good faith and fair dealing (Count VI), and unjust enrichment (Count IX).
4
The Court acknowledges that sufficient facts have not been alleged for a determination as a
matter of law with respect to Count II’s one-year statute of limitations. It is expected that
discovery will bear out the exact date of Plaintiffs’ discovery of the fraud. Plaintiffs will have to
meet their burden of demonstrating that the discovery rule tolls the statute of limitations until
August 12, 2013 or later. Contrary to Defendants’ arguments, however, they have not met their
burden of demonstrating that no reasonable mind could find that Plaintiffs satisfy the statute of
limitations, while accepting the complaint’s well-pleaded facts as true. As such, dismissal of this
count based on the statute of limitations would be improper, as material facts remain unsettled.
6
Compl. at “Wherefore” clauses pp. 14, 16, 19. Plaintiffs do not respond to Defendants’ Motion
to Strike.
Traditionally, when a plaintiff seeks damages that are not recoverable, a defendant will
move to dismiss the prayer for that particular relief under Federal Rule of Civil Procedure
12(b)(6). See, e.g. Williamsburg Commons Condo. Ass’n v. State Farm Fire and Cas. Co., 907
F.Supp.2d 673 (E.D. Pa. 2012); Johnson v. State Farm Life Ins. Co., 695 F.Supp.2d 201 (W.D.
Pa. 2010); Motorola, Inc. v. Airdesk, Inc., 2005 WL 894807 (E.D. Pa. 2005). As such, the Court
construes Defendants’ Motion to Strike Plaintiffs’ prayer for attorneys’ fees and punitive
damages at Counts IV, VI, and IX as a Motion to Dismiss the same. The standard for a motion
to dismiss for failure to state a claim is set forth supra.
Plaintiffs have not addressed Defendants arguments, and thus the Court construes these
arguments as unopposed. As the arguments are unopposed, Defendants’ Motion to Dismiss any
prayer for relief in the form of attorneys’ fees and/or punitive damages at Counts IV, VI, and IX
will be granted with prejudice.5
II.
ORDER
For the reasons stated above, Defendants’ Motion to Dismiss and Motion to Strike (Doc.
16) is GRANTED IN PART AND DENIED IN PART. Defendants’ Motion to Dismiss
5
The Court notes that Pennsylvania law prohibits recovery of punitive damages on breach of
contract claims. See Samuel-Bassett v. Kia Motors Am., Inc., 357 F.3d 392, 402 (3d Cir. 2004)
(citing Thorsen v. Iron & Glass Bank, 476 A.2d 928, 932 (Pa.Super. 1984) (“the law is clear that
punitive damages are not recoverable in an action for breach of contract”)). The unjust
enrichment alleged in Count IX is a “quasi-contract” remedy, and thus punitive damages are
unavailable at that count as well. Motorola, 2005 WL 894807 at *3 (citing Schott v.
Westinghouse Elec. Corp., 259 A.2d 443, 448 (Pa. 1969) (describing unjust enrichment as a
“quasi-contact” remedy)); Danlin Mgmt. Group, Inc. v. School Dist. Of Philadelphia, 2005 WL
2140314 at *3 (holding that punitive damages cannot be awarded for unjust enrichment that
sounds in quasi-contract). Further, “attorneys [sic] fees are not recoverable absent express
authority, agreement of the parties or some other established exception.” Reinhold v. County of
York, 2012 WL 4104793 at *23 (M.D. Pa. 2012).
7
Counts II-IX as time-barred is DENIED. Defendants’ Motion to Strike Plaintiffs’ prayer for
attorneys’ fees and punitive damages at Counts IV, VI, and IX – construed as a Motion to
Dismiss the same – is GRANTED with prejudice.
IT IS SO ORDERED.
May 27, 2015
s\Cathy Bissoon
Cathy Bissoon
United States District Judge
cc (via ECF email notification):
All Counsel of Record
8
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?