According to this Court’s Policies and Procedures, reply briefs may be filed only with 1

leave of the Court. As leave of the Court was not sought, defendants’ reply brief will not be

considered. 

 Plaintiff Compliant is a successor-in-interest to Targeted Media for Medicine, Inc., the 2

company that entered into the Agreement with XO Defendants. Am. Compl. ¶ 1. XO Texas,

Inc. is a subsidiary of XO Communications, Inc. Id. ¶ 4. 

1

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

COMPLIANT RX SOLUTIONS INC. : CIVIL ACTION

Plaintiff, :

 :

 v. :

 :

XO COMMUNICATIONS, et al., : NO. 05-CV-676-LDD

Defendants/Third Party Plaintiffs, :

 :

v. :

 :

HENRY COMMUNICATIONS, INC. :

Third Party Defendant. :

MEMORANDUM

LEGROME D. DAVIS, J. APRIL 13, 2006

Presently before this Court is the Motion to Dismiss and, Alternatively, Motion for

Summary Judgment filed by XO Communications, Inc. and XO Texas, Inc. (Doc. No. 33) and

Plaintiff’s response thereto (Doc. No. 37). For the reasons that follow, Defendants’ Motion is 1

denied. 

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

On April 1, 2002, XO Communications, Inc. and XO Texas, Inc. (“XO Defendants”)

and/or Defendant Victor J. Quinones entered into a written agreement (“Agreement”) with

Plaintiff Compliant Rx Solutions, Inc. (“Compliant”). Am. Compl. ¶ 11. Defendant Quinones, 2

Case 2:05-cv-00676-LDD Document 50 Filed 04/13/06 Page 1 of 7
 Specifically, the services included inbound toll free service, debit card platform services 3

consisting of the balance information, number of minutes remaining and other information

associated with a standard debit call card, terminating service, and standard reporting and access

services. Am. Compl. ¶ 16; see also Compl., Ex. B. Plaintiff also activated toll free numbers,

rates schedules and PINS for services requested by XO Defendants. Am. Compl. ¶ 16.

 On April 15, 2002, plaintiff sent XO Defendants an invoice in the amount of $34,278.86 4

for services provided between April 4, 2002 and April 14, 2002. Id. ¶ 19. On April 22, 2002,

plaintiff sent XO Defendants an invoice in the amount of $34,164.17 for services provided

between April 15, 2002 and April 21, 2002. Id. ¶ 20. On May 1, 2002, plaintiff sent XO

Defendants an invoice in the amount of $36,365.59 for services provided between April 22, 2002

and April 28, 2002. Id. ¶ 21. On May 8, 2002, plaintiff sent XO Defendants an invoice in the

amount of $43,097.30 for services provided between April 29, 2002 and May 7, 2002. Id. ¶ 22. 

On May 21, 2002, plaintiff sent XO Defendants an invoice in the amount of $6,626.05 for

services provided between May 8, 2002 and May 20, 2002. Id. ¶ 23.

2

who was employed by XO Defendants at the time, signed the Agreement. Id. ¶¶ 10, 11. Prior to

entering into the Agreement, Defendant Quinones represented to plaintiff that he had authority to

enter the Agreement on behalf of XO Defendants. Id. ¶ 12. Pursuant to the Agreement, plaintiff

provided various telecommunications services to XO Defendants and/or Defendant Quinones and

customers of XO Defendants. Id. ¶ 16. XO Defendants and/or Defendant Quinones agreed to 3

pay plaintiff for telecommunications services according to a schedule attached to the Agreement.

Id. ¶ 17. Plaintiff sent XO Defendants five invoices totaling $154,531.97 for services provided

between April 4, 2002 and May 20, 2002. Id. ¶¶ 19-24. XO Defendants did not pay any of the 4

invoices. Id. ¶ 24. 

On January 13, 2005, plaintiff commenced this action against XO Defendants in the

Philadelphia Court of Common Pleas, alleging breach of contract, estoppel, unjust enrichment,

restitution and quantum meruit. On February 11, 2005, XO Defendants removed this matter to

this Court based on diversity jurisdiction. XO Defendants filed a third party complaint against

Henry Communications, Inc. on March 16, 2005. On October 18, 2005, plaintiff filed an

Case 2:05-cv-00676-LDD Document 50 Filed 04/13/06 Page 2 of 7
 The instant motion was filed after XO Defendants answered plaintiff’s Amended

5

Complaint and over a month before the discovery deadline of April 10, 2006. 

3

Amended Complaint, adding Victor Quinones as a defendant. On February 3, 2006, the instant

motion to dismiss or, in the alternative, motion for summary judgment was filed. 

5

II. LEGAL STANDARD

XO Defendants argue that, pursuant to Federal Rule of Civil Procedure 12(b)(6),

plaintiff’s claims against XO Texas, Inc. should be dismissed for failure to state a claim and

plaintiff’s claims against XO Communications, Inc. should be dismissed because plaintiff failed

to file a proof of claim after XO Communications, Inc. filed for Chapter 11 bankruptcy. Defs’

Mot. at 1. A Rule 12(b) motion to dismiss a complaint must be filed before any responsive

pleadings. Turbe v. Government of Virgin Islands, 938 F.2d 427, 428 (3d Cir. 1991). A postanswer motion to dismiss pursuant to Rule 12(b)(6) may be treated, in the court’s discretion, as a

Rule 12(c) motion for judgment on the pleadings. Trustees of the University of Pennsylvania v.

Mayflower Transit, No. 97-1111, 1997 U.S. Dist. LEXIS 14577, at *4 (E.D. Pa. Sept. 16, 1997)

(citing Scheetz v. Morning Call, Inc., 130 F.R.D. 34, 36 (E.D. Pa 1990)); see also Turbe, 938

F.2d at 428; Prendergast v. Janecka, No. 00-CV-3099, 2001 U.S. Dist. LEXIS 9689, at *1 n.1

(E.D. Pa. July 10, 2001). Since the instant motion was filed after XO Defendants filed their

second Answer, this motion shall be treated a Rule 12(c) motion for judgment on the pleadings. 

When a defense of failure to state a claim is asserted in a motion for judgment on the pleadings,

the Rule 12(b)(6) standards are applied. Turbe, 938 F.2d at 428.

Dismissal for failure to state a claim pursuant to Rule 12(b)(6) is appropriate when it

clearly appears that the plaintiff can prove no set of facts in support of the claim which would

Case 2:05-cv-00676-LDD Document 50 Filed 04/13/06 Page 3 of 7
4

entitle him to relief. See Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Robb v. City of

Philadelphia, 733 F.2d 286. 290 (3d Cir. 1984). In deciding a motion to dismiss pursuant to Rule

12(b)(6), all facts alleged in the complaint must be accepted as true. Malia v. General Electric

Co., 23 F.3d 828, 830 (3d Cir. 1994). A court may consider any document appended to and

referenced in the complaint on which plaintiff’s claim is predicated. See Fed. R. Civ. P. 10(c); In

re Burlington Coat Factory Securities Litigation, 114 F.3d 1410, 1426 (3d Cir. 1997); In re

Westinghouse Securities Litigation, 90 F.3d 696, 707 (3d Cir. 1996). A claim may be dismissed

when the facts alleged and the reasonable inferences therefrom are legally insufficient to support

the relief sought. See Pennsylvania ex rel. Zimmerman v. PepsiCo., Inc., 836 F.2d 173, 179-80

(3d Cir. 1988). 

III. DISCUSSION

A. Claims Against Defendant XO Texas, Inc.

XO Defendants argue that, even accepting plaintiff’s allegations as true, plaintiff fails to

state a claim against XO Texas, Inc. (“XO Texas”). Defs’ Memo. at 7-8. XO Defendants base

their argument on the fact that the Agreement, which is attached to plaintiff’s original complaint,

is silent as to XO Texas. Id. at 8. In the Agreement, XO Texas is not mentioned by name;

however, the address provided for XO Communications is the address of XO Texas. See id. at

Ex. B; Am. Compl. ¶ 3. Plaintiff alleges that Defendant Quinones, who signed the Agreement,

was employed as a sales manager for both XO Communications, Inc. and XO Texas. Am.

Compl. ¶ 10. Accepting the facts alleged in the Amended Complaint as true, this Court finds that

plaintiff has adequately stated a claim against XO Texas. 

XO Defendants also argue that the Amended Complaint contains allegations that

Case 2:05-cv-00676-LDD Document 50 Filed 04/13/06 Page 4 of 7
 XO Defendants did not assert the affirmative defense of discharge in bankruptcy in their 6

Answer to plaintiff’s Complaint or their Answer to plaintiff’s Amended Complaint. The first

time the affirmative defense of discharge in bankruptcy was asserted was in the instant motion.

On April 10, 2006, this Court granted XO Defendants’ Motion for Leave to Amend Answer to

Add Affirmative Defense of Discharge in Bankruptcy. 

5

Defendant Quinones was authorized to enter into the Agreement on behalf of XO

Communications, Inc., not XO Texas. Defs’ Memo. at 8. In its Amended Complaint, plaintiff

defined XO Communications, Inc. and XO Texas collectively as “XO” or “XO Defendants.”

Am. Compl. ¶ 4. Plaintiff alleged that Defendant Quinones “had authority, including but not

limited to [actual], express, implied, and/or apparent authority, to bind Defendant XO to the

agreement.” Id. ¶ 14. Since plaintiff defined “XO” to include both XO Communications, Inc.

and XO Texas, plaintiff adequately pled that Defendant Quinones had authority to bind XO

Texas to the Agreement.

B. Affirmative Defense of Discharge in Bankruptcy

XO Defendants argue that plaintiff’s claims against XO Communications, Inc. (“XO

Communications”) were discharged during XO Communications’ bankruptcy proceedings and,

as a result, plaintiff is barred from proceeding against XO Communications. Defs’ Memo. at 4- 6

7. To resolve a Rule 12(b)(6) motion, the court may take judicial notice of public records.

Southern Cross Overseas Agencies, Inc. v. Wah Kwong Shipping Group Ltd., 181 F.3d 410, 426

(3d Cir. 1999). In determining whether the affirmative defense of discharge in bankruptcy

applies, it is appropriate to look not only to the face of the complaint, but also to public

documents related to XO Communications’ bankruptcy proceedings, of which judicial notice is

hereby taken. See id; ALA, Inc. v. CCAIR, Inc., 29 F.3d 855, 859 (3d Cir. 1994) (noting that a

claim is subject to dismissal under Rule 12(b)(6) when an affirmative defense appears on the face

Case 2:05-cv-00676-LDD Document 50 Filed 04/13/06 Page 5 of 7
6

of the complaint). 

On June 17, 2002, XO Communications filed for Chapter 11 bankruptcy protection in the

United States Bankruptcy Court, Southern District of New York. Defs’ Memo., Ex. C. The

bankruptcy court set July 22, 2002 as the deadline for filing proofs of claims. Id, Ex. D. The

court ordered that any claim holder required to file a proof of claim that failed to file a proof of

claim on or before July 22, 2002 would be forever barred, estopped, and permanently enjoined

from asserting such claim. Id., Ex. D ¶ 8. XO Defendants argue that since plaintiff did not file a

claim on or before July 22, 2002, plaintiff’s claims against XO Communications were discharged

by the 2002 reorganization. See id., Ex. F. 

Inadequate notice is a defect which precludes discharge of a claim in bankruptcy.

Chemetron Corp. v. Jones, 72 F.3d 341, 346 (3d Cir. 1995). Bankruptcy law divides claimants

into two types, known and unknown. Id. XO Defendants contend that plaintiff was an unknown

creditor and therefore, notice by publication in the Wall Street Journal was sufficient. Defs’

Memo. at 5; see also Chemetron, 72 F.3d at 346 (noting that notice by publication generally is

sufficient for unknown creditors). Plaintiff argues that it was a known creditor and, therefore,

actual written notice of the bankruptcy filing was required. Pl’s Resp. at 12; see also Chemetron,

72 F.3d at 346 (citing City of New York v. New York N.H. & H.R. Co., 344 U.S. 293, 296

(1953)) (noting that known creditors must be provided actual written notice). 

It is not apparent from the Amended Complaint and the public documents related to XO

Communications’ bankruptcy proceedings whether plaintiff was a known or unknown creditor.

Further development of the record is needed in order to determine whether the affirmative

defense of discharge in bankruptcy applies. See Worldcom, Inc. v. Graphnet, Inc., 343 F.3d 651,

Case 2:05-cv-00676-LDD Document 50 Filed 04/13/06 Page 6 of 7
 XO Defendants’ motion to dismiss states that it is alternatively a motion for summary 7

judgment. Defs’ Mot. at 1. However, the memorandum of law provided is “in support of

Defendants’ Motion to Dismiss.” Defs’ Memo. at 1. XO Defendants never clearly set forth an

alternative motion for summary judgment. See id. 

While XO Defendants attached exhibits outside the pleadings for this Court to consider,

only one exhibit, Exhibit E, is not properly considered when deciding a motion to dismiss. When

matters outside the pleadings are considered on a motion to dismiss or a motion for judgment, the

motion is treated as one for summary judgment and all parties must be given reasonable

opportunity to present all material pertinent to such a motion. Fed. R. Civ. Proc. 12(b), (c). Since

the first time that XO Defendants asserted the affirmative defense of discharge in bankruptcy was

in the instant motion, this Court finds that plaintiff has not had a “reasonable opportunity” to

present all material pertinent to such a motion. See Pl’s Resp. at 2 (noting that a summary

judgment motion is premature and that certain issues of fact at the heart of his motion could be

clarified through additional deposition testimony). Therefore, this Court will not convert XO

Defendants’ Motion to Dismiss into a Motion for Summary Judgment. 

7

657 (3d Cir. 2003) (noting that facts necessary to establish an affirmative defense must generally

come from matters outside the complaint). Therefore, XO Defendants’ motion to dismiss the

claims against XO Communications based on the affirmative defense of discharge in bankruptcy

is denied. 

7

IV. CONCLUSION

Accordingly, XO Defendants’ motion is denied. An appropriate order follows.

Case 2:05-cv-00676-LDD Document 50 Filed 04/13/06 Page 7 of 7