Martin-Evans et al v. Chesapeake Appalachia, LLC et al
Filing
28
MEMORANDUM OPINION AND ORDER DENYING PLAINTIFF'S MOTION TO REMAND, GRANTING DEFENDANT DONALD J. SCHRECKENGOST'S MOTION TO DISMISS, GRANTING DEFENDANT CHESAPEAKE APPALACHIA, LLC'S PARTIAL MOTION TO DISMISS AND DENYING AS MOOT DEFENDANT CHESAPEAKE APPALACHIA, LLC'S MOTION TO STRIKE OR ALTERNATIVELY TO FILE A SUR-REPLY: denying 4 Motion to Remand and for costs, expenses, and attorney's fees; granting 6 Motion to Dismiss; granting 8 Motion to Dismiss for failure to State a Claim; denying as moot 22 Motion to Strike. Accordingly, the only remaining count in this civil action is the plaintiffs' breach of contract claim (Count One) against defendant Chesapeake Appalachia, LLC. Signed by Senior Judge Frederick P. Stamp, Jr. on 8/27/15. (copy to counsel of record via CM/ECF)(rjs)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
LADONNA MARTIN-EVANS, individually,
and STACEY D. EVANS, individually
and as power of attorney for
LADONNA MARTIN-EVANS,
Plaintiffs,
v.
Civil Action No. 5:15CV87
(STAMP)
CHESAPEAKE APPALACHIA, LLC, an
Oklahoma limited liability company,
and DONALD J. SCHRECKENGOST a/k/a
D.J. SCHRECKENGOST, individually
and as an agent, employee and/or
representative of defendant,
CHESAPEAKE APPALACHIA, LLC,
Defendants.
MEMORANDUM OPINION AND ORDER
DENYING PLAINTIFFS’ MOTION TO REMAND,
GRANTING DEFENDANT DONALD J. SCHRECKENGOST’S
MOTION TO DISMISS,
GRANTING DEFENDANT CHESAPEAKE APPALACHIA, LLC’S
PARTIAL MOTION TO DISMISS AND
DENYING AS MOOT DEFENDANT CHESAPEAKE APPALACHIA, LLC’S
MOTION TO STRIKE OR ALTERNATIVELY TO FILE A SUR-REPLY
I.
Background
The plaintiffs originally filed this civil action in the
Circuit Court of Ohio County, West Virginia.
Defendant Chesapeake
Appalachia, LLC (“Chesapeake”) removed this civil action, to which
defendant Donald J. Schreckengost (“Schreckengost”) consented. ECF
Nos. 1 and 4.
The plaintiffs are residents of West Virginia.
Chesapeake’s citizenship and primary place of business are located
in Oklahoma, and defendant Schreckengost is a resident of West
Virginia.
According to the complaint, the plaintiffs planned to
enter into a leasehold agreement with Chesapeake.
was
allegedly
negotiated
defendant Schreckengost.
and
entered
into
That agreement
with
the
help
of
The plaintiffs claim that defendant
Schreckengost was an employee or agent of Chesapeake.
Before
finalizing the leasehold agreement with Chesapeake, the plaintiffs
negotiated into right of way agreements with Appalachia Midstreams
Services, LLC.
However, after entering into those right of way
agreements, Chesapeake allegedly stated that it no longer sought to
enter into the leasehold agreement with the plaintiffs.
Thus, the
plaintiffs entered into right of way agreements under the belief
that they would be in a leasehold agreement with Chesapeake.
In
their complaint, the plaintiffs assert the following counts against
the
defendants:
constructive
(1)
fraud;
breach
(3)
of
contract;
equitable
(2)
estoppel;
fraud
and
(4)
and/or
unjust
enrichment. Further, the plaintiffs seek punitive damages, general
damages, and a jury trial.
Pending before this Court are the following motions: (1) the
plaintiffs’ motion to remand; (2) defendant Schreckengost’s motion
to dismiss; (3) Chesapeake’s partial motion to dismiss; and (4)
Chesapeake’s motion to strike, or, alternatively, to file a surreply.
Those matters are discussed in the order presented.
2
A.
Plaintiffs’ Motion to Remand
In their motion to remand, the plaintiffs first contend that
diversity
jurisdiction
does
not
exist,
Schreckengost’s West Virginia residency.
pointing
to
defendant
ECF No. 4.
They then
assert that Chesapeake’s notice of removal is untimely, and that
the Circuit Court of Ohio County is the proper venue for this civil
action.
Within their motion to remand, the plaintiffs also seek
attorney’s fees and costs incurred as a result of the defendants’
removal.
Chesapeake first argues that it timely removed this action.
As to venue, Chesapeake believes that this Court is the proper
venue for actions removed from Ohio County, West Virginia courts.
Chesapeake then contends that diversity jurisdiction exists because
the plaintiffs fraudulently joined defendant Schreckengost.
In
support of that contention, Chesapeake asserts the following: (1)
defendant Schreckengost was not a party to the leasehold agreement;
(2) the plaintiffs did not sufficiently plead a claim of fraud
against defendant Schreckengost; and (3) the plaintiffs did not
sufficiently
plead
that
defendant
Schreckengost
was
enriched by the alleged actions of the parties.
unjustly
As to the
plaintiffs’ request for attorney’s fees and costs, Chesapeake
argues
that
such
fees
should
be
denied
because
objectively reasonable basis for seeking removal.
3
it
had
an
B.
Defendant Schreckengost’s Motion to Dismiss
In addition to the plaintiffs’ motion to remand, defendant
Schreckengost filed a motion to dismiss the complaint.
ECF No. 8.
Defendant Schreckengost first points out that he was not a party to
the
alleged
Chesapeake.
leasehold
agreement
between
the
plaintiffs
and
Because of that, he contends that the breach of
contract claim should be dismissed as it relates to him.
Second,
as to the fraud and estoppel claims, the defendant argues that the
plaintiffs failed to sufficiently plead enough facts to show how
defendant Schreckengost committed fraud.
Third, regarding the
unjust enrichment claim, defendant Schreckengost claims that not
only is he not a party to the alleged leasehold agreement, but that
the plaintiffs also fail to allege what benefit he obtained.
Finally, because the plaintiffs cannot prevail against defendant
Schreckengost,
defendant
Schreckengost
requests
that
the
plaintiffs’ claims for punitive damages and attorney’s fees be
dismissed.
In response, the plaintiffs argue that, regarding the breach
of contract claim, defendant Schreckengost may be liable because he
allegedly is an agent of Chesapeake.
estoppel
claims,
Schreckengost
the
plaintiffs
fraudulently
Concerning their fraud and
contend
misrepresented
plaintiffs about the leasehold agreement.
that
information
defendant
to
the
Finally, the plaintiffs
claim that defendant Schreckengost has yet to respond to their
4
discovery requests, and thus the benefit obtained, or lack thereof,
is
still
to
opportunity
be
to
decided.
conduct
Therefore,
discovery.
they
For
should
those
have
the
reasons,
the
plaintiffs argue that defendant Schreckengost’s motion to dismiss
lacks merit.
C.
Chesapeake’s Partial Motion to Dismiss
In addition to defendant Schreckengost’s motion to dismiss,
Chesapeake filed a partial motion to dismiss.
ECF No. 6.
In that
motion, Chesapeake seeks to dismiss the plaintiffs’ claims of fraud
and estoppel, as well as the plaintiffs’ demand for punitive
damages and attorney’s fees.
claims,
Chesapeake
insufficient facts.
argues
As to their fraud and estoppel
that
the
plaintiffs
have
alleged
In particular, Chesapeake contends that the
plaintiffs do not satisfy the pleading standard for fraud under
Rule
9
of
the
Federal
Rules
of
Civil
Procedure
(“Rule
9”).
Regarding punitive damages and attorney’s fees, Chesapeake believes
that the only remaining counts, which would be unjust enrichment
and breach of contract if this Court were to grant its motion, do
not support claims for punitive damages.
In response, the plaintiffs argue that they have sufficiently
plead their claims.
As to the fraud and estoppel claims, the
plaintiffs believe that they satisfy both the federal and state
pleading requirements.
Next, regarding the unjust enrichment
claim, the plaintiffs contend that discovery will show that the
5
defendants
acceptance.
received
a
monetary
benefit
from
rescinding
their
Concerning their claim for punitive damages and
attorney’s fees, the plaintiffs argue that it is too early in this
civil action to dismiss such claims.
II.
A.
Applicable Law
Motion to Remand
A defendant may remove a case from state court to federal
court in instances where the federal court is able to exercise
original jurisdiction over the matter.
28 U.S.C. § 1441.
Federal
courts have original jurisdiction over primarily two types of
cases: (1) those involving federal questions under 28 U.S.C.
§ 1331, and (2) those involving citizens of different states where
the
amount
in
controversy
exceeds
$75,000.00,
interests and costs pursuant to 28 U.S.C. § 1332(a).
exclusive
of
However, if
federal jurisdiction arises only by virtue of the parties’ diverse
citizenship, such an action “shall be removable only if none of the
. . . defendants is a citizen of the State in which such action is
brought.”
Tomlin
v.
Office
of
Law
Enforcement
Tech.
Commercialization, Inc., 5:07CV42, 2007 WL 1376030, at *1 (N.D. W.
Va. May 7, 2007).
The party seeking removal bears the burden of
establishing federal jurisdiction.
See In re Blackwater Security
Consulting, LLC, 460 F.3d 576, 583 (4th Cir. 2006); Mulcahey v.
Columbia Organic Chems. Co., Inc., 29 F.3d 148, 151 (4th Cir.
1994).
Removal jurisdiction is strictly construed, and if federal
6
jurisdiction is doubtful, the federal court must remand.
Hartley
v. CSX Transp., Inc., 187 F.3d 422 (4th Cir. 1999); Mulcahey, 29
F.3d at 151.
Further, the court is limited to a consideration of facts on
the record at the time of removal.
See Lowrey v. Alabama Power
Co., 483 F.3d 1184, 1213–15 (11th Cir. 2007) (“In assessing whether
removal was proper . . . the district court has before it only the
limited universe of evidence available when the motion to remand is
filed.”); O’Brien v. Quicken Loans, Inc., 5:10CV110, 2011 WL
2551163 (N.D. W. Va. June 27, 2011); Marshall v. Kimble, No.
5:10CV127, 2011 WL 43034, at *3 (N.D. W. Va. Jan. 6, 2011) (“The
defendant’s removal cannot be based on speculation; rather, it must
be based on facts as they exist at the time of removal.”);
Fahnestock v. Cunningham, 5:10CV89, 2011 WL 1831596, at *2 (N.D. W.
Va. May 12, 2011) (“The amount in controversy is determined by
considering the judgment that would be entered if the plaintiff
prevailed on the merits of his case as it stands at the time of
removal.”)
(internal
citations
omitted).
Regarding
punitive
damages, the mere likelihood of punitive damages, without more,
does not give rise to federal jurisdiction.
Cunningham, 2011 WL
1831596, at *2 (citing Landmark Corp. v. Apogee Coal Company, 945
F. Supp. 932 (S.D. W. Va. 1996)).
7
B.
Motion to Dismiss
In assessing a motion to dismiss for failure to state a claim
under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a
court must accept all well-pled facts contained in the complaint as
true.
Nemet Chevrolet, Ltd v. Consumeraffairs.com, Inc, 591 F.3d
250, 255 (4th Cir. 2009). However, “legal conclusions, elements of
a cause of action, and bare assertions devoid of further factual
enhancement fail to constitute well-pled facts for Rule 12(b)(6)
purposes.”
(2009)).
Id. (citing Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949
This
Court
also
declines
to
consider
“unwarranted
inferences, unreasonable conclusions, or arguments.”
Wahi v.
Charleston Area Med. Ctr., Inc., 562 F.3d 599, 615 n.26 (4th Cir.
2009).
It has often been said that the purpose of a motion under Rule
12(b)(6) is to test the formal sufficiency of the statement of the
claim for relief; it is not a procedure for resolving a contest
about the facts or the merits of the case.
5B Charles Alan Wright
& Arthur R. Miller, Federal Practice and Procedure § 1356 (3d ed.
1998).
The Rule 12(b)(6) motion also must be distinguished from a
motion for summary judgment under Federal Rule of Civil Procedure
56, which goes to the merits of the claim and is designed to test
whether there is a genuine issue of material fact.
Id.
For
purposes of the motion to dismiss, the complaint is construed in
the
light
most
favorable
to
the
8
party
making
the
claim
and
essentially
the
court’s
inquiry
is
directed
to
whether
the
allegations constitute a statement of a claim under Federal Rule of
Civil Procedure 8(a).
Id. § 1357.
A complaint should be dismissed “if it does not allege ‘enough
facts to state a claim to relief that is plausible on is face.’”
Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir. 2008) (quoting
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “Facial
plausibility is established once the factual content of a complaint
‘allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.’” Nemet Chevrolet,
591 F.3d at 256 (quoting Iqbal, 129 S. Ct. at 1949).
Detailed
factual allegations are not required, but the facts alleged must be
sufficient “to raise a right to relief above the speculative
level.”
Twombly, 550 U.S. at 555.
III.
A.
Discussion
Plaintiffs’ Motion to Remand
In their motion to remand, the plaintiffs primarily argue that
diversity jurisdiction does not exist, and that the defendants’
removal of this civil action is untimely.
contends
that
the
plaintiffs
Defendant Chesapeake
fraudulently
joined
Schreckengost in order to defeat diversity jurisdiction.
defendant
Further,
Chesapeake asserts that its notice of removal is timely.
For
primarily the two reasons set forth below, the plaintiffs’ motion
to remand must be denied.
9
First, the defendants notice of removal was timely.
Under 28
U.S.C. § 1446(b), a “petition for removal of a civil action shall
be filed within 30 days after the receipt by the defendant, through
service or otherwise, of a copy of the initial pleading[.]”
As
indicated earlier, the defendant bears the burden of demonstrating
the right to removal.
Marler v. Amoco Oil Co., 793 F. Supp. 656,
658-59 (E.D.N.C. 1992).
The plaintiffs argue that Chesapeake’s
notice removal was untimely because it was filed more than 30 days
after Chesapeake was served on June 3, 2015. The record shows that
Chesapeake filed its notice removal on July 9, 2015. Therefore, at
first glance, it may appear that Chesapeake’s notice of removal was
due by July 3, 2015.
However, the date that the plaintiffs rely on
was when Chesapeake’s statutory agent, here the Secretary of State
of West Virginia, was served.
ECF No. 4, Ex. E.
When a statutory
agent of a defendant is served, “rather than on an agent appointed
by the defendant, the time to remove the action to federal court
does not start to run until the defendant actually has received a
copy of the complaint.”
Gordon v. Hartford Fire Ins. Co., 105 F.
App’x 476, 480 (4th Cir. 2004) (quoting Lilly v. CSX Transp., Inc.,
186 F. Supp. 2d 672, 673 (S.D. W. Va. 2002)) (emphasis added).
The
record shows that Chesapeake actually received a copy of the
complaint on June 9, 2015.
ECF No. 14, Ex. 1.
Accordingly,
Chesapeake had until July 9, 2015, to timely file its notice of
10
removal, which it did. Therefore, the plaintiffs’ assertions as to
untimeliness are slightly misguided.
Second, defendant Schreckengost appears to be fraudulently
joined, meaning diversity jurisdiction does exist.
“Fraudulent
joinder is a judicially created doctrine that provides an exception
to the requirement of complete diversity.”
Triggs v. John Crump
Toyota, Inc., 154 F.3d 1284, 1287 (11th Cir. 1998).
The doctrine
permits defendants “to remove cases lacking complete diversity
jurisdiction if they demonstrate that the plaintiff included claims
against non-diverse defendants ‘for the sole purpose of preventing
removal.’”
Murriel-Don Coal Co., Inc. v. Aspen Ins. UK Ltd., 790
F. Supp. 2d 590, 594 (E.D. Ky. 2011) (quoting McLeod v. Cities
Serv. Gas Co., 233 F.2d 242, 246 (10th Cir. 1956)).
Generally,
joinder is deemed fraudulent in the following situations: (1) when
no possibility exists “that the plaintiff can prove a cause of
action against the [non-diverse] defendant”; and when outright
fraud exists “in the plaintiff’s pleading of jurisdictional facts.”
Triggs,
154
omitted).
F.3d
at
1287
(internal
citations
and
quotations
The United States Court of Appeals for the Fourth
Circuit has described the defendant’s burden for proving fraudulent
joinder as “heavy: the defendant must show that the plaintiff
cannot establish a claim against the non-diverse defendant even
after resolving all issues of fact and law in the plaintiff’s
favor.”
Mayes v. Rapoport, 198 F.3d 457, 464 (4th Cir. 1999)
11
(internal citations and quotations omitted); see Griggs v. State
Farm Lloyds, 181 F.3d 694, 699 (5th Cir. 1999).
fraudulent
joinder
claim,
a
plaintiff
must
To defeat a
show
“a
slight
possibility of a right to relief,” or at least a “glimmer of hope
for the plaintiff.”
Hartley v. CSX Transp., Inc., 187 F.3d 422,
426 (4th Cir. 1999).
In this civil action, it appears that not even a “glimmer of
hope”
exists
as
to
the
plaintiff’s
claims
against
defendant
Schreckengost, the diversity defeating defendant. The record shows
that Chesapeake’s citizenship and primary place of business are
located in Oklahoma, and the plaintiffs and defendant Schreckengost
are residents of West Virginia.
ECF No. 1, Ex. 1.
However,
because the plaintiff fails to show even “slight possibility a
right to relief” against defendant Schreckengost, it appears that
defendant Schreckengost has been fraudulently joined. This Court’s
reasoning is set forth below.
1.
Count One: Breach of Contract
Regarding the plaintiffs’ breach of contract claim, defendant
Schreckengost was not a party to the alleged lease agreement.
non-party
to
a
contract
cannot
be
sued
for
breach
of
“A
that
contract.” A. Hak Indus. Services BV v. TechCorr USA, LLC, 2014 WL
7243191 (N.D. W. Va. Dec. 19, 2014); see also Herbal Care Sys. Inc.
v. Plaza, 2009 WL 692338, at *2 (D. Ariz. Mar. 17, 2009); Brown v.
Kinross Gold U.S.A., Inc., 531 F. Supp. 2d 1234, 1240 (D. Nev.
12
2008); Kelly v. TillotsonPearson, Inc., 840 F. Supp. 935, 944
(D.R.I. 1994); Hotel Aquarius, B.V. v. PRT Corp., 1992 WL 391264,
at *6 (S.D.N.Y. Dec. 22, 1992).
Here, the complaint alleges that
the plaintiffs were supposed to enter into an oil and gas lease
agreement with Chesapeake, but not with defendant Schreckengost.
Therefore, because defendant Schreckengost is a non-party to the
alleged agreement, he cannot be sued for breach of that agreement.
It should be noted that the plaintiffs argue in their motion that
they seek to pursue alternative theories of recovery under their
breach of contract claim, such as “ostensible authority, acting
beyond the scope of [defendant Schreckengost’s] authority, tortious
interference
venture.”
with
a
ECF No. 18.
contract,
civil
conspiracy
and/or
joint
As Chesapeake correctly points out in its
response in opposition, those alternative theories of recovery were
not pleaded in the complaint.
See Great Plans Trust Co. v. Morgan
Stanley Dean Witter & Co., 313 F.3d 305, 321 (5th Cir. 2002).
Accordingly, based on the breach of contract claim as framed in the
complaint, rather than in the plaintiffs’ later filings, defendant
Schreckengost was not a party to the alleged contract between
Chesapeake and the plaintiffs.
Furthermore, the plaintiffs’ alternative theories of recovery
under the principles of agency also lack merit.
West Virginia law
explicitly states that “[a]n agent or broker contracting for and on
behalf of a principal known or disclosed to the person with whom
13
the contract is made, is not personally bound by it, nor liable for
a breach thereof, unless the credit has been extended to him or he
has
expressly
bound
himself
by
the
contract
in
some
form.”
Hurricane Milling Co. v. Steel & Payne Co., 99 S.E. 490 (W. Va.
1919) (citing Johnson v. Welch, 24 S.E. 585 (W. Va. 1896)).
As
stated earlier, defendant Schreckengost is not a party to the
agreement.
Moreover, the plaintiffs do not indicate what “credit
[was] extended to” defendant Schreckengost, if any, by allegedly
participating in the agreement negotiations.
Id.
plaintiffs’
provided
breach
of
contract
claim,
as
Therefore, the
in
their
complaint, does not show even a “glimmer of hope” of recovery
against defendant Schreckengost.
2.
Counts Two and Three: Fraud and Estoppel
Similar to the breach of contract claim, the same ruling may
be concluded regarding the plaintiffs claims of fraud and estoppel
against defendant Schreckengost.
Rule 9(b) states that “[i]n
alleging fraud or mistake, a party must state with particularity
the circumstances constituting fraud or mistake.
Malice, intent,
knowledge, and other conditions of a person’s mind may be alleged
generally.”
Further, the United States Court of Appeals for the
Fourth Circuit has noted that the “‘circumstances’ required to be
pled with particularity under Rule 9(b) are ‘the time, place, and
contents of the false representations, as well as the identity of
the person making the misrepresentation and what he obtained
14
thereby.’”
Harrison v. Westinghouse Savannah River Co., 176 F.3d
776, 784 (4th Cir. 1999) (internal citations omitted).
As also
stated in Harrison, “A court should hesitate to dismiss a complaint
under Rule 9(b) if the court is satisfied (1) that the defendant
has been made aware of the particular circumstances for which she
will have to prepare a defense at trial, and (2) that plaintiff has
substantial prediscovery evidence of those facts.”
In cases
involving allegations of fraud relating to “an omission instead of
an affirmative misrepresentation,” however, “less particularity is
required.” In Town Hotels Ltd. Partnership v. Marriot Int’l, Inc.,
246 F. Supp. 2d 469, 487 (S.D. W. Va. 2003) (citing Shaw v. Brown
& Williamson Tobacco Corp., 973 F. Supp. 539, 552 (D. Md. 1997)).
In addition to the standards under Rule 9, West Virginia law
provides the following essential elements in a fraud claim: “(1)
that the act claimed to be fraudulent was the act of the defendant
or induced by him; (2) that it was material and false; (3) that
plaintiff relied on it and was justified under the circumstances in
relying upon it; and (4) that he was damaged because he relied on
it.”
Syl. Pt. 5, Folio v. City of Clarksburg, 655 S.E.2d 143 (W.
Va. 2007) (internal citations omitted). Further, West Virginia law
recognizes that as a “general principle[,] [] an action for fraud
can arise by the concealment of truth.”
Teter v. Old Colony Co.,
441 S.E.2d 728, 734 (W. Va. 1994) (quoting Thacker v. Tyree, 297
S.E.2d 885, 888 (W. Va. 1982)).
Nonetheless, “plaintiffs carry an
15
‘unquestionably heavy’ burden of proof” when proving a fraud claim.
White v. Nat’l Steel Corp., 938 F.2d 474, 490 (4th Cir. 1991)
(quoting Tri-State Asphalt Products, Inc. v. McDonough Co., 391
S.E.2d 907, 912 (W. Va. 1990)).
As stated by one court, “a
presumption always exists in favor of innocence and honesty in a
given transaction and the burden is upon one who alleges fraud to
prove it by clear and
distinct evidence.”
White, 938 F.2d at 490
(quoting Steele v. Steele, 295 F. Supp. 1266, 1269 (S.D. W. Va.
1969) (citation omitted)).
In the instant case, the plaintiffs allege that the defendants
engaged in fraud, whether by intentionally concealing material
facts or making false representations.
provide only conclusory allegations.
However, the plaintiffs
The plaintiffs do not state
“the time, place, and contents of the false representations, as
well as the identity of the person making the misrepresentation and
what he obtained thereby.’”
Harrison, 176 F.3d at 784.
As to
defendant Schreckengost, the complaint states neither the time and
place of the misrepresentations he made, if any, nor does it
adequately
point
out
defendant
participation in the alleged fraud.
Schreckengost’s
specific
As the court stated in
Bluestone Coal Corp., “simply alleging that [the defendant] was an
[agent or employee] of the corporate defendant [here, Chesapeake],
and that the corporate defendant engaged” in fraud is not enough.
2007 WL 6641647, at *7.
Therefore, the plaintiffs do not comply
16
with the requirements under Rule 9 because they fail to state their
fraud
claim
against
defendant
Schreckengost
with
sufficient
particularity. Moreover, the plaintiffs have not complied with the
requirements under West Virginia law.
See Folio, 655 S.E.2d at
Syl. Pt. 5 (internal citations omitted).
In addition to pleading
with insufficient particularity, the plaintiffs cannot recover
against defendant Schreckengost because their fraud claim would not
“arise independent of the existence of” the alleged contract.
Lockhart v. Airco Heating & Cooling, Inc., 567 S.E.2d 619, 624 (W.
Va. 2002) (internal citations and quotations omitted).
This Court
already determined that the plaintiffs cannot prevail under their
breach of contract claim against defendant Schreckengost.
Because
the fraud claim is based on the existence of the contract claim,
the plaintiffs’ fraud claim would not independently arise without
the breach of contract claim.
Accordingly, the plaintiffs cannot
recover under their fraud claim against defendant Schreckengost
because their fraud claim fails to arise independent of the
existence of the lease agreement.
The plaintiffs also pleaded their equitable estoppel claim
(Count Three) with insufficient particularity.
“relates
to
omissions.”
misrepresentations
of
fact,
Equitable estoppel
positive
acts,
and
Edell & Assocs., P.C. v. Law Offices of Peter G.
Angelos, 264 F.3d 424, 441 (4th Cir. 2001) (internal citations and
17
quotations omitted).
More specifically, West Virginia law states
the following as to equitable estoppel:
The general rule governing the doctrine of equitable
estoppel is that in order to constitute equitable
estoppel or estoppel in pais there must exist a false
representation or a concealment of material facts; it
must have been made with knowledge, actual or
constructive of the facts; the party to whom it was made
must have been without knowledge or the means of
knowledge of the real facts; it must have been made with
the intention that it should be acted on; and the party
to whom it was made must have relied on or acted on it to
his prejudice.
Folio, 655 S.E.2d at syl. pt. 3 (internal citations and quotations
omitted).
However, “[t]he general rule is that a promise to be
performed in the future, and its subsequent breach, are not
sufficient bases upon which to predicate fraud.”
Cottrell v.
Nurnberger, 47 S.E.2d 454, 462 (W. Va. 1948); see White, 938 F.2d
at 490 (“Broken promises are the substance of contract law and are
not
to
be
shoehorned
into
an
ill-fitting
suit
of
fraud.”).
Furthermore, “Rule 9(b) applies to any cause of action that sounds
in fraud or is grounded in fraud, even when the cause of action is
not fraud.” Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th
Cir. 2003); see In re InSite Services Corp., LLC, 287 B.R. 79, 86
(S.D.N.Y. 2002).
As was the case regarding the plaintiffs’ fraud claim, the
plaintiffs have pleaded their estoppel claim with insufficient
particularity.
Other than baldly stating that the defendants
provided false misrepresentations of fact or concealed material
18
facts, and that the plaintiffs relied on such acts or omissions,
the complaint complies with neither Rule 9(b) nor West Virginia
law’s particularity requirements. Relying on those bald assertions
and statements, not even a “glimmer of hope” exists as to the
plaintiffs’
claims
for
fraud
and
equitable
estoppel
against
defendant Schreckengost.
3.
Count Four: Unjust Enrichment
Finally, the plaintiffs’ claim of unjust enrichment, as framed
in the complaint, lacks even a chance of recovery against defendant
Schreckengost.
“Unjust enrichment of a person occurs when he has
and retains money or benefits which in justice and equity belong to
another.”
Bright v. QSP, Inc., 20 F.3d 1300, 1306 (4th Cir. 1994)
(quoting Dunlap v. Hinkle, 317 S.E.2d 508, 512 n.2 (W. Va. 1984)).
Further, the “benefit may be an interest in money, land, chattels,
or chooses in action; beneficial services conferred; satisfaction
of debt or duty owed by him; or anything which adds to his security
or advantage.”
Hinkle, 317 S.E.3d at 512 n.2 (quoting Commercial
Fixtures & Furnishings, Inc. v. Adams, 564 P.2d 773, 776 (Utah
1977)).
In their complaint, the plaintiffs do not state what
benefits
defendants
Schreckengost
obtained.
Moreover,
the
plaintiffs collectively accuse the defendants of profiting unjustly
at the expense of the plaintiffs.
accusations,
the
plaintiffs
Aside from those conclusory
provide
no
further
details
or
allegations in their complaint as to how defendant Schreckengost
19
was unjustly enriched, and if so, what he unjustly obtained.
Therefore, based on the plaintiffs’ claims under Count Four, it
does not appear that the plaintiffs have even the slightest chance
of prevailing against defendant Schreckengost.
Based upon the reasons set forth above, this Court finds that
defendant Schreckengost has been fraudulently joined in this civil
action.
Accordingly, his residency will be ignored for diversity
jurisdiction purposes.
Furthermore, the plaintiffs’ motion for
remand of this civil action must denied for the reasons discussed
above. As to the plaintiffs’ motion for attorney’s fees and costs,
the awarding of attorney’s fees and costs in the motion to remand
context falls under the discretion of this Court.
Martin v.
Franklin Capital Corp., 546 U.S. 132, 136 (2005) (quoting Fogerty
v.
Fantasy,
Inc.,
§ 1447(c)(2012).
510
U.S.
517
,533
(1994));
see
28
U.S.C.
Furthermore, because this Court denies the
plaintiffs’ motion to remand and, thus, finds the defendants’
removal as proper and reasonable, the plaintiffs should not be
entitled to attorney’s fees and costs incurred as a result of the
removal.
Martin, 546 U.S. at 141 (“[T]he standard for awarding
fees should turn on the reasonableness of the removal.
Absent
unusual circumstances, courts may award attorney’s fees under [28
U.S.C.]
§
1447(c)
only
where
the
removing
party
lacked
an
objectively reasonable basis for seeking removal. Conversely, when
an objectively reasonable basis exists, fees should be denied.”).
20
Therefore, the plaintiffs’ motion for attorney’s fees and costs as
to the motion to remand must be denied.
B.
Defendant Schreckengost’s Motion to Dismiss
As stated earlier, defendant Schreckengost filed a motion to
dismiss the claims against him.
those
concerning
this
Court’s
ECF No. 8.
finding
For reasons similar to
of
fraudulent
joinder,
defendant Schreckengost’s motion must be granted.
First,
the
plaintiffs’
breach
of
contract
defendant Schreckengost must be dismissed.
claim
“A non-party to a
contract cannot be sued for breach of that contract.”
Indus. Services BV, 2014 WL 7243191, at *12.
against
A. Hak
Because defendant
Schreckengost does not appear to be a party to the alleged lease
agreement
between
Chesapeake
and
the
plaintiffs,
defendant
Schreckengost cannot be found liable under the plaintiffs’ breach
of contract claim.
As to the plaintiffs’ theories under the
principles of agency, those theories are equally lacking in merit.
West Virginia law explicitly states that “[a]n agent or broker
contracting for and on behalf of a principal known or disclosed to
the person with whom the contract is made, is not personally bound
by it, nor liable for a breach thereof, unless the credit has been
extended to him or he has expressly bound himself by the contract
in some form.”
Hurricane Milling Co., 99 S.E. at 490 (citing
Johnson, 24 S.E. at 585).
The plaintiffs have not indicated or
21
alleged any specific “credit” or gain that defendant Schreckengost
obtained.
Based on the law cited above, the plaintiffs’ breach of
contract claim must be dismissed as to defendant Schreckengost.
Second, the plaintiffs have failed to plead their claims for
fraud and equitable estoppel with sufficient particularity.
As
discussed above, Rule 9 states that “[i]n alleging fraud or
mistake, a party must state with particularity the circumstances
constituting fraud or mistake.
Malice, intent, knowledge, and
other conditions of a person’s mind may be alleged generally.”
Further,
the
“‘circumstances’
required
to
be
pled
with
particularity under Rule 9(b) are ‘the time, place, and contents of
the false representations, as well as the identity of the person
making
the
misrepresentation
and
what
he
obtained
thereby.’”
Harrison, 176 F.3d at 784 (internal citations omitted).
In
addition to the standards under Rule 9, West Virginia law lists the
following essential elements in a fraud claim: “(1) that the act
claimed to be fraudulent was the act of the defendant or induced by
him; (2) that it was material and false; (3) that plaintiff relied
on it and was justified under the circumstances in relying upon it;
and (4) that he was damaged because he relied on it.”
S.E.2d at syl. pt. 5 (internal citations omitted).
Folio, 655
“Plaintiffs
carry an ‘unquestionably heavy’ burden of proof” when proving a
fraud claim.
White, 938 F.2d at 490 (quoting Tri-State Asphalt
22
Products, Inc., 391 S.E.2d at 912).
In the instant case, the
plaintiffs have not met the pleading standards required under
either
Rule
9
or
West
Virginia
law
for
their
fraud
claim.
Regarding defendant Schreckengost, the plaintiffs do not indicate
the “‘time, place, and contents of the false representations,’” or
what
exactly
defendant
Schreckengost
“‘obtained
thereby.’”
Harrison, 176 F.3d at 784 (internal citations omitted).
Rather,
the complaint simply accuses the defendants of making a false
representation,
intentionally.
concealing
material
facts,
and
doing
so
However, the plaintiffs do not specifically allege
when or where defendant Schreckengost conducted the alleged fraud,
what defendant Schreckengost said or did that amounted to fraud, or
what defendant Schreckengost obtained by committing such fraud.
The conclusory allegations, as currently stated in the complaint,
do
not
satisfy
the
particularity
standards
discussed
above.
Phrased another way, the plaintiffs have failed to carry their
“unquestionably heavy” burden.
Therefore, the plaintiffs’ fraud
claim against defendant Schreckengost must be dismissed.
The
same
is
found
concerning
the
plaintiffs’
estoppel claim against defendant Schreckengost.
equitable
Stated earlier,
“[t]he general rule is that a promise to be performed in the
future, and its subsequent breach, are not sufficient bases upon
which
to
predicate
fraud.”
Cottrell,
47
S.E.2d
at
462.
Furthermore, “Rule 9(b) applies to any cause of action that sounds
23
in fraud or is grounded in fraud, even when the cause of action is
not fraud.”
the
Vess, 317 F.3d at 1106.
plaintiffs
make
conclusory
equitable estoppel claim.
Similar to their fraud claim,
allegations
regarding
However, those allegations do not
satisfy the pleading requirements under Rule 9(b).
plaintiffs’
equitable
their
estoppel
claim
Therefore, the
against
defendant
Schreckengost must also be dismissed.
Lastly,
defendant
the
plaintiffs’
Schreckengost
must
unjust
also
enrichment
be
claim
dismissed.
against
This
Court
previously stated that “[u]njust enrichment of a person occurs when
he has and retains money or benefits which in justice and equity
belong to another.”
Bright, 20 F.3d at 1306 (internal citations
and quotations omitted).
In addition, the “benefit may be an
interest in money, land, chattels, or choses in action; beneficial
services conferred; satisfaction of debt or duty owed by him; or
anything which adds to his security or advantage.”
Hinkle, 317
S.E.3d at 512 n.2 (internal citations and quotations omitted).
their
complaint,
the
plaintiffs
defendant Schreckengost obtained.
do
not
state
what
In
benefits
Moreover, the plaintiffs simply
accuse defendant Schreckengost of profiting unjustly at the expense
of the plaintiffs.
Aside from such conclusory accusations, the
plaintiffs provide no further details or allegations in their
complaint as to how defendant Schreckengost was unjustly enriched,
and if so, what he unjustly obtained.
24
Therefore, the plaintiffs’
claim of unjust enrichment against defendant Schreckengost must be
dismissed.
C.
Chesapeake’s Partial Motion to Dismiss
As mentioned earlier, Chesapeake filed a partial motion to
dismiss, seeking to dismiss the plaintiffs’ fraud and equitable
estoppel claims against it.
After reviewing the parties’ filings,
Chesapeake’s motion must be granted.
This Court previously stated
the particularity requirements for a claim of fraud under both Rule
9 and West Virginia law.
The “‘circumstances’ required to be pled
with particularity under Rule 9(b) are ‘the time, place, and
contents of the false representations, as well as the identity of
the person making the misrepresentation and what he obtained
thereby.’” Harrison, 176 F.3d at 784 (internal citations omitted).
Moreover,
West
Virginia
law
provides
the
following
essential
elements in a fraud claim: “(1) that the act claimed to be
fraudulent was the act of the defendant or induced by him; (2) that
it was material and false; (3) that plaintiff relied on it and was
justified under the circumstances in relying upon it; and (4) that
he was damaged because he relied on it.”
pt. 5 (internal citations omitted).
Folio, 655 S.E.2d at syl.
Similar to their allegations
against defendant Schreckengost, the plaintiffs simply state that
Chesapeake intentionally made false representations or withheld
information and thereby benefitted from such fraud.
do
not
allege
when
or
where
25
Chesapeake
However, they
made
the
false
misrepresentations, what those misrepresentations or omissions
were, or what Chesapeake fraudulently obtained.
conclusory
allegations
clearly
do
not
The plaintiffs’
satisfy
the
pleading
requirements as set forth above, under either Rule 9 or West
Virginia law.
Therefore, the plaintiffs’ fraud claim against
Chesapeake must be dismissed.
Moreover, the plaintiffs’ claim for equitable estoppel against
defendant Chesapeake is equally misguided.
The applicable law, as
stated earlier, requires the same heightened pleading standard
under Rule 9 that a fraud claim must maintain.
“Rule 9(b) applies
to any cause of action that sounds in fraud or is grounded in
fraud, even when the cause of action is not fraud.”
at 1106.
Vess, 317 F.3d
As was the case concerning their fraud claim, the
plaintiffs again insufficiently plead their claim of equitable
estoppel against defendant Chesapeake.
the
defendants
intentionally
Other than concluding that
committed
fraud
against
the
plaintiffs, the plaintiffs provide no specific allegations as to
that
claim.
applicable
Therefore,
pleading
the
plaintiffs
requirements
and,
fail
thus,
to
satisfy
their
the
equitable
estoppel claim must be dismissed.
In addition to dismissing the plaintiffs’ fraud and equitable
estoppel claims, the plaintiffs’ claim of unjust enrichment must
also be dismissed.
This Court previously stated that “[u]njust
enrichment of a person occurs when he has and retains money or
26
benefits which in justice and equity belong to another.”
Bright,
20 F.3d at 1306 (internal citations and quotations omitted).
Further, the “benefit may be an interest in money, land, chattels,
or choses in action; beneficial services conferred; satisfaction of
debt or duty owed by him; or anything which adds to his security or
advantage.”
Hinkle, 317 S.E.3d at 512 n.2 (internal citations and
quotations omitted).
In their complaint, the plaintiffs do not
state what benefits Chesapeake obtained.
Moreover, the plaintiffs
simply accuse Chesapeake of profiting unjustly at the expense of
the
plaintiffs
obtained.
without
specifying
what
profit,
if
any,
was
Aside from such conclusory accusations, the plaintiffs
provide no further details or allegations in their complaint as to
how Chesapeake was unjustly enriched, and if so, what it unjustly
obtained.
Therefore, the plaintiffs’ claim of unjust enrichment
against Chesapeake must also be dismissed.
In its partial motion to dismiss, Chesapeake also seeks to
dismiss the plaintiffs’ claim for punitive damages and attorney’s
fees.
This Court has already denied the plaintiffs’ motion for
attorney’s fees concerning their motion to remand, which was also
denied.
As for the plaintiffs’ claim for punitive damages, this
Court finds that such a claim cannot proceed because the only
remaining claim in this civil action is the plaintiffs’ breach of
contract
claim.
West
Virginia
law
is
clear
on
the
matter,
providing that “[g]enerally, punitive damages are unavailable in an
27
action for breach of contract unless the conduct of the defendant
constitutes an independent, intentional tort.”
Hayseeds, Inc. v.
State Farm Fire & Cas., 352 S.E.2d 73, 80 (W. Va. 1986) (internal
citations omitted); see Short v. Grange Mut. Cas. Co., 307 F. Supp.
768, 773 (S.D. W. Va. 1969) (“Punitive damages, without exception,
are not recoverable in breach of contract actions and this is true
even if the breach is willful.”) (internal citations and quotations
omitted); Warden v. Bank of Mingo, 341 S.E.2d 679, 684 (W. Va.
1985) (“Punitive damages are allowed only where there has been
malice, fraud, oppression, or gross negligence . . . punitive
damages are generally unavailable in pure contract actions.”).
In
the instant case, the plaintiffs’ remaining claim is for breach of
contract against Chesapeake.
West Virginia law generally does not
allow for the recovery of punitive damages in such actions.
Therefore, the plaintiffs’ request for punitive damages must also
be denied.
D.
Chesapeake’s Motion to Strike or Alternative Motion to File a
Sur-reply
Chesapeake filed a motion to strike the plaintiffs’ reply to
their motion to remand or, alternatively, to file a sur-reply. ECF
No. 22.
In that motion, Chesapeake contends that the plaintiffs
raised new arguments concerning the timeliness of its removal.
Therefore, Chesapeake requests that either the plaintiffs’ reply be
stricken because they allegedly raised new issues for the first
28
time in that reply, or, alternatively, that it be allowed to file
a sur-reply on the matter.
Chesapeake’s motion.
The plaintiffs did not respond to
However, because this Court has already
determined that Chesapeake’s removal is timely and ultimately
denied
the
plaintiffs’
appears to be moot.
motion
to
remand,
Chesapeake’s
motion
Therefore, Chesapeake’s motion to strike or
alternatively to file a sur-reply must be denied as moot.
IV.
Conclusion
For the reasons set forth above, the plaintiffs’ motion to
remand and motion for costs, expenses, and attorney’s fees (ECF No.
4) is DENIED.
Defendant Donald J. Schreckengost’s motion to
dismiss (ECF No. 8), and defendant Chesapeake Appalachia, LLC’s
partial motion to dismiss (ECF No. 6) are GRANTED.
defendant
Chesapeake
Appalachia,
LLC’s
motion
Furthermore,
to
strike
or
alternatively motion to file a sur-reply (ECF No. 22) is DENIED AS
MOOT.
Finally, the plaintiffs’ claim for unjust enrichment and
punitive damages against defendant Chesapeake Appalachia, LLC are
both DISMISSED.
Accordingly, the only remaining count in this
civil action is the plaintiffs’ breach of contract claim (Count
One) against defendant Chesapeake Appalachia, LLC.
IT IS SO ORDERED.
The Clerk is DIRECTED to transmit a copy of this memorandum
opinion and order to counsel of record herein.
29
DATED:
August 27, 2015
/s/ Frederick P. Stamp, Jr.
FREDERICK P. STAMP, JR.
UNITED STATES DISTRICT JUDGE
30
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