The opinion
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF PENNSYLVANIA
TANK BROS, LLC, :
Plaintiff, :
CIVIL ACTION NO, 3:26-CV-922
V. :
(JUDGE MANNION)
ACUANTIA, INC., and GRUPO :
ROTOPLAS, S.A.B. DE C.V.,
Defendants.
MEMORANDUM
Presently before the Court is Acuantia, Inc.'s (“Moving Defendant’)
motion to dismiss Counts II-IX of Tank Bros, LLC’s (‘Plaintiff’) Complaint.
(Doc. 2). For the reasons set forth below, Acuantia’s motion will be
GRANTED IN PART AND DENIED IN PART.
I. BACKGROUND!
Plaintiff commenced the underlying action by filing a Complaint in the
Court of Common Pleas of Lackawanna County, Pennsylvania, against
Moving Defendant and Grupo Rotoplas, S.A.B. de C.V. (collectively,
“Defendants”), arising from a dispute in connection with a Representative-
' Because the Court is required to accept the facts pleaded in the
Compiaint as true for purposes of this motion, the Court refers to the
Complaint for its factual background.
Distributor Agreement (the “Agreement”) dated December 8, 2022. (Doc. 1-
1 at 32). Thereafter, Defendants removed the matter to this Court pursuant
to 28 U.S.C. §1441. (Doc. 1).
The Complaint alleges that Defendant Grupo Rotoplas, S.A.B. de C.V.
(“Defendant Grupo Rotoplas”) is the parent company of Moving Defendant.
(Doc. 1-1, 8). Moving Defendant is a manufacturer and provider of plastic
tanks for various industrial and commercial applications, and operates
through multiple sales platforms with “centralized pricing, e-commerce
infrastructure, call centers, and distribution logistics[.]’ /d., 995-6.
In September of 2022, Plaintiff was formed for the purpose of operating
a Tank Depot distribution yard in northeastern Pennsylvania. /d., 715. Prior
to the execution of the Agreement, Moving Defendant provided Plaintiff with
a sales heat-map date reflecting approximately eighteen months of sales
within a proposed territory and engaged in negotiations regarding
commission, territory, and the inclusion of drop-shipped products within the
commission structure. /d., 716. In such negotiations, Moving Defendant
purportedly represented to Plaintiff that it would receive a protected territory,
guaranteed commissions on all sales therein, and a “Partner Store”
relationship. /d., 19. On December 8, 2022, Plaintiff and Moving Defendant
entered into the Agreement. /d. at 32.
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Pursuant to the Agreement, Plaintiff was appointed as a non-exclusive
representative and distributor of Moving Defendant's products, subject to a
specifically defined territory: a 500-mile diameter surrounding 701 Hudson
Avenue, Scranton, Pennsylvania 18504. /d. at 32, 36. The Agreement
guaranteed Plaintiff a 15% commission rate based on total invoiced revenue.
Id. at 33. Pursuant to the Agreement, Moving Defendant “shall not appoint
any other distributor, agent or representative to sell the [p]roducts to
customers in the [tlerritory without the express permission of [Plaintiff] and
shall not itself sell the [p]roducts to customers in the territory.” /d. at 36.
Additionally, the parties agreed that that they would not “directly, or indirectly,
interfere with, circumvent, attempt to circumvent, avoid or bypass any [plarty
from any [t]ransactions between the [p]arties’ contracts, or obviate or
interfere with the relationship of any [pJarty and its contacts for the purpose
of gaining any benefit, whether such benefit is monetary or otherwise.” /d, at
35,
According to Plaintiff, the business relationship was labeled as that of
independent contractors, but the actual course of dealing created a
franchise-like relationship—-Defendants exercised substantial control over
Plaintiff's operations including pricing, sales channels, and reporting
requirements. (Doc. 1-1, [J]30-31). Plaintiff alleges that while its location was
□□□
merely a “distribution stockyard” in the beginning, Defendants started to shift
operational burdens onto Plaintiff. /d., J]32-33. Additionally, Plaintiff alleges
that Defendants’ leadership expressly stated that it needed to “raise
profitability in the yards,” “made a bad deal with Scranton,” and that it would
be shifting burdens to Plaintiff to improve financial performance. /d., 934.
Plaintiff alleges that after commencing operations, in or about February
of 2023, Plaintiff repeatedly observed orders within its territory that did not
ship from its yard, and requested information from Defendants, who
“minimized the issue and failed to provide direct answers.” /d., ]]37-38.
Additionally, “products stocked by Plaintiff were nonetheless drop-shipped”
by Defendants directly into the Agreement territory. /d., 39. As such, Plaintiff
alleges that it has suffered substantial economic damages “including lost
commissions, lost profits, and damage to goodwill.” /d., 951. Plaintiff avers
that the Agreement remains in full force and effect. /d., 29.
Based on the foregoing, Plaintiff's Complaint alleges breach of express
contract (Count |), breach of implied covenant of good faith and fair dealing
(Count Il), unjust enrichment in the alternative to the breach of express
contract claim (Count III), tortious interference with contractual and business
relations (Count IV), fraud and fraudulent inducement (Count V), breach of
fiduciary duty (Count VI), civil conspiracy (Count VII), conversion (VIII), and
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negligence (IX). (Doc. 1-1 at 14-31). After removing the case to this Court,
on April 17, 2026, Moving Defendant filed the instant motion to dismiss. (Doc.
2). On May 1, 2026, Moving Defendant filed a brief in support of its motion.
(Doc. 3). On May 29, 2026, Plaintiff filed a brief in opposition, and on June
12, 2026, Moving Defendant filed a reply brief. (Docs. 8, 9). This matter is
now ripe for disposition.
ll. LEGAL STANDARD
The Federal Rules of Civil Procedure require that a complaint contain
“a short and plain statement of the claim showing that the pleader is entitled
to relief.” Fed.R.Civ.P. 8(a)(2). This standard “does not require detailed
factual allegations, but it demands more than an unadorned, the-defendant-
unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (internal quotations omitted). A complaint that contains only “labels
and conclusions” or a “formulaic recitation of the elements of a cause of
action” does not comply with Rule 8. /d.
A defendant may move to dismiss a complaint “for failure to state a
claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). The moving
party bears the burden of showing that no claim has been stated, and
dismissal is appropriate only if, accepting all of the facts alleged in the
complaint as true, the plaintiff has failed to plead “enough facts to state a
5.
claim to relief that is plausible on its face.” Hedges v. United States, 404 F.3d
744, 750 (3d Cir. 2005); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570
(2007) (abrogating “no set of facts” language found in Conley v. Gibson, 355
U.S. 41, 45-46 (1957)). The facts alleged must be sufficient to “raise a right
to relief above the speculative level.” Twombly, 550 U.S. at 555. This
requirement “calls for enough fact[s] to raise a reasonable expectation that
discovery will reveal evidence of’ necessary elements of the plaintiff's cause
of action. /d.
“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.” Iqba/, 556 U.S. at 678. Facial plausibility is achieved “when the
plaintiff pleads factual content that allows the Court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.” /d.
Plausibility does not require probability but “more than a sheer possibility that
a defendant has acted unlawfully.” /d. Facts “merely consistent with” liability
do not satisfy this standard. /d.
As noted above, the Court at this stage accepts the complaint's factual
allegations as true. This tenet “is inapplicable to legal conclusions.” /d.
(“Threadbare recitals of the elements of a cause of action, supported by mere
conclusory statements, do not suffice.”). “Determining whether a complaint
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states a plausible claim for relief’ is “a context-specific task that requires the
reviewing court to draw on its judicial experience and common sense.” /d. at
679.
The federal pleading standard just described requires that district
courts “conduct a two-part analysis:”
First, the factual and legal elements of a claim should be
separated. The District Court must accept all of the complaint’s
well-pleaded facts as true but may disregard any legal
conclusions. Second, a District 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 plaintiffs
entitlement to relief. A complaint has to show such an
entitlement with its facts.
Fowler v. UPMC Shadyside, 578 F.3d 203, 210-211 (3d Cir. 2009).
In considering a motion to dismiss, the Court generally relies on the
Complaint, attached exhibits, and matters of public record. See Sands v.
McCormick, 502 F.3d 263 (3d Cir. 2007). The Court may also consider
“undisputedly authentic document[s] that a defendant attaches as an exhibit
to a motion to dismiss if the plaintiff's claims are based on the [attached]
documents.” Pension Benefit Guar. Corp. v. White Consol. Indus., 998 F.2d
1192, 1196 (3d Cir. 1993). Moreover, “documents whose contents are
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alleged in the complaint and whose authenticity no party questions, but which
are not physically attached to the pleading, may be considered.” Pryor v.
Nat’! Collegiate Athletic Ass’n, 288 F.3d 548, 560 (3d Cir. 2002). However,
the Court may not rely on other parts of the record in determining a motion
to dismiss. See Jordan v. Fox, Rothschild, O’Brien & Frankel, 20 F.3d
1250,1261 (3d Cir. 1994).
lil. DISCUSSION
Moving Defendant argues that the following claims should be
dismissed from Plaintiff's Complaint: breach of implied covenant of good faith
and fair dealing (Count II), unjust enrichment in the alternative to the breach
of express contract claim (Count Ill), tortious interference with contractual
and business relations (Count IV), fraud and fraudulent inducement (Count
V), breach of fiduciary duty (Count VI), civil conspiracy (Count VII),
conversion (VIII), and negligence (IX). (Doc. 3 at 2-3). In other words, Moving
Defendant requests that this Court dismiss all but Count | of Plaintiff's
Complaint. The Court addresses each in turn.
a. Count Il: Breach of Implied Covenant of Good Faith and
Fair Dealing
§205 of the Restatement (Second) of Contracts provides: “Every
contract imposes upon each party a duty of good faith and fair dealing in its
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performance and its enforcement.” (1981). While the Pennsylvania Supreme
Court has not formally adopted §205, federal courts applying Pennsylvania
law have predicted that it would if it were presented the opportunity.
Haywood v. Univ. of Pittsburgh, 976 F.Supp.2d 606, 626 (W.D.Pa. 2013)
(internal citations omitted).
Moving Defendant argues that Pennsylvania does not recognize a
separate breach of contractual duty of good faith and fair dealing claim
because it is otherwise subsumed by a separately pled breach of contract
claim. (Doc. 3 at 5). To support its argument, Moving Defendant cites the
Haywood case. 976 F.Supp.2d at 627. In that case, an employment contract
provided the University with the ability to terminate an employee with “just
cause.” /d. The contract defined "just cause” as “determined by the
University, any conduct of Employee that is seriously prejudicial to the best
interest of the University .. .” /d. The University argued that the employee
could not prove that it violated its duty to act in good faith because the
employment contract expressly provided the University with the discretion to
determine that just cause existed to terminate him. /d. at 628.
The court noted that when a party has discretion to act under a
contract, the implied duty of good faith requires the party to “reasonably
exercise that discretion.” /d. Because the implied duty of good faith cannot
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“override the express terms of a contract[,]" the court held that the duty to act
reasonably did not conflict with the University’s right to terminate the
employee. /d. Because the duty of good faith and fair dealing was subsumed
by the University’s contractual obligations, the court subsequently granted
summary judgment in the University’s favor. /d. at 646.
Despite such an outcome,
Nothing in the case law... bars a plaintiff from bringing a
cause of action for breach of contract and a cause of action for
breach of the duty of good faith and fair dealing when those
two actions are based on separate conduct. See Clunie-
Haskins v. State Farm Fire & Cas. Co., 855 F. Supp. 2d 380,
388 (E.D. Pa. 2012) ("Here, however, the conduct forming the
basis of Plaintiffs’ breach of contract claim—the failure to
defend or indemnify—is not the same conduct as their claim
for breach of the duty of good faith and fair dealing ...
Consequently, Plaintiffs' two claims do not merge.”). Instead,
because a good faith and fair dealing claim is a breach of
contract clain, Pennsylvania law simply bars a plaintiff
from bringing both a breach of contract claim and a bad
faith claim based on the same conduct. See King of Prussia
Equip. Corp. v. Power Curbers, Inc., 158 F. Supp. 2d 463, 467
(E.D. Pa. 2001) (“Because the actions forming the basis of [the
plaintiff's] breach of contract claim and
its good faith and fair dealing claim are essentially the same,
[the plaintiff] cannot pursue both causes of action.”); Smith v.
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Allstate Ins. Co., 904 F. Supp. 2d 515, 522 (W.D. Pa.
2012) (noting that “claims for breach of the contractual duty
of good faith and fair dealing have been dismissed where
Plaintiff also asserts a claim for breach of contract and
Plaintiff's claim for breach of the duty
of good faith and fair dealing is redundant.”).
Slamon v. Carrizo (Marcellus) LLC, 3:16-CV-2187, 2017 WL 3877856 at *8,
(M.D.Pa. Sept. 5, 2017) (emphasis added).
In Slamon, a plaintiff brought a breach of contract claim, arguing that
the defendants’ breached a lease “by (i) deducting DTE's fee and post-
production costs; (ii) paying Royalties that are lower than the NYMEX spot
price and/or the local market price; (iil) paying Royalties based on different
prices for gas taken from the same well during the same month; and (iv)
paying Royalties based on an improper conversion from MMBtu to Mcf.” □□□
In contrast, the plaintiff's claim for breach of the duty of good faith and fair
dealing alleged that the defendants “acted in bad faith by accepting sale
prices under their contracts with DTE that were well below a competitive
market price.” /d. In other words, the plaintiff pleaded that even if the
defendants were entitled to pay him royalties based on the sale price of gas
to DTE, “they breached a duty, implied in the contract, to exercise their
discretion in a reasonable way by obtaining a competitive market price for
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the natural gas.” /d. The court held that this was a distinct theory of breach
and was not subsumed by the plaintiff's other breach of contract claims. /d.
Accordingly, the defendants’ motion to dismiss was denied. /d.
Here, the circumstances are quite similar to those in S/amon. Plaintiff
alleges that not only did Moving Defendant breach the express contract by
selling products to customers within Plaintiff's designated territory, but it also
breached the implied covenant of good faith and fair dealing by breaching its
“duty to exercise its contractual discretion honestly, reasonably, and in good
faith, and not to evade the spirit of the Agreement through opportunistic or
deceptive conduct.” (Doc. 1-1 at 13). The basis for the breach of the implied
covenant of good faith and fair dealing claim is distinct because it takes a
step beyond the mere breach of contract clain—it alleges affirmative, bad
faith conduct in an attempt to sabotage Plaintiff's course of business. (Doc.
1-1 at 13). Accordingly, Moving Defendant’s argument that the breach of the
implied covenant of good faith and fair dealing claim is subsumed by the
separately pled breach of contract claim fails, and the motion to dismiss
Count Il of the Complaint will be denied. Slamon, 2017 WL 3877856 at *8.
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b. Count Ill: Unjust Enrichment
Defendant next argues that Count Ill of the Complaint should be
dismissed. An action based on unjust enrichment is an equitable action
which sounds in quasi-contract, a contract implied in law. Sevast v.
Kakouras, 915 A.2d 1147, 1153 n. 7 (Pa. 2007). When a _ plaintiff
claims unjust enrichment, he is required to “show that the party against
whom recovery is sought either wrongfully secured or passively received a
benefit that would be unconscionable for the party to retain without
compensating the provider.” Bair v. Purcell, 500 F.Supp.2d 468, 499
(M.D.Pa. 2007) (quoting Hershey Foods Corp. v. Ralph Chapek, Inc., 828
F.2d 989, 999 (3d Cir. 1987)).
Under Pennsylvania law, the elements of claim
for unjust enrichment are: (1) the plaintiff conferred a benefit upon the
defendant; (2) an appreciation of such benefits by the defendant; and (3) the
defendant accepted and retained such benefit under circumstances where it
would be inequitable for the defendant to retain the benefit without payment
of value. Allegheny Gen. Hosp. v. Philip Morris, Inc., 228 F.3d 429, 447 (3d
Cir. 2000). Here, Moving Defendant argues that Plaintiffs unjust enrichment
claim should be dismissed because it is barred by Plaintiff's breach of
contract claim (Doc. 3 at 6).
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As a general matter, “Federal Rule of Civil Procedure 8(d) expressly
permits pleading in the alternative; therefore, the fact that [Plaintiff] has
pleaded the existence of a contract is not a basis for dismissing, on a Rule
12(b)(6) motion, an unjust enrichment claim.” Grasso Foods, Inc. v. Wynn
Env't Sales Co., No. CV 17-6430 (RMB/AMD), 2018 WL 3455479, at *4
(D.N.J. July 18, 2018). Under Pennsylvania law, however, “a plaintiff may not
recover under a theory of unjust enrichment if the parties’ relationship is
governed by a written contract, though they may plead this claim in the
alternative when there is a dispute about the existence or validity of a
contract.” Buccigrossi v. Thomas Jefferson Univ., No. 21-CV-0221-JMY,
2022 WL 1093127, at *4 (E.D.Pa. Apr. 12, 2022).
In Innospec Fuel Specialties, LLC v. lsochem N. Am., LLC, the court
held that when the “defendant has not yet answered the Complaint,” he or
she “has not yet admitted to the existence and enforceability of the contract.”
No. CV 10-1642 (AET), 2010 WL 11570284, at *4 (D.N.J. Aug. 23, 2010).
When the existence and enforceability of a contract are not yet confirmed by
the moving party, “the Court will not assume, upon a motion to dismiss, that
the contract will be found to be valid and enforceable.” /d. at *4. “By allowing
parties to plead inconsistent theories of recovery, [Federal Rule of Civil
Procedure 8(d)] safeguards the pleader from foregoing potentially
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meritorious claims while he or she is still ‘legitimately uncertain as to the
relevant facts.” Kindred Hosps. E., LLC v. Keystone Fam. Health Plan, No.
CV 25-1563, 2026 WL 370946, at *4 (E.D.Pa. Feb. 10, 2026) (internal
citations omitted).
In Lomma v. Ohio Nat'l Life Assurance Corp., the Middle District of
Pennsylvania granted a motion to dismiss an unjust enrichment claim. 283
F.Supp.3d 240, 265 (M.D.Pa. 2017). In that case, the Honorable Robert D.
Mariani reasoned:
Plaintiffs’ Complaint alleges the existence of an express
written contract between Ms. Lomma and the Defendants,
[who] do not deny that the Replacement Policy is a valid,
written, enforceable contract. Because it is undisputed that the
relationship between the parties is governed by an express
written contract, Plaintiffs’ claims for unjust enrichment .. .
must necessarily fail.
id. (internal citations and quotation marks omitted).
Here, it appears that Moving Defendant does “not deny that the
[Agreement] is a valid, written, enforceable contract.” Lomma, 283
F Supp.3d at 265. Recognizing that a valid and enforceable written contract
exists between Plaintiff and Moving Defendant, the Court agrees with Moving
Defendant that an unjust enrichment action cannot proceed against Moving
Defendant in the face of a fully-executed, express contract between itself
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and Plaintiff. See Rahemtulla v. Hassam, 539 F.Supp.2d 755, 781 (M.D.Pa.
2008),
However, the existence and validity of the contract has not been
acknowledged, and therefore left undisputed, by Defendant Grupo Rotoplas.
(Doc. 1-1 at 3). Accordingly, because Plaintiff is not in contractual privity with
Defendant Grupo Rotoplas, Plaintiff's claim for unjust enrichment may
proceed against it. See Rahemtulla, 539 F.Supp.3d at 781 (citing Baker v.
Family Credit Counseling Corp.,440 F.Supp.2d 392, 420 (E.D.Pa.
2006) (allowing claims for unjust enrichment to proceed against defendants
who were not parties to the original contract)).
Therefore, Moving Defendant's motion to dismiss Count III of the
Complaint will be granted to the extent it applies to Moving Defendant and
denied to the extent it applies to Defendant Grupo Rotoplas.
c. Gist of the Action Doctrine: Counts IV through IX
Moving Defendant alleges that Plaintiff's tort claims, Counts IV through
IX, should be dismissed based upon the “gist of the action” doctrine. (Doc. 3
at 7-8).? The gist of the action doctrine precludes recovery in tort where (1)
* Moving Defendant also argues in a footnote that Counts IV through
IX are barred by the “economic loss doctrine.” (Doc. 3 at 7). The economic
loss doctrine bars “plaintiffs from recovering in tort economic losses to which
(footnote continued on next page)
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liability arises solely from the contractual relationship between the parties;
(2) the alleged duties breached were grounded in the contract itself; (3) any
liability stems from the contract; and (4) when the tort claim essentially
duplicates the breach of contract claim or where the success of the tort claim
depends upon the success of the breach of contract claim. Sarsfield v.
Citimortgage, Inc., 717 F.Supp.2d 546, 553 (M.D.Pa. 2010) (internal citations
omitted).
Pennsylvania courts distinguish between claims arising from duties
imposed by contract and those arising from broader social policies embodied
in tort duties. Reardon v. Allegheny Coll., 926 A.2d 477, 486 (Pa.Super.
2007). Indeed, the Pennsylvania Superior Court has stated:
Pennsylvania courts must review each claim individually to
determine whether the plaintiff has alleged or offered sufficient
proof (depending on the stage of the proceedings) that the
defendant breached the particular duty (tort or contractual)
their entitlement flows only from a contract.” Debbs v. Chrysler Corp., 810
A.2d 137, 164 n. 32 (Pa.Super. 2002) (emphasis added). However, the
doctrine does not appiy when a defendant breaches a duty imposed by law
independent of any contractual obligations. Dittman v. UPMC, 196 A.3d
1036, 1054 (Pa. 2018). Because Plaintiff alleges tortious conduct beyond the
breach in obligations set forth in the Agreement, Moving Defendant's
economic loss doctrine argument fails.
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for each particular claim. lf so, the claim proceeds to trial.
Courts should keep in mind that there are instances when a
single gist of the action (one unlawful act) breaches both a
general duty of care, as well as an expressed or implied
contractual duty. While double recovery for the same unlawful
act is generally prohibited, multiple claims can proceed to trial,
if timely filed.
Swatt v. Nottingham Village, 342 A.3d 23, 58 (Pa.Super. 2025) (emphasis in
the original) (citing Bruno v. Erie Ins. Co., 630 Pa. 79, 116 (Pa. 2014) (holding
that because the “allegations of negligence facially concernfed] [a
defendant's] alleged breach of a general social duty, not a breach of any duty
created by the insurance policy itself,” the negligence claim was not barred
by the gist of the action doctrine).
This Court's inquiry therefore turns on whether Plaintiff has pleaded
sufficient facts to plausibly support that each claim arises out of conduct
which breached a tort duty beyond those outlined in the Agreement. Swatt,
342 A.3d at 58; see also Vantage Learning, 246 F.Supp.3d at 1101. We
address each tort claim in turn—first on the gist of the action doctrine, and
when applicable, on the merits.
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i. Count IV: Tortious Interference with Contractual
and Business Relations
Moving Defendant first claims that Count IV is barred by the gist of the
action doctrine. As Moving Defendant correctly notes, “[a] tortious
interference with contract claim is barred by the gist of the action doctrine if
it is not independent of a contract claim that is pled along with it.” ((Doc. 3 at
8-9) (quoting DePuy Synthes Sales, Inc. v. Globus Med., Inc., 259 F.Supp.3d
225. 243 (E.D.Pa. 2017)). However, Moving Defendant states nothing more
about how the gist of the action doctrine should be applied to this particular
claim, nor does it argue that Plaintiff's claim is not independent of a contract
claim pleaded along with it. We cannot grant Moving Defendant's motion to
dismiss Count IV on these grounds. Accordingly, the Court turns to Moving
Defendant's argument that Count IV fails on the merits.
The Restatement (Second) of Torts §766 states:
One who intentionally and improperly interferes with the
performance of acontract (except acontractto marry)
between another and a third person by inducing or otherwise
causing the third person not to perform the contract, is subject
to liability to the other for the pecuniary loss resulting to the
other from the failure of the third person to perform
the contract.
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(1979) (emphasis added). The Pennsylvania Supreme Court has adopted
the Second Restatement. PennEnergy Resources, LLC v. Winfield
Resources, LLC, 301 A.3d 439, 459 (Pa.Super. 2023) (citing Ad/er, et al.,
393 A.2d 1175 (Pa. 1978)).
"[T]o state a claim for tortious interference with contract, a plaintiff must
first allege there was an existing contract in place.” Wurth Baer Supply Co.
v. Strouse, 627 F.Supp.3d 422, 434 (M.D.Pa. 2022). A tortious interference
with contract claim will only lie where a defendant has interfered with a
plaintiffs contract with a third party. Labalockie v. Capital Area Intermediate
Unit, 926 F.Supp. 503, 509 (M.D.Pa. 1996) (citing Daniel Adams Associates
v. Rimbach Publishing, Inc., 519 A.2d 997, 1000-01 (Pa.Super. 1987))
(emphasis in original); see also Motise v. Parrish, 297 Fed.Appx. 149, 152
(3d Cir. 2008) (“[A] party to the contract, may not tortiously interfere with
the contract.”). “Thus, a corporation's agents or employees generally cannot,
as a matter of law, tortiously interfere with the corporation's own contracts.”
Whaumbush v. Cty. of Philadelphia, 747 F.Supp.2d 505, 513 (E.D.Pa. 2010)
(citing Labalockie, 926 F.Supp. at 509).
Here, the question becomes whether Plaintiff has pleaded sufficient
facts to show that Defendants tortiously interfered with a contract between
Plaintiff and a third party. Moving Defendant argues that Plaintiff failed to
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allege that it had any specific contract with a third party, therefore, Count IV
should be dismissed. (Doc. 3 at 11). However, the Complaint states:
Plaintiff had existing contractual and prospective business
relationships with customers and leads within the [t]erritory,
including customers generated through Plaintiff's marketing,
sales efforts, and local presence .. . Defendants knew of these
contractual and business relationships and Knew that such
relationships were central to Plaintiff's role under the
Agreement . . . Despite this knowledge, Defendants
intentionally and improperly interfered with Plaintiff's
contractual and business relationships, including but not
limited to . . . [dJirectly selling and drop-shipping products to
customers in the [tlerritory in violation of Plaintiff's exclusive
commission rights[.]
(Doc. 1-7 at 19) (emphasis added). A plain reading of the Complaint indicates
that Plaintiff sufficiently pieaded the existence of third-party contracts with
which Moving Defendant allegedly interfered. However, to the extent Moving
Defendant argues that the Complaint is imprecise in that it did not enumerate
each individual contract, the argument will be rejected. See Devon Robotics
v. Deviedma, 09-CV-3552, 2009 WL 4362822 at *7 (E.D.Pa. Nov. 30, 2009)
(“[The plaintiff] has pled that it had several validation contracts with different
hospitals, that [the defendant] purposefully interfered with those contracts for
his own benefit, without justification, and that as a result, [the plaintiff] lost
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substantial amounts of business. These pleadings are sufficient to establish
a claim for tortious interference with existing contractual relations.”).
Accordingly, Moving Defendant's motion to dismiss Count IV of the
Complaint will be denied.
li. Count V: Fraud and Fraudulent Inducement
Moving Defendant next claims that Count V is barred by the gist of the
action doctrine. Specifically, it argues that any representations it made to
Plaintiff prior to the Agreement were subsequently added to the Agreement
in writing. (Doc. 3 at 9). Accordingly, Moving Defendant argues that Plaintiff
cannot premise a fraudulent inducement claim on a_ purported
misrepresentation when it was nonetheless incorporated into the Agreement.
Id.
“Pennsylvania state and federal courts have reached different
conclusions about whether the gist of the action doctrine applies to fraudulent
inducement claims.” Downs v. Andrews, 639 Fed.Appx. 816, 820 (3d Cir.
2016). Numerous district courts have recognized that “fraud in the
inducement of a contract would not necessarily be covered by the gist of the
action doctrine because fraud to induce a person to enter into a contract is
generally collateral to (i.e., not ‘interwoven’ with) the terms of the contract
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itself.” Air Products and Chemicals, Inc. v. Eaton Metal Products Co., 256
F.Supp.2d 329, 341 (E.D.Pa. 2003).
However, recognizing that Pennsylvania is without a bright line rule,
some courts have held that fraudulent inducement claims based on duties
that parties identified in the contract are barred by the gist of the action
doctrine. See Vives v. Rodriguez,849 F.Supp.2d. 507, 518-20
(E.D.Pa.2012) (holding that a fraudulent inducement claim is barred by the
gist of the action doctrine), Wen v. Willis, 117 F.Supp.3d. 673, 681
(E.D.Pa.2015) (“[W]here the precontractual statements that are the basis for
the fraudulent inducement claim concern specific duties that the parties later
outlined in the alleged contract,” the claim may be dismissed under the gist
of the action doctrine) (quoting integrated Waste Sol'ns, Inc. v.
Goverdhanam, No. 10-2155, 2010 WL 4910176, at *11 (E.D.Pa. Nov. 30,
2010)).
In First United Bank & Trust v. PNC Financial Services Group, Inc., the
Middle District of Pennsylvania applied the gist of the action doctrine to pre-
agreement misrepresentations. 667 F.Supp.2d 443, 450 (M.D.Pa. 2009).
Finding that the representations and duties detailed in the agreement
concerned the same facts and circumstances that the plaintiff alleged were
misrepresented to induce it to enter the agreement in the first instance, the
~23-
court held that the gist of the action doctrine barred allegations of fraudulent
inducement. /d.
However, in another case which is relevant and distinguishable here,
the Superior Court of Pennsylvania declined to extend the gist of the action
doctrine when a plaintiff alleged that a defendant “fraudulently and/or
negligently agreed to perform obligations that it never intended to perform
in order to induce [the plaintiff] to agree to the proposed changes to his
compensation package and to forgo an immediate resignation.” Sullivan v.
Chartwell inv. Partners, LP, 873 A.2d 710, 719 (Pa.Super. 2005) (emphasis
added). The court concluded that “since [the plaintiff's] tort claims relate[d]
to the inducement to contract, they [were] collateral to the performance of
the contracts and therefore, are not barred by the gist-of-the action doctrine.”
Id.
Here, the circumstances are similar to those in Sullivan. Plaintiff
alleges that:
In or about September through December 2022, and prior to
the execution of the Agreement, Defendants, through their
officers, executives, sales representatives, and agents, made
material representations of fact to Plaintiff concerning the
nature of the parties’ relationship and Plaintiff's rights under
the proposed Agreement .. . Specifically, Defendants
represented, inter alia, that:
-24-
a) Plaintiff would be guaranteed a protected [tJerritory in
which Defendants would not sell products directly to
customers;
b) Plaintiff would receive a guaranteed commission of
fifteen percent (15%) on all sales within the [tlerritory,
regardless of fulfillment method;
c) Plaintiff would operate as a “Partner Store” and
authorized distributor, akin to a franchise-style
relationship;
d) Defendants would not circumvent Plaintiff by drop-
shipping products directly into the [tlerritory or diverting
gales channels; and
e) Plaintiff's investment in facilities, staffing, and local
market development would be supported and protected
by Defendants.
. .. Upon information and belief, Defendants intended, at the
time of contracting, to continue selling and drop-shipping
products directly into Plaintiff's [t]erritory because such sales
were more profitable for Defendants and aligned with
Defendant’s internal financial objections and parent-company
profitability mandates ... Defendants further intended to retain
centralized control over sales channels, call routing, e-
commerce systems, and transactional data in order to
circumvent Plaintiff's commission rights while maintaining the
appearance that the Agreement remained in force .. .
Defendants made the foregoing representations with the intent
to induce Plaintiff to enter into the Agreement and to invest
~25-
substantial capital, labor, facilities, inventory, and goodwill into
Defendants’ distribution network . . . Plaintiff justifiably relied
on Defendants’ representations in executing the Agreement.
(Doc. 1-1 at 21-22).
Plaintiff alleges that Moving Defendant “fraudulently .. . agreed to
perform obligations that it never intended to perform in order to induce
[Plaintiff] to” execute the Agreement. Sullivan, 873 A.2d at 719. On that
basis, Plaintiff's claim of fraudulent inducement may proceed. Accordingly,
Moving Defendant’s motion to dismiss Count V of the Complaint will be
denied.
iii. Count Vi: Breach of Fiduciary Duty
Moving Defendant next argues that Count VI is barred by the gist of
the action doctrine. “To allege a breach of fiduciary duty, a plaintiff must
establish that a fiduciary or confidential relationship existed between her and
the defendants.” Slamon, 2017 WL 3877856, at *10 (quoting Baker v. Family
Credit Counseling Corp., 440 F. Supp. 2d 392, 414 (E.D. Pa. 2006)),
Additionally:
Although no precise formula has been devised to ascertain the
existence of a confidential relationship, it has been said that
such a relationship is not confined to a particular association
of parties but exists whenever one occupies toward another
- 26 -
such a position of advisor or counselor as reasonably to inspire
confidence that he will act in good faith for the other's interest.
Slamon, 2017 WL 3877856, at *10 (quoting Silver v. Silver, 219 A.2d 659,
662 (Pa. 1966)). Moving Defendant aptly notes that “[a] breach of fiduciary
duty claim is barred by the gist of the action doctrine if the fiduciary duty
alleged is grounded in contractual obligations.” (Doc. 3 at 9) (quoting DePuy,
259 F.Supp.3d at 234).
As explained by the Pennsylvania Supreme Court:
lf the facts of a particular claim establish that the duty breached
is one created by the parties by the terms of their contract—
i.e[.], a specific promise to do something that [a] party would
not ordinarily have been obligated to do but for the existence
of the contract—then the claim is to be viewed as one for
breach of contract[... ] If, however, the facts establish that
the claim involves the violation of a broader social duty owed
to all individuals, which is imposed by law of torts and, hence,
exists regardless of the contract, then it must be regarded as
a tort.
DePuy, 259 F.Supp.3d at 234 (quoting Bruno, 106 A.3d at 68). "First, .. .
claims for breach of fiduciary duty are not barred if the fiduciary duty at issue
goes ‘beyond the particular obligations contained in’ the parties’ contract.”
DePuy, 259 F.Supp.3d at 234-35 (internal citations omitted). “Second, .. .
-27 -
breach of fiduciary duty claims are barred by the gist of the action doctrine if
there are ‘no allegations of breach of fiduciary duty or duty of loyalty that
transcend or exist outside of’ the parties’ contractual agreements.” /d.
The Court must determine whether Plaintiff's breach of fiduciary duty
claims are based on duties existing outside those established by the
contract. The Complaint alleges:
Defendants breached their fiduciary duties by engaging in seif-
interested and disioyal conduct, including knowingly diverting
sales within Plaintiff's [tlerritory to Defendants’ internal sales
channels, drop-shipping products directly into the [tlerritory to
avoid paying commissions, concealing the true volume of
sales occurring within the ([tlerritory, and _ retaining
commissions and revenues rightfully owed to Plaintiff...
Defendants further breached their fiduciary duties by
withholding material information, restricting Plaintiff's access
to sales and fulfillment data, and failing to provide a full and
accurate accounting, thereby preventing Plaintiff from
protecting its interests and enforcing its rights .. . Defendants
acted to advance their own financial interests and profitability,
including parent-company objectives, at Plaintiff's expense,
while continuing to hold Plaintiff out as an authorized partner
store and benefitting from Plaintiff's investments in facilities,
staffing, and market development.
- 28 -
(Doc. 1-1 at 25). The breach of fiduciary duty claims enumerated in the
Complaint mirror, in almost identical fashion, the obligations of the
Agreement which forms the basis of the breach of contract claim.
Specifically, the Agreement states that the parties shall not “directly or
indirectly, interfere with, circumvent, attempt to circumvent, avoid or bypass
any [plarty from any [t]ransactions between the parties’ contacts, or obviate
or interfere with the relationship of any [p]arty and its contacts for the purpose
of gaining any benefit, whether such benefit is monetary or otherwise.” (Doc.
1-1 at 35). The allegations stated in the Complaint are, in one form or
another, alleged breaches of this term of the Agreement.
The Complaint does not identify any obligation not contemplated by
the Agreement. Accordingly, “the fiduciary duties in question are inextricably
intertwined with, and not collateral to, the employment agreements in
question.” DePuy, 259 F.Supp.3d at 236-37 (citing Brown & Brown, Inc. v.
Cola, 745 F.Supp.2d 588 (E.D.Pa. 2010). Accepting Plaintiff's facts to
support Count VI of the Complaint as true, the Court finds that the breach of
fiduciary duty claim is legally barred by the gist of the action doctrine. Fowler
v. UPMC Shadyside, 578 F.3d 203, 210-211 (3d Cir. 2009). “As the breach
of fiduciary duty claim is not legally viable, it must be dismissed from the
- 29 -
case.” DePuy, 259 F.Supp.3d at 238. Moving Defendant’s motion to dismiss
Count VI will therefore be granted.
iv. Count VII: Civil Conspiracy
Moving Defendant next argues that Count Vil of the Complaint should
be dismissed because all of Plaintiffs other tort claims are barred by the gist
of the action doctrine, so the civil conspiracy claim cannot stand. (Doc. 3 at
10). However, the Court has already determined that the gist of the action
doctrine does not bar a// of Plaintiffs other tort claims. Therefore, this
argument fails.
In the alternative, Moving Defendant argues that the civil conspiracy
claim should be dismissed because “[a] single entity cannot conspire with
itself and, similarly, agents of a single entity cannot conspire among
themselves.” (Doc. 3 at 13) (quoting Grose v. Procter & Gamble Paper
Prods., 866 A.2d 437,441 (Pa.Super. 2005) (internal quotations omitted)).
Here, the Complaint alleges that “Defendants, [Moving Defendant] and
[Defendant] Grupo Rotoplas .. . acted in concert and entered into an
agreement and common pian to wrongfully deprive Plaintiff of commissions
and economic benefits arising from sales within Plaintiff's designated
[tlerritory.” (Doc. 1-1 at 26). Moving Defendant is a Florida corporation
operating individually and as, inter alia, The Tank Depot/Tank Depot, Plastic-
- 30 -
Mart.com, and PiasticWaterTanks.com. /d. at 7. Defendant Grupo Rotoplas
is a foreign corporation headquartered in Mexico City, Mexico, and is the
parent company and conirolling entity of Moving Defendant. /d. at 8.
The issue is whether a parent company and subsidiary can conspire
with each other for purposes of establishing a civil conspiracy claim. Plaintiff
argues that “the fact that [Defendant] Grupo Rotoplas . . . may be a parent,
affiliate, or related corporate entity of Moving Defendant does not, at this
preliminary stage, render the entities legally incapable of conspiring with one
another as a matter of law[.]” (Doc. 8 at 23). However, this is not so. “it is
well-settled that a corporation cannot conspire with its subsidiaries, its
agents or its employees[.]” Siege/ Transfer, Inc. v. Carrier Exp., Inc., 856
F.Supp, 990, 1009 (E.D.Pa. 1994). “It is, of course, counterintuitive to accept
the proposition that a parent corporation can conspire with its subsidiary.
Thus, the Supreme Court has held in its antitrust jurisprudence that a parent
and subsidiary are incapable of conspiring.” Michael v. Shiley, Inc., 93-CiV-
1729, 1994 WL 59349 at *15 (citing Copperweld Corp. v. independence
Tube Corp., 467 U.S. 752, 104 S.Ct. 2731 (1984)).
Accordingly, because the relationship between Moving Defendant and
Defendant Grupo Rotoplas are that of subsidiary and parent-company, the
entities are incapable of conspiring with one another, Sfege/, 856 F.Supp. at
□
1009. Given that Plaintiff's allegation constitutes a legal impossibility, it must
be dismissed—Moving Defendant's motion to dismiss Count VII of the
Complaint will be granted.
v. Count VIll: Conversion
Moving Defendant next alleges that the gist of the action doctrine
preciudes Plaintiff's recovery under a conversion claim. (Doc. 3 at 8). Under
Pennsylvania law, conversion is defined as “the deprivation of another's right
of property in, or use or possession of a chattel, or other interference
therewith, without the owner's consent and without lawful justification.”
Rahemtulla, 539 F.Supp.2d at 777 (quoting Universal Premium Acceptance
Corp. v. York Bank & Trust Co., 69 F.3d 695, 704 (3d Cir.1995)); McKeeman
v. Corestates Bank, N.A., 751 A.2d 655, 659 n. 3 (Pa.Super, 2000). Money
may be the subject of conversion, however the rights to the money must
have originally belonged to the plaintiff. WcKeeman, 751 A.2d at 659;
Pittsburgh Const. Co. v. Griffith, 834 A.2d 572, 581 (Pa.Super. 2003).
Courts have applied the gist of the action doctrine to conversion claims
when entitlement to the chattel is predicated solely by an agreement between
the parties. See, e.g., Murphy v. Mid East Oil Co., 2007 WL 527715, at *5-6
(W.D.Pa. Feb. 14, 2007) (dismissing conversion claim because it was
dependent on the defendant's noncompliance with the terms of the
~ 32 -
agreements); Montgomery v. Fed. Ins. Co., 836 F.Supp. 292, 301-02
(E.D.Pa. 1993) (dismissing conversion claim because of, infer alia, the
“firmly accepted ... doctrine that an action for conversion will not lie where
damages asserted are essentially damages for breach of contract’);
Pittsburgh Const. Co. v. Griffith, 834 A.2d 572, 584 (Pa. Super. 2003) (stating
that where success of the conversion claim “depend[s] entirely on the
obligations as defined by the contract,” the “gist of the action” doctrine
applies).
Here, the Complaint bases its conversion claim entirely on Plaintiff's
property interests established by the Agreement:
At all relevant times, Plaintiff possessed a present, immediate,
and vested property interest in commissions earned on sales
of Defendants’ products occurring within Plaintiff's designated
[t]territory, including commissions calculated as a_ fixed
percentage of invoiced revenue .. . These earned
commissions constituted specific, identifiable funds that were
capable of being calculated, segregated, and paid, and were
not merely an abstract expectancy or unliquidated contractual
claim.
(Doc. 1-1 at 28). In this case, the gist of Piaintiff's conversion claim lies in
contract, not tort, because it arises out of Moving Defendant's alleged
nonperformance of contractual obligations set forth in the Agreement.
. 33 -
Because any rights Plaintiff might have to commissions are defined by the
terms of the Agreement by a fixed percentage, it cannot sue in tort for
conversion of that money. Accordingly, Moving Defendant's motion to
dismiss Count Vill will be granted.
vi. Count IX: Negligence
Moving Defendant finally alleges that the gist of the action doctrine
precludes recovery under a negligence claim because “[Plaintiff's] . □ .
negligence claim[ is] . . . premised on the same core set of alleged
contractual conduct (/.e., the purported diversion of sales opportunities within
the [tlerritory to Defendants’ internal sales team).” (Doc. 3 at 8). To support
its proposition, Moving Defendant cites to Vantage Learning (USA), LLC v.
Edgenuity, Inc., in which the Eastern District of Pennsylvania held that the
“[pllaintiffis claim [was] based entirely on the terms of the Agreement
because it [was] predicated upon the performance of contractual duties
imposed by the parties’ ‘mutual consensus’ rather than by ‘the breach of
duties imposed as a matter of social policy.” 246 F.Supp.3d 1097, 1101
(E.D.Pa. 2017). “Because [the plaintiff did] not allege the breach of a public
duty arising under tort law, [the pllaintiff's negligence claim is barred under
the gist of the action doctrine.” /d.
- 34 -
Here, the Complaint states that:
By undertaking to design, implement, and operate [sales, call-
routing, e-commerce, etc.,] in a manner that directly affected
Plaintiff's ability to earn commissions and operate its business,
Defendants owed Plaintiff a duty to exercise reasonable care
in the administration, maintenance, and oversight of those
systems... Defendants further owed Plaintiff a duty to act with
reasonable care in providing accurate sales information,
properly routing customer inquiries, and ensuring that sales
within Plaintiff's [tlerritory were not negligently misdirected,
misclassified, or omitted from commission calculations .. .
Defendants breached their duties of care by, inter alia,
negligently misrouting customer calls and web inquiries away
from Plaintiff, negligently failing to ensure that orders within the
[tlerritory were properly attributed and recorded, negligently
administering drop-shipment practices without safeguards to
protect Plaintiff's commission rights, and negligently restricting
Plaintiffs access to sales data necessary to identify and
correct errors.
(Doc. 1-1 at 30). Plaintiff iater alleges that “Defendants’ negligence was
independent of and collateral to Defendants’ contractual obligations and
arose from Defendants’ voluntary assumption of control over operational
systems and information uniquely within Defendants’ possession.” /d.
However, a plain reading of the Complaint indicates Moving Defendant's
- 35 -
duties arise solely from the parties’ Agreement and would not exist outside
that contractual relationship. What is more, in its opposition to Moving
Defendant's motion, Plaintiff fails to identify any case law to support its
contention that Moving Defendant had a duty, beyond that imposed by the
Agreement to provide commissions, disclose sales information, and route
customer opportunities through Plaintiff.
Accordingly, because “Plaintiff does not allege the breach of a public
duty arising under tort law, Plaintiffs negligence claim is barred under the
gist of the action doctrine.” Vantage Learning, 246 F.Supp.3d 1097, 1101
(E.D.Pa, 2017) (emphasis added). The Court notes that Defendant Grupo
Rotoplas was not a party of the Agreement. Thus, Moving Defendant's
motion to dismiss Count IX will be granted to the extent it applies to Moving
Defendant, and denied to the extent it applies to Defendant Grupo Rotoplas.
IV. CONCLUSION
Accepting all of the facts alleged in the Complaint as true, Plaintiff failed
to plead “enough facts to state a claim to relief that is plausible” with respect
to certain Counts. Hedges, 404 F.3d at 750; Twombly, 550 U.S. at 570. For
- 36 -
the reasons set forth herein, Moving Defendant’s motion to dismiss (Doc. 2),
will be GRANTED IN PART AND DENIED IN PART.
The motion will be GRANTED for Counts VI, VII, and VIII of the
Complaint, and DENIED for Counts Il, IV, and V of the Complaint. For Counts
Ill and IX of the Complaint, the motion will be GRANTED to the extent it
applies to Moving Defendant and DENIED to the extent it applies to
Defendant Grupo Rotoplas. An appropriate order will be issued.
Lil E. MANNION
United States District Judge
fel”
DATE:
26-922-01