PATROSKI v. RIDGE et al
ORDER granting 6 Motion to Dismiss for Failure to State a Claim. The Complaint filed against Pressley Ridge Foundation is dismissed with prejudice. On or before November 1, 2011, Plaintiff may either file an Amended Complaint or file a notice of her intent to stand on the Complaint as filed.Signed by Judge Terrence F. McVerry on 10/18/2011. (bsc)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
PRESSLEY RIDGE, PRESSLEY RIDGE
FOUNDATION, and B. SCOTT FINNELL,
MEMORANDUM OPINION AND ORDER OF COURT
Pending before the Court is the MOTION TO DISMISS COMPLAINT, with brief in
support (Document Nos. 6 and 7), filed by Defendant, Pressley Ridge Foundation, the
MEMORANDUM OF LAW IN OPPOSITION TO PRESSLEY RIDGE FOUNDATION‟S
MOTION TO DISMISS filed by Plaintiff, Susan Patroski (Document No. 13), and the REPLY
BRIEF filed by Defendant, Pressley Ridge Foundation (Document No. 18). The matters have
been thoroughly briefed and are ripe for disposition.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff initiated this action by the filing of an eleven (11) count Complaint against
Defendants, under both federal and state law, all of which relate to alleged sexual harassment
and retaliation. The only claim alleged against Defendant Pressley Ridge Foundation (“the
Foundation”) is the last claim of the Complaint for alleged “piercing the corporate veil” set forth
in Count 11. This claim does not in fact plead a separate cause of action or theory of relief, but
rather seeks generally to pierce the corporate veil of Defendant Pressley Ridge to assess liability
against the Foundation for the allegedly wrongful acts of Pressley Ridge and B. Scott Finnell as
pled in the preceding counts of the Complaint.
The Foundation argues that Count 11 should be dismissed with prejudice because
“piercing the corporate veil” is not an independent cause of action. In the alternative, the
Foundation argues that Plaintiff has failed to allege any facts that would allow a court to pierce
the corporate veil, and thus, Plaintiff‟s attempt to bring the Foundation into this action is fatally
deficient as a matter of law.
Not surprisingly, Plaintiff contends that the arguments of the Foundation lack merit and
should be denied. However, in the alternative, Plaintiff requests that should the Court conclude
that the veil piercing claim is not sufficiently pled, that she be granted leave to amend.
STANDARD OF REVIEW
A motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) challenges the legal sufficiently
of the complaint filed by Plaintiff. The United States Supreme Court has held that “[a] plaintiff‟s
obligation to provide the „grounds‟ of his „entitle[ment] to relief‟ requires more than labels and
conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell
Atlantic Corp. v. Twombly, 550 U.S. 554, 555 (2007) (citing Papasan v. Allain, 478 U.S. 265,
286 (1986)) (alterations in original).
The Court must accept as true all well-pleaded facts and allegations, and must draw all
reasonable inferences therefrom in favor of the plaintiff. However, as the Supreme Court made
clear in Twombly, the “factual allegations must be enough to raise a right to relief above the
speculative level.” Id. The United States Supreme Court has subsequently broadened the scope
of this requirement, stating that only a complaint that states a plausible claim for relief survives a
motion to dismiss. Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1950 (2009). Thus, after
Iqbal, a district court must conduct a two-part analysis when presented with a motion to dismiss
for failure to state a claim. Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). First,
the Court must separate the factual and legal elements of the claim. Id. Although the Court
“must accept all of the complaint‟s well-pleaded facts as true, [it] may disregard any legal
conclusions.” Id. at 210-11. Second, the Court “must then determine whether the facts alleged
in the complaint are sufficient to show that the plaintiff has a „plausible claim for relief.‟ In
other words, a complaint must do more than allege the plaintiff‟s entitlement to relief. A
complaint has to „show‟ such an entitlement with its facts.” Id. at 211 (citing Iqbal 129 S. Ct. at
1949). The determination for “plausibility” will be “„a context-specific task that requires the
reviewing court to draw on its judicial experience and common sense.‟” Id. at 211 (quoting
Iqbal 129 S. Ct. at 1950).
As a result, “pleading standards have seemingly shifted from simple notice pleading to a
more heightened form of pleading, requiring a plaintiff to plead more than the possibility of
relief to survive a motion to dismiss.” Id. at 211. That is, “all civil complaints must now set out
„sufficient factual matter‟ to show that the claim is facially plausible. This then „allows the court
to draw the reasonable inference that the defendant is liable for the misconduct alleged.‟” Id. at
210 (quoting Iqbal, 129 S. Ct. at 1948).
However, nothing in Twombly or Iqbal changed the other pleading standards for a motion
to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) and the requirements of Fed. R. Civ. P. 8 must
still be met. See Phillips v. Co. of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008) (internal citations
omitted). Fed. R. Civ. P. 8 requires a showing, rather than a blanket assertion, of entitlement to
relief, and “contemplates the statement of circumstances, occurrences, and events in support of
the claim presented and does not authorize a pleader‟s bare averment that he wants relief and is
entitled to it.” Twombly, 550 U.S. at 555 n.3 (internal citations and quotations omitted).
Additionally, the United States Supreme Court did not abolish the Fed. R. Civ. P. 12(b)(6)
requirement that “the facts must be taken as true and a complaint may not be dismissed merely
because it appears unlikely that the plaintiff can prove those facts or will ultimately prevail on
those merits.” Phillips, 515 F.3d at 231(citing Twombly, 550 U.S. at 553).
The first issue the Court must decide is whether piercing the corporate veil is recognized
as an independent cause of action under Pennsylvania law. In support of its motion that piercing
the corporate veil is not recognized as an independent cause of action in Pennsylvania, the
Foundation relies heavily on two cases, Village of Camelback Prop. Owners Assn. v. Carr, 538
A.2d 528 (Pa. Super. 1988) and Siematic Mobelwerker GmbH & Co. KG v. Siematic Corp., 643
F. Supp.2d 675 (E.D. Pa. 2009). The Court finds the Foundation‟s reliance on these two cases is
misplaced. First, as Plaintiff correctly notes, in each of these cases, the plaintiff had included a
cause of action to pierce the corporate veil. In Camelback, the Pennsylvania Superior Court
denied a defendant‟s motion to dismiss the veil-piercing cause of action. In Siematic
Mobelwerker, the court denied summary judgment finding that a genuine issue of material fact
existed as to whether the defendant‟s corporate veil should be pierced.
In the introductory comments to its opinion, the panel in Camelback noted that “the last
count [of the complaint] does not in fact plead a separate cause of action or theory of relief at all,
but rather seeks generally to pierce the corporate veil of the various corporate defendants to
assess liability against Carr individually for the allegedly wrongful acts of those corporate
defendants pled in the preceding counts.” Village at Camelback v. Carr, 538 A.2d at 532.
However, the court then proceeded to analyze the facts of the case and applicable law and
concluded that appellants had sufficiently pleaded the ultimate facts necessary to state a cause of
action for piercing the corporate veil.
The Court finds that the Foundation has improperly construed the court‟s introductory
remarks in Camelback. Those remarks do not constitute a holding that no separate cause of
action is stated when a claim for piercing the corporate veil is pled. As explained by the
Pennsylvania Superior Court in Krause v. Great Lakes Holdings, Inc., 563 A.2d 1182, 1191(Pa.
Super. Ct. 1989), appeal denied, 574 A.2d 70 (Pa. 1990):
[t]he court‟s introductory remarks . . . do not constitute a holding that no separate
cause of action is stated when a claim for piercing the corporate veil is pled. The
Camelback court was merely commenting on the state of the record in that
particular case, which was that in count twelve of their complaint, the appellants
had asserted a general claim of piercing the corporate veil, which, for its specifics,
relied on and referred back to the other counts set forth in the complaint. Thus,
the court‟s comment was entirely dependent on the particular facts present in
Camelback, specifically the organization and structure of the Camelback
plaintiffs‟ complaint. The comment was most definitely not a general holding
that when a claim is made under an alter ego theory, a separate cause of action is
Krause, 563 A.2d at 1191 (emphasis added). Accordingly, the Court finds that Pennsylvania
law does recognize piercing the corporate veil as an independent cause of action.
Having found that an independent cause of action exists, the Court must now determine
whether Plaintiff‟s contentions have sufficient plausibility to survive a motion to dismiss. The
term “plausibility” is not susceptible of mathematical quantifications, but lies somewhere on the
rhetorical spectrum between “conceivable” or “speculative” and “probable.” The Supreme Court
of the United States made a distinction between facts that were merely “consistent” with
wrongful conduct and facts that would be “suggestive” enough to render the alleged claim
Pennsylvania law features a strong presumption against the propriety of piercing the
corporate veil. See Lumax Indus., Inc. v. Aultman, 669 A.2d 893, 895 (Pa. 1995). Although
there is no iron-clad rule under Pennsylvania law as to when piercing is warranted, see Good v.
Holstein, 787 A.2d 426, 430 (Pa. Super. Ct. 2001), the applicable standard has been articulated
as follows: piercing is appropriate when the corporate form must be disregarded in order to
“prevent fraud, illegality, or injustice, or when recognition of the corporate entity would defeat
public policy or shield someone from liability for a crime.” Pearson v. Component Tech. Corp.,
247 F.3d 471, 484 (3d Cir. 2001) (quoting Zubik v. Zubik, 384 F.2d 267, 273 (3d Cir. 1967)). In
Lumax Indus., the Pennsylvania Supreme Court cited with approval several specific factors that
had been denoted by the Commonwealth Court as informing the determination of whether
piercing is warranted in a given case. These are “undercapitalization, failure to adhere to
corporate formalities, substantial intermingling of corporate and personal affairs and use of the
corporate form to perpetrate a fraud.” Lumax, 669 A.2d at 895.
Pennsylvania law requires that a veil-piercing claim be supported by specific factual
averments, rather than mere legal conclusions. Id. Thus, based on public policy, the
Pennsylvania Supreme Court refused to permit a veil-piercing claim to proceed where the
complaint stated only conclusory allegations. Id. Rather, the pleader must state facts showing a
reason to pierce the corporate veil.
In matter sub judice, Plaintiff has provided little or nothing in the way of factual
allegations to support her contention that liability should be imposed on the Foundation by
piercing the corporate veil. In fact, the allegations in Count 11 consist of nothing more than a
recitation of the elements necessary to hold the Foundation liable under the piercing of the veil
theory based on Plaintiff‟s information and belief. In the wake of Twombly, the factual
allegations of a complaint “must be enough to raise a right to relief above the speculative level”
and the complaining party must offer “more than labels and conclusions” or “a formulaic
recitation of the elements of a cause of action.” Twombly, 550 U.S. at 555. The Court is “not
compelled to accept unsupported conclusions and unwarranted inferences, or a legal conclusion
couched as a factual allegation.” Baraka v. McGreevey, 481 F.3d 187, 195 (3d Cir. 2007)
(internal quotations and citations omitted.)
In the absence of anything more than a recitation of the elements necessary to hold the
Foundation liable under the piercing the veil theory, Count 11 of the Complaint will be dismissed
in its entirety and the Foundation will be dismissed as a defendant. However, the Court will
permit Plaintiff to amend her Complaint to cure the shortcomings of her initial pleading
inasmuch as the Court hesitates at this stage of the litigation to find such an amendment would
be inequitable or futile. See Phillips v. County of Allegheny, 515 F.3d 24, 236 (3d Cir. 2008).1
For the hereinabove stated reasons, the Motion to Dismiss will be granted, Count 11 of
the Complaint will be dismissed, and the Foundation will be dismissed as a defendant. The
Court will grant Plaintiff leave to amend the Complaint. On or before November 1, 2011,
Plaintiff may either file an Amended Complaint or file a notice of her intent to stand on the
Complaint as filed.
An appropriate Order follows.
See generally Fletcher-Harlee v. Pote Concrete Contractors, 482 F.3d 247, 252 (3d Cir.
2007), in which our appellate court discussed whether it is error for a district court to fail to offer
a plaintiff an opportunity to amend sua sponte, i.e., where no request was made to the trial court.
Here, Plaintiff has specifically requested that should the Court find that her veil piercing claim is
insufficiently pled, that she be granted leave to amend.
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
PRESSLEY RIDGE, PRESSLEY RIDGE
FOUNDATION, and B. SCOTT FINNELL,
ORDER OF COURT
AND NOW, this 18th day of October, 2011, in accordance with the foregoing
Memorandum Opinion, it is hereby ORDERED, ADJUDGED and DECREED that the Motion
to Dismiss Complaint filed by Defendant Pressley Ridge Foundation is GRANTED.
Accordingly, the Complaint filed against Pressley Ridge Foundation is dismissed with prejudice.
The caption of this case is amended as follows:
PRESSLEY RIDGE and
B. SCOTT FINNELL,
On or before November 1, 2011, Plaintiff may either file an Amended Complaint or file
a notice of her intent to stand on the Complaint as filed.
BY THE COURT:
s/ Terrence F. McVerry
United States District Court Judge
Violet E. Grayson, Esquire
Kimberly A. Craver, Esquire
Reed Smith, LLP
Martha Hartle Munsch, Esquire
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?