Lieberman v. Corporacion Experienca Unica, S.A.
| Decision Date | 27 December 2016 |
| Docket Number | CIVIL ACTION NO. 14–5102,CIVIL ACTION NO. 14–3393 |
| Citation | 226 F.Supp.3d 451 |
| Parties | Richard LIEBERMAN, Plaintiff, v. CORPORACION EXPERIENCA UNICA, S.A., et al., Defendants. Richard Kreibich, et al., Plaintiffs, v. Playa Dulce Vida, S.A., et al., Defendants. |
| Court | U.S. District Court — Eastern District of Pennsylvania |
Philip S. Rosenzweig, Kevin J. Silverang, Silverang, Donohoe, Rosenzweig & Haltzman, LLC, St. Davids, PA, for Plaintiff.
Patrick Joseph Troy, William E. Viss, Sirlin Lesser & Benson PC, Philadelphia, PA, for Defendants.
I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY...456
II. MOTION FOR JUDGMENT ON THE PLEADINGS...458
III. MOTION FOR SUMMARY JUDGMENT...460
IV. MOTION TO APPOINT RECEIVER...473
These two cases—consolidated for pretrial purposes—involve several investments in a resort located in Costa Rica. Following discovery, the parties have filed a number of motions. For the reasons that follow, the Court will: (1) deny the Motion for Judgment on the Pleadings; (2) grant in part the Motion for Summary Judgment; and (3) deny the Motion to Appoint a Receiver.
I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY
Playa Dulce Vida, S.A. ("PDV") is a corporation organized and existing under the laws of Costa Rica. David Callan Decl. ¶ 2, Kreibich ECF No. 33–1.1 PDV owns and operates the Arenas Del Mar Beachfront and Rainforest Resort ("the Resort") in Costa Rica. Id. ¶ 5.
In 2004, Plaintiff Richard Lieberman became aware of the opportunity to invest in PDV by purchasing a condo-apartment, or unit, at the Resort. Another investor, Glenn Jampol, introduced Lieberman to Gary Haynes,2 a real estate agent who served as PDV's representative for the sale of units at the Hotel. Second Am. Compl. ¶¶ 60–63, Lieberman ECF No. 19. Haynes informed Lieberman that PDV was not actually selling real estate, but instead was selling "preferred shares" of stock in PDV. These shares would vest a purchaser/shareholder with proprietary rights to "the full use and enjoyment" of a designated unit at the Resort—in other words, it was a timeshare agreement of sorts. Id. ¶¶ 67–68. Haynes also said that shareholders would earn income from their shares, because when a unit was not in use by its shareholder owner, it would be rented to the public by the Resort. Id. ¶ 69.
Thereafter, in November 2004, Lieberman bought twenty-five preferred shares, representing unit 603 ("the Lieberman Unit") at the Resort. Id. ¶¶ 65, 79–80. His purchase was memorialized by three stock certificates (collectively, "the Stock Certificates"). Id. ¶ 81. In the course of his purchase of shares, Lieberman signed a set of documents: a Reciprocal Promise of Purchase and Sale ("the PSA"), a Rental Pool Agreement ("the RPA"), the Regulations, and a Purchase/Sale Contract for Shares ("the PSCFS") (collectively, "the Contract"). See Defs.' Mot. Summ. J. Ex. D, Kreibich ECF No. 33–4.
The following year, Plaintiffs Richard Kreibich and Susan Kreibich ("the Kreibichs") also learned about the opportunity to invest in the Resort. Specifically, they were introduced to Defendant David Callan, who informed the Kreibichs that he was a licensed financial advisor, an officer of PDV, a member of the PDV Board, and a member of the PDV Executive Committee. First Am. Compl. ¶¶ 54–60, Kreibich ECF No. 9. Callan explained that purchasing preferred shares would give the Kreibichs usage rights to a particular unit, as well as income from their unit's placement in the Resort rental pool. Id. ¶¶ 62–65.
As a result, in February 2006, the Kreibichs purchased fifteen preferred shares, representing unit 501 ("the Kreibich Unit") at the Resort. Id. ¶¶ 80, 90–95. The Kreibichs, like Lieberman, signed the Contract with PDV.
In February 2011, several years after the Resort opened, the PDV board of directors issued a letter to the preferred shareholders ("the Preferred Shareholders Letter" or "the Letter"). Second Am. Compl. Ex. J, Lieberman ECF No. 19–3. The Letter explained that in order for the Resort to be a financial success, the company was undergoing an "important ownership restructuring." Id. at 1. As part of the restructuring, the company offered to preferred shareholders the option to convert their preferred shares—that is, their contractual rights to their respective units at the Resort—to common stock. Id. at 3. The Letter explained that preferred shareholders who exercised that option would "continue to receive usage rights[,] but as common shareholders." Id. The usage rights for common shareholders were set forth in the Letter, id. at 5, and, as the Letter noted, could "be modified by the Board of Directors," id. at 3. Thus, the Letter cautioned preferred shareholders that "if usage is a critical reason for ownership, then one needs to weigh the cost/benefit analysis of giving up that usage right." Id. The Kreibichs opted to convert their preferred shares into common shares. Kreibich First Am. Compl. ¶ 140. Lieberman did not. Lieberman Second Am. Compl. ¶ 128.
Neither Lieberman nor the Kreibichs have received any income distributions from their respective investments in the Resort. Id. ¶ 117; Pls.' Mem. Law Opp'n at 5, Kreibich ECF No. 35. They also contend that Defendants have, in violation of the Contract, failed to provide audited financial statements for certain fiscal years. Lieberman Second Am. Compl. ¶¶ 110–12; Kreibich First Am. Compl. ¶¶ 110–14.
Moreover, Lieberman claims that Defendants have breached the Contract by declining to accept or honor his attempts to reserve his Unit at particular times. Lieberman Second Am. Compl. ¶¶ 144–200.
Lieberman filed a Complaint against PDV, Hawk Management L.P. ("Hawk Management"), and HWC, LLC ("HWC"), on June 10, 2014.3 Lieberman ECF No. 1. He later filed a First Amended Complaint, Lieberman ECF No. 8—which added Hawk Opportunity Fund, L.P. ("HOF") as a defendant—and a Second Amended Complaint,4 Lieberman ECF No. 19, which was dismissed in part, Lieberman ECF No. 31. The following claims remain in that case: (1) alter ego liability/piercing the corporate veil; (2) breach of contract; (3) conversion; (4) tortious interference with contract; (5) private nuisance; and (6) promissory estoppel.
The Kreibichs filed a Complaint against PDV, HOF, Hawk Management, HWC, and David Callan on September 5, 2014. Kreibich ECF No. 1. They later filed a First Amended Complaint, Kreibich ECF No. 9, which was dismissed in part, Kreibich ECF No. 18. The following claims remain in that case: (1) alter ego liability/piercing the corporate veil; (2) breach of contract; (3) fraud/misrepresentation; (4) tortious interference with contract; and (5) fraud in the inducement.
The Court consolidated these two cases for pretrial purposes.5 Kreibich ECF No. 18. After discovery, several motions are now ripe for disposition: (1) a Motion to Appoint Receiver, filed by Lieberman and the Kreibichs, Lieberman ECF No. 45;6 (2) a Motion for Judgment on the Pleadings, filed by Defendants, Lieberman ECF No. 57;7 and (3) a Motion for Summary Judgment, filed by Defendants, Kreibich ECF No. 32.8
II. MOTION FOR JUDGMENT ON THE PLEADINGS
Though Defendants' motion for judgment on the pleadings was filed after their motion for summary judgment, the Court must address it first because it challenges the Court's subject matter jurisdiction.
Federal Rule of Civil Procedure 12(c) provides that, "[a]fter the pleadings are closed—but early enough not to delay trial—a party may move for judgment on the pleadings."9 Judgment on the pleadings is appropriate only if the moving party "clearly establishes that no material issue of fact remains to be resolved and that he is entitled to judgment as a matter of law." Society Hill Civic Ass'n v. Harris , 632 F.2d 1045, 1054 (3d Cir. 1980) (citation omitted). In reviewing a Rule 12(c) motion, a court "must view the facts presented in the pleadings and the inferences to be drawn therefrom in the light most favorable to the nonmoving party." Rosenau v. Unifund Corp. , 539 F.3d 218, 221 (3d Cir. 2008) (quoting Jablonski v. Pan Am. World Airways, Inc. , 863 F.2d 289, 290–91 (3d Cir. 1988) ).
In their motion for judgment on the pleadings, Defendants argue that the Court lacks subject matter jurisdiction over this case because Plaintiffs lack standing to bring it. Specifically, Defendants believe that Plaintiffs' claims are derivative, not direct, and thus that they cannot be brought in Plaintiffs' personal capacities.
In Pennsylvania, a shareholder lacks standing "to institute a direct suit for ‘a harm [that is] peculiar to the corporation and [that is] only [ ] indirectly injurious to [the] shareholder.’ " Hill v. Ofalt , 85 A.3d 540, 548 (Pa. Super. Ct. 2014) (alterations in original) (quoting Reifsnyder v. Pittsburgh Outdoor Advertising Co. , 405 Pa. 142, 173 A.2d 319, 321 (1961) ). Instead, "such a claim belongs to, and is an asset of, the corporation." Id. This type of claim—one belonging to the corporation, rather than the shareholder—is called a derivative claim.
In order to have standing to bring a direct suit—that is, to sue individually, rather than on behalf of the corporation—a shareholder "must allege a direct, personal injury—that is independent of any injury to the corporation—and the shareholder must be entitled to receive the benefit of any recovery." Id. "If the injury is one to the plaintiff as a stockholder and to him individually, and not to the corporation, it is an individual action." Fishkin v. Hi–Acres, Inc. , 462 Pa. 309, 341 A.2d 95, 98 n.4 (1975) (quoting 13 Fletcher Cyclopedia Corporations § 5911 (Perm. Ed.)).
Accordingly, a court facing the question of whether an action is direct or derivative must approach the inquiry as follows:
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