Opinion ID: 3160864
Heading Depth: 1
Heading Rank: 1

Heading: facts

Text: KBZ is in the business of selling video conference equipment and related services. CBE Technologies, LLC (“CBE”) purchased those products and services pursuant to a “Dealer Agreement” between the parties, dated April 22, 2008. The Dealer Agreement set out the requirements and the process by which the parties would order goods and services, submit invoices, and get paid in the future. Although KBZ delivered the goods and services contemplated by the contract, CBE failed to pay for them. According to its Complaint, KBZ “continued to sell products and services to CBE during this time period based on CBE’s promises to pay and the representations, statements and assurances of the Individual Defendant[s] that [KBZ] would be paid for what it supplied to CBE.” (J.A. at 16.) In total, for unpaid invoices from September 2012 to February 2013, CBE owed KBZ $996,103.67. KBZ filed this action on April 16, 2013.2 The Complaint alleges breach of contract and unjust enrichment claims against CBE alone; claims for fraud and negligent 1 Because the District Court dismissed KBZ’s Complaint against the Individual Defendants in response to their motion to dismiss, we recount the facts as alleged in the Complaint and draw all reasonable inferences in favor of KBZ. See Phillips v. Cty. of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008). 2 misrepresentation against both CBE and the Individual Defendants; and a claim for civil conspiracy against the Individual Defendants alone. In making its claims against the Individual Defendants – who are identified in the Complaint as the President, Purchasing Manager, and other “managers” of CBE (J.A. at 14) – KBZ says that, as early as December 2012, CBE’s ownership had decided to “move the company in a different direction” and to “wind down” certain operations, which included moving “away from purchasing products and services of the type [KBZ] provided.” (J.A. at 16.) Nevertheless, despite not being “financially sound,” CBE continued to order products from KBZ without disclosing that the company was planning changes in its business. (J.A. at 16.) According to KBZ, the Individual Defendants made “intentional misrepresentations” and “intentionally lied” so as to “fraudulently induce [KBZ] to continue selling and deliver[ing] products and services.” (J.A. at 17.) By those alleged lies, the Individual Defendants “caused CBE to breach its contractual business arrangement with [KBZ].” (J.A. at 17.) In so doing, says KBZ, they “acted fraudulently and tortiously with respect to [KBZ].” (J.A. at 17.) KBZ urged the District Court to “pierce the corporate veil and hold the Individual Defendants personally liable in this action.” (J.A. at 17.) CBE moved to dismiss the fraud and negligent misrepresentation claims against it, and the Individual Defendants moved to dismiss all claims against them, on the basis that such claims were barred by the “gist of the action” doctrine, which generally “precludes 2 KBZ’s previously-filed state court action against CBE for breach of contract and unjust enrichment was withdrawn on June 5, 2013. 3 plaintiffs from re-casting ordinary breach of contract claims into tort claims.” eToll, Inc. v. Elias/Savion Adver., Inc., 811 A.2d 10, 14 (Pa. Super. Ct. 2002). The District Court agreed, granting the motions to dismiss, with prejudice, because the case was “at its core, an action for breach of contract.” (J.A. at 31.) The District Court noted that “KBZ does not allege any action or statement on the part of CBE or the individual defendants that could be considered a tort independent of CBE’s breach of the Dealer Agreement … .” (J.A. at 35.) Any purchases, and the course of dealings that went along with them, would be governed by the Dealer Agreement and, said the Court, would be “part and parcel” of the parties’ duties under the agreement. (Addendum to J.A. at 35a.) In particular, “KBZ alleges no injury apart from the financial losses caused by th[e] breach” of contract, “which would be fully compensable in an ordinary contract action.” (J.A. at 36.) The Court dismissed the civil conspiracy count because it concluded that the remaining claims for breach of contract and unjust enrichment could not support a cause of action for conspiracy against the Individual Defendants.3 KBZ eventually accepted an offer from CBE to settle the remaining counts, and the District Court entered judgment in favor of KBZ against CBE in that amount. KBZ then filed a timely notice of appeal from the District Court’s order insofar as it “dismissed Defendants John Mann, Brenda Barrowclough, Diane Stemm and Thomas A. 3 Despite the pleading defects pointed out in these motions, KBZ elected not to amend its Complaint pursuant to Federal Rule of Civil Procedure 15(a)(1)(B). Instead, KBZ filed an opposing brief and did not make an offer of proof as to how it would amend its Complaint if leave were given. 4 Waldman.” (J.A. at 45.) No appeal was filed as to the dismissal of the tort claims against CBE.