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American Rubber & Metal Hose Co., Inc. & Vito Polera v. Strahman Valves

July 22, 2011


The opinion of the court was delivered by: Cooper, District Judge



Plaintiffs, Vito Polera ("Polera") and American Rubber & Metal Hose, Co., Inc. ("American") (collectively "Plaintiffs") brought this action against the Defendants, Strahman Valves, Inc. ("Strahman") and August F. Percoco (improperly pled as "Augie Percoco") ("Percoco") (collectively "Defendants"), alleging claims for: (1) breach of contract, (2) breach of fiduciary duty (only against Percoco), (3) conversion, (4) breach of implied covenant of good faith and fair dealing, (5) economic duress, (6) unjust enrichment, and (7) attorneys' fees. (Dkt. entry no. 1, Rmv. Notice, Ex. A, Compl.) Defendants removed to this Court and now move to dismiss claim two, claim three, claim five, claim six, and claim seven in their entirety, and claim one and claim four insofar as they are asserted against Percoco, pursuant to Federal Rule of Civil Procedure ("Rule") 12(b)(6). (Dkt. entry no. 5, Mot. to Dismiss.) The Court determines the Motion without oral argument. Fed.R.Civ.P. 78(b). The Court will grant the Motion in part and deny the Motion in part.


Polera was previously the owner, or sole shareholder, of American. (Compl. at ¶ 6; dkt. entry no. 5, Maloney Aff., Ex. B, Purchase Agreement at 1.) On November 1, 2004, the parties entered into two agreements: (1) "Agreement for Sale and Purchase of Assets" ("Purchase Agreement") and (2) "Employment Agreement" (collectively, "Agreements"). (Purchase Agreement; Compl. at 21, Employment Agreement.) The first was signed by Polera, as both an individual and as the President of American, and by Percoco as the President of Strahman. (Purchase Agreement at 12.) The second was signed by Polera as an individual and by Percoco as the President of Strahman. (Employment Agreement at 7.)

The Purchase Agreement notes that American is "in the business of selling and distributing certain metal and rubber hoses, coupling and clamps." (Purchase Agreement at 1.) It purports to sell to Strahman "certain of the tangible and intangible assets of [American] used in the operation of [American's] Business," and also notes the mutual desire of the parties to have Polera work at Strahman as a sales person, "subject to the terms and conditions set forth in the Employment Agreement." (Id.) The "Purchase Price" in the Purchase Agreement appears to consist of three parts: (1) an initial payment for "machinery identified on Schedule 1.1.1." and "other Acquired Assets," (2) a second payment for the value of American's "Inventory," upon a reconciliation of same, and (3) "contingent annual payments as set forth in the Employment Agreement." (Id. at 4.)

The Employment Agreement, in turn, provides a formula for calculating Polera's compensation, which appears to be a combination of a set base salary and a profit-sharing component whereby Polera would receive a certain amount for exceeding certain sales targets. (See Employment Agreement at 2-3.) This section refers to the assets purchased by Strahman as the "Hose Division" and notes that "the Payments shall be due notwithstanding the fact [Polera's] employment is terminated for any reason . . . as the Payments do not represent additional compensation for services performed hereunder, instead the Payments represent a portion of the Purchase Price (as defined in the Purchase Agreement) paid by [Strahman] in connection with its purchase of the Hose Division." (Id. at 3.)

According to the Complaint and documents attached therein, Polera received two payments from Strahman, totaling $167,000, and began working as an employee there pursuant to the Employment Agreement. (Compl. at 18-19, Checks; id. at ¶ 11.) Polera alleges that he performed as required under the Employment Agreement, but that Strahman and Percoco "failed to honor the terms of the agreements and provide support for the sales, purchasing, assembly, and marketing" of American's products. (Id. at ¶¶ 12, 17.) As a result, Polera asserts, he resigned from Strahman in September 2007. (Id. at ¶ 19.)


I. Legal Standard for Motion to Dismiss

A motion under Rule 12(b)(6) tests the legal sufficiency of a complaint, and the Court must "accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine, whether under any reasonable reading of the complaint, the plaintiff may be entitled to relief." Phillips v. Cnty. of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008). At this stage, a "complaint must contain sufficient factual matter, accepted as true to 'state a claim to relief that is plausible on its face.' A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007)). "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged--but it has not 'show[n]'--that the 'pleader is entitled to relief.'" Id. at 1950. In evaluating a Rule 12(b)(6) motion to dismiss for failure to state a claim, the Court may consider the Complaint, exhibits attached thereto, matters of public record, and undisputedly authentic documents if the plaintiff's claims are based upon those documents. See Pension Benefit Guar. Corp. v. White Consol. Indus., 998 F.2d 1192, 1196 (3d Cir. 1993).

II. Legal Standard Applied Here

A. Breach of contract and implied covenant of good faith and fair dealing (claims one and four)

The Complaint alleges in claim one that the Defendants "did not honor," and "fail[ed] to perform their duties" pursuant to, the "express terms of the written agreements," which caused Plaintiffs to suffer damages. (Compl. at ¶¶ 21-22.) It further alleges in claim four that Defendants' conduct constituted breach of the implied covenant of good faith and fair dealing. (Id. at ¶ 33.) Defendants contend that claim one and claim four should be dismissed insofar as they are asserted against Percoco because he was not a party to the Agreements, but merely signed on behalf of Strahman. (Dkt. entry no. 5, Def. Br. at 8-9.) Plaintiffs concede that only parties to a contract can commit these breaches, but ...

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