Opinion
Civil Action No. 04-cv-2096.
December 29, 2004
MEMORANDUM
I. Introduction
Presently before this Court is a Motion to Dismiss, pursuant to Federal Rule of Civil Procedure 12(b)(6), filed by Defendant Apartment Investment Management Company (AIMCO). For the reasons set forth below, the Motion to Dismiss will be denied.
II. Jurisdiction and Legal Standard
This court has jurisdiction pursuant to 28 U.S.C. § 1332, as the parties are citizens of different states and the amount in controversy exceeds $75,000. The requirement of complete diversity among the parties is satisfied and thus, this court has diversity jurisdiction. See Strawbridge v. Curtiss, 7 U.S. 267 (1806) (requiring complete diversity).
28 U.S.C. § 1332 states, in pertinent part:
§ 1332. Diversity of citizenship; amount in controversy; costs
(a) The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between —
(1) Citizens of different States.
According to the Amended Complaint, Plaintiff is a Pennsylvania corporation with its principal place of business in Malvern, PA. (Amended Compl. at ¶ 1). Defendant Kings Row is a New Jersey Limited Partnership with its principal place of business in Middletown, NJ. Id. at ¶ 2. Defendant AIMCO is a Maryland corporation with its principal place of business in Denver, Colorado. Id. at ¶ 3. Plaintiff seeks damages in the amount of $297,970, plus late charges of 1.5% per month, plus attorneys' fees and costs. Id. at 4.
When deciding a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), the court may grant the motion only if, accepting all well-pleaded allegations in the complaint as true, and viewing them in the light most favorable to plaintiff, the plaintiff is not entitled to relief. Doug Grant, Inc. V. Greate Bay Casino Corp., 232 F.3d 173, 183 (3d Cir. 2000). Accordingly, a federal court may dismiss a complaint for failure to state a claim only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations. Doe v. Delie, 257 F.3d 309, 313 (3d Cir. 2001).
II. Background A. Procedural Background
On May 14, 2004, Brock Company, Inc. ("Plaintiff" or "Brock") filed a four-count complaint asserting causes of action for breach of contract against Defendant Kings Row and promissory estoppel, civil conspiracy, and constructive trust against both Kings Row and AIMCO. In an Order dated November 17, 2004, this Court granted in part and denied in part Defendants' Motions to Dismiss. Brock Co., Inc. v. Kings Row Associates et al, 2004 WL 2624864, (E.D.Pa. 2004). Specifically, Count II for promissory estoppel against Defendant Kings Row was dismissed with prejudice. Count II against Defendant AIMCO was dismissed without prejudice, granting leave to amend. Count III for civil conspiracy was dismissed with prejudice with regard to both Defendants. Finally, the Motion to Dismiss Count IV for a constructive trust was denied. The court concluded that it would construe Count IV as a claim for unjust enrichment seeking a constructive trust as an equitable form of relief.
On November 24, 2004, Plaintiff filed an Amended Complaint asserting three causes of action. Count I asserts a breach of contract claim against Defendant Kings Row. Count II asserts a claim for promissory estoppel against Defendant AIMCO. Count III asserts a claim for unjust enrichment against both Defendants Kings Row and AIMCO. On December 8, 2004, Defendant AIMCO filed a Motion to Dismiss Count II of the Amended Complaint. Plaintiff responded on December 16, 2004.
B. Allegations of the Parties 1. Brock Co.
At the heart of this dispute is an agreement between Plaintiff and Defendant Kings Row under which Plaintiff agreed to manage and operate Defendant's food and vending services operations facilities located in Middletown, New Jersey. (Amended Compl. at ¶ 6). Defendant AIMCO was the managing agent for Kings Row and was authorized to negotiate all terms and conditions of the agreement. Id. at ¶¶ 5, 7. Plaintiff alleges that Kings Row fell behind in their payments under the contract several times.Id. at ¶ 10. Plaintiff states that even though it provided Defendants with a Notice of Termination, the contract was not terminated because a meeting was held "at which time it was agreed that Kings Row/AIMCO would pay . . ." and based on assurances from both Kings Row and AIMCO that the past due amounts would be brought current. Id. at ¶¶ 11-13. Because Defendants had paid their arrears in the past, Plaintiff relied on the promises of Defendants and continued to provide services.Id. at ¶ 14. After receiving no payment, Plaintiff notified Defendant AIMCO by letter dated March 15, 2004, that Plaintiff was terminating services as of April 3, 2004. Plaintiff claims that Kings Row/AIMCO owes Plaintiff $297, 970, plus late fees, interest, and costs.
Plaintiff attached a copy of the "Food and Vending Services Management Agreement," dated March 13, 2001, to the Amended Complaint as Exhibit B. The Agreement is effective as of April 1, 2001 between Brock and Kings Row. The initial term of the Agreement was for a five year period commencing April 1, 2001 and ending March 31, 2006. Agreement, Article 2. AIMCO is identified as the agent for Kings Row. Agreement, § 10.1.
2. AIMCO
AIMCO argues that Count II of the Amended Complaint fails to state a claim for promissory estoppel. (Def's Memorandum in Support of Motion at 1).
AIMCO's argument is two-fold. First, AIMCO argues that Plaintiff has not shown that AIMCO undertook an independent obligation to pay the debt of Defendant Kings Row. Id. at 3-4. Second, AIMCO argues that Plaintiff has again failed to state all the required elements of promissory estoppel by not indicating how enforcement of the alleged oral promise is necessary to avoid injustice. Id. at 4. Thus, AIMCO argues that Count II against it should be dismissed with prejudice.
III. Discussion A. Promissory Estoppel
Count II asserts a claim for promissory estoppel against Defendant AIMCO. This claim is based on an oral promise allegedly made by AIMCO, representing itself and Kings Row, to stay current with the billings and to pay an additional $5,313.75 per week to Plaintiff in order to cover the total amount due in arrears under the contract at that time. (Amended Compl. at ¶¶ 12, 21-25).
Section 90 of the Restatement 2d of Contracts addresses the elements of promissory estoppel:
§ 90 Promise Reasonably Inducing Action or Forbearance (1) A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires.
The court agrees with Defendant AIMCO that an agent for a disclosed principal is not liable for the principal's contract unless the agent agrees to assume independent liability. See Tucci v. CP Kelco ApS, 2002 WL 31261054, *4 (E.D.Pa. 2002) (noting that agent for disclosed principal is not party to contract and is not liable for nonperformance); CGB Occupational Therapy, Inc. v. RHA/Pennsylvania Nursing Homes, Inc., 2001 WL 1175150, *4 (E.D.Pa. 2001) (noting that it is well established in Pennsylvania that authorized agent for disclosed principal is not liable on contract between principal and third party unless agent agrees to assume such liability).
Initially, the Court found that the original Complaint failed to state that AIMCO undertook an independent obligation to pay the debt of Kings Row. Brock Co., Inc. v. Kings Row Associates, 2004 WL 2624864, *3 (E.D.Pa. 2004). The court also concluded that the email sent from Thomas Vague at Brock (Exhibit D to Amended Compl.) was insufficient to suggest such an independent obligation. In its Amended Complaint, however, Plaintiff provides a responsive e-mail from Richard Skoczylas at AIMCO acknowledging the alleged payment schedule. (Exhibit E to Amended Compl.). Thus, keeping in mind the liberal pleading requirements and viewing the Amended Complaint in a light most favorable to Plaintiff, the Amended Complaint now alleges sufficient facts to suggest that AIMCO undertook an independent obligation to pay the debt of Kings Row.
Further, in its original Complaint, Plaintiff failed to address two of the essential elements of promissory estoppel by 1) failing to allege that Defendants should have reasonably expected to induce action or forbearance, and 2) failing to indicate how enforcement of the oral promise is necessary to avoid injustice. Defendant AIMCO argues that Plaintiff still fails to allege how the promissory estoppel claim against AIMCO is necessary to prevent injustice. Although Plaintiffs' Amended Complaint is silent as to how enforcement of the alleged promise made by AIMCO is necessary to avoid injustice, Plaintiff's Brief provides some clarification.
Specifically, Plaintiff argues that even though Count I of the Complaint provides an adequate legal remedy allowing recovery of past due amounts on the contract from Defendant Kings Row, if that claim should fail, Plaintiff would be left without any recovery for providing food and services in accordance with the Agreement. Plaintiff argues that the only way to avoid this potential injustice is to allow the promissory estoppel claim to proceed against AIMCO in the alternative. In addition, Plaintiff alleges Defendant AIMCO benefitted from Plaintiff's continued services by receiving management fees from Kings Row. (Amended Compl. at ¶ 29). Presumably, allowing AIMCO to escape liability under a theory of promissory estoppel would result in further injustice because AIMCO allegedly benefitted from the continued relationship with Kings Row.
The court interprets the Amended Complaint consistent with the intent and arguments made clear in Plaintiff's brief. Thus, Plaintiff has addressed all the requisite elements of a claim under promissory estoppel and the Defendant's Motion to Dismiss Count II will be denied.
IV. Conclusion
For the foregoing reasons, Defendant AIMCO's Motion to Dismiss Count II will be denied.
An appropriate Order follows.