DocketNumber: C.A. No. N12C-07-220 JRS CCLD
Citation Numbers: 62 A.3d 1233
Judges: Slights
Filed Date: 11/27/2012
Status: Precedential
Modified Date: 1/6/2022
I.
A dispute arising under a Pretreatment and Disposal Agreement (the “Agreement”) between plaintiff, Eureka Resources, LLC (“Eureka”), and defendants, Range Resources-Appalachia, LLC (“Range”) and Range Resources Corpora
Eureka argues that defendants have glossed over the choice of law analysis in order to reach the conclusion that Texas law, more favorable to RRC’s position, applies here. According to Eureka, Pennsylvania has the most significant relationship to this controversy and, therefore, Pennsylvania law should apply. In this regard, Eureka disagrees with defendants’ contention that, when considering the viability of an intentional tort claim, the Court should defer to the law of the state where the tortious conduct allegedly occurred (in this case Texas). Instead, Eureka contends that Delaware courts will engage in a full choice of law analysis under the Restatement (Second) of Conflicts even in cases where the claim at issue is an intentional tort. A proper choice of law analysis, says Eureka, points to Pennsylvania law which does not, says Eureka, ipso jure preclude claims that a parent has tortiously interfered with its subsidiary’s ability to perform a contract.
After careful consideration of the parties’ submissions and presentations at oral argument, the Court concludes that Pennsylvania law applies to this dispute. Under Pennsylvania law, it is premature at this stage of the litigation to determine whether Eureka’s tortious interference claim is viable as a matter of law. Accordingly, defendants’ motion to dismiss must be DENIED.
II.
A. The Parties
Eureka is a Delaware limited liability company with its principal place of business in Pennsylvania.
B. The Agreement
Eureka and Range entered into the Agreement on August 6, 2008, for a term of five years.
In 2010 and 2011, disputes arose between the parties regarding the extent of Range’s obligation to pay reservation fees.
Eureka initiated this lawsuit in July, 2012, and has asserted the following claims: (1) Count I-breach of contract; (2) Count II-unjust enrichment; (3) Count Ill-promissory estoppel; (4) Count IV-tor-tious interference with contract (against RRC); (5) Count V-civil conspiracy (against RRC and Range); and (6) Count VI-declaratory judgment. Defendants have moved to dismiss Counts IV and V.
III.
Although the parties offer differing views of the substance of Texas and Pennsylvania law regarding tortious interference with contract, the essence of their dispute lies in their differing views regarding the focus of Delaware’s choice of law analysis when considering the proper law to apply to intentional tort claims. Defendants argue that Delaware places great (almost presumptive) weight on the lex loci delicti (the law of the site of the tort) when determining choice of law for intentional tort claims. Eureka, on the other hand, argues that the defendants’ emphasis upon lex loci delicti is misplaced and contrary to the now-settled law of Delaware.
The parties’ fundamental disagreement regarding the contours of Delaware’s choice of law analysis is significant here as both parties appear to appreciate that Eureka’s tortious interference of contract claim stands a better chance of success under Pennsylvania law than Texas law. Mindful of this dynamic, the Court will first consider the choice of law before determining the viability of Eureka’s tort claims.
IV.
A motion to dismiss under Rule 12(b)(6)
V.
A. Choice of Law
When more than one state’s law might apply to a dispute (here Texas, Pennsylvania and possibly Delaware), the Court will apply Delaware choice of law standards to determine which law shall apply.
The defendants have cited to cases from the United States District Court for the District of Delaware, two decided prior to Lake and one after, in support of the proposition that Delaware courts will apply the law of the state where the alleged tort was committed when determining choice of law for intentional torts claims.
“The Second Restatement contemplates a two-step process in which the court (1) chooses a presumptively applicable law ...; and (2) tests this choice against the principles of § 6 in light of relevant contacts identified by general provisions like § 145 (torts) and § 188 (contracts).”
The Restatement (Second) of Conflicts § 6 “lists the following relevant choice of law considerations”
The defendants argue that the relevant factors point to Texas law; Eureka wants Pennsylvania law to apply, and for good reason. Texas does not recognize a claim that a parent tortiously interfered with its subsidiary’s performance of a contra ct;
1.Place of Injury
Eureka alleges that RRC’s interference with the Agreement caused injury to Eureka in Pennsylvania, where Eureka maintained its principal place of business and where it performed the services required under the Agreement.
2.The Place of the Injury-Causing Conduct
RRC, the target of the tortious interference with contract claim, is incorporated in Delaware but operates, as does Range, in Texas.
3.Domicile, Residence, Place of Incorporation and Place of Business of the Parties
According to the complaint, Eureka is a Pennsylvania limited liability company, Range is a Delaware limited liability company and RRC is a Delaware corporation.
The Agreement, which is the genesis of this dispute, called for “Eureka [ ] to provide water pretreatment and disposal services for wastewater [ ] produced from Range’s drilling, hydraulic fracturing, and gas well producing sites in Pennsylvania....”
5. The Broader § 6 Policy Considerations
Of the seven broad policy considerations recognized in § 6, the Court is satisfied that only the following have any possible relevance here: (2) the relevant policies of the forum; (4) protection of justified expectations; (5) the basic policies underlying the field of law; and (6) certainty, predictability and uniformity of result. They will be considered seriatim below.
a. Relevant Policies of the Fora
Both Pennsylvania and Texas recognize the common law tort of tortious interference with contract, and it is safe to conclude that both states “have an interest in deterring tortious interference with contract and punishing those who do so interfere.”
b. Protection of Justified Expectations
This factor points to Pennsylvania. The Agreement is a Pennsylvania contract in every sense. Eureka was to perform the bargained-for services exclusively in Pennsylvania; Range’s drilling operations were in Pennsylvania; and the Agreement incorporates Pennsylvania law with respect to allowable finance charges on late pay
c. Policies Underlying The Field of Law
The Court can discern no overriding policy underlying tort law generally, or the law of tortious interference with contract specifically, that would point either to Pennsylvania or Texas. While it is true that the nuances of the laws of Texas and Pennsylvania with regard to tortious interference with contract may lead to different results in this case, depending upon which state’s law applies, the parties have pointed to nothing in the underlying policies of the laws of either Texas or Pennsylvania that would suggest that either jurisdiction has an interest in this controversy superior to the other’s.
The defendants have suggested that Delaware’s federal court, in pre-Lake decisions, has recognized that the policy underlying intentional torts is “punitive” rather than “compensatory” and that the punitive aspect of tort law points to the law of the state where the tort occurred.
d. Certainty, Predictability and Uniformity of Result
This factor allows the Court to consider whether either party has engaged in improper forum shopping or to enforce the parties’ agreed-upon choice of law.
6. The Choice of Law Conclusion
The defendants rest their argument on law that no longer governs the choice of law analysis in Delaware. Absent an applicable “presumption” within the Restatement (Second) of Conflicts that would direct the Court to place particular weight upon a single factor, the Court is obliged to perform a complete choice of law analysis under the most significant relationship framework.
B. The Viability of Eureka’s Tort Claims Under Pennsylvania Law
Having determined that Pennsylvania law will apply at this stage to determine whether Eureka has stated actionable tort claims, the Court turns to the question of whether a parent can tortiously interfere with its subsidiary’s contract as a matter of Pennsylvania law. In Advent Systems Ltd. v. Unisys Corp.,
The Third Circuit has also applied the Pennsylvania law of privilege to determine the propriety of a parent’s interference with a subsidiary’s existing contract as well.
It is clear under Pennsylvania law that there is no per se bar to claims that a parent tortiously interfered with its subsidiary’s contract. Rather, Pennsylvania law embraces a fact-intensive inquiry as to whether the parent’s interference with its subsidiary’s contract was “proper”
It is “reasonably conceivable” that Eureka can prove that RRC improperly interfered with Range’s performance of the Agreement. Because Eureka’s tortious interference of contract claim is viable as plead, defendants’ argument that Eureka’s derivative claim of civil conspiracy fails for want of an actionable underlying tort misses the mark.
VI.
Based on the foregoing, defendants’ motion to dismiss must be DENIED.
IT IS SO ORDERED.
. Compl. atHl.
. Id. at ¶¶ 2-3.
. Id.
. Id. at ¶ 5.
. Id.
. Id. at ¶¶ 5-7. The monthly reservation fee increased after the first year. It would not be triggered if Range delivered more than a contractually-determined minimum gallons per month for pretreatment. Id.
. Id. at ¶¶ 12-16.
. Id. at ¶¶ 14-18.
. Id. at ¶¶ 43-44.
. Del.Super. Ct. Civ. R. 12(b)(6)(allowing for dismissal of a complaint for "failure to state a claim upon which relief may be granted.”).
. Browne v. Robb, 583 A.2d 949, 950 (Del. 1990)("The complaint sufficiently states a cause of action when a plaintiff can recover under any reasonably conceivable set of circumstances susceptible of proof under the complaint.”).
. In re Tri-Star Pictures, Inc. Litig., 634 A.2d 319, 326 (Del. 1993) (holding that the reviewing court must accept the allegations of the complaint as true) (citation omitted).
. Precision Air v. Standard Chlorine of Del., 654 A.2d 403, 406 (Del. 1995).
. Hedenberg v. Raber, 2004 WL 2191164, at *1 (Del.Super. Aug. 24, 2004).
. See Travelers Indem. Co. v. Lake, 594 A.2d 38, 47 (Del.1991).
. Id. at 41.
. Id. at 43, 47.
. Id.
. Def. Opening Brief, at 6 (citing Johnston Assoc., Inc. v. Rohm & Haas Co., 560 F.Supp. 916 (D.Del.1983); Hill v. Equitable Trust Co., 562 F.Supp. 1324 (D.Del.1983); Christ v. Cor-mick, 2007 WL 2022053 (D.Del. Jul. 10, 2007)).
. See Johnston Assoc., 560 F.Supp. at 918 ("The claim of tortious interference with plaintiff's contractual rights is, of course, a tort claim. Consequently, the Court must utilize a lex loci delecti analysis”)(emphasis supplied); Hill, 562 F.Supp. at 1334 ("Delaware courts, when confronted with a substantive choice of law situation in a tort action, will apply the law of lex loci delecti, i.e., the law of the state where the tort or injury occurred.”); Christ, 2007 WL 2022053, at *6 ("Generally, in tort cases, Delaware courts have followed 'the principle of lex loci delecti, and [have] appl[ied] the law of the place of the injury ... [except][i]n the case of intentional torts [where the] court [will] apply the substantive law of the state [] where the defendant's wrongful conduct primarily occurred.' ")(citing pre-Lake decisions as authority). But see Integral Resources (PVT) Ltd., 2005 WL 3134068, at *1 (3d Cir. Nov. 23, 2005)(apply-ing Delaware law and noting that "Delaware applies the ‘most significant relationship test’ " in all tort cases).
.See e.g. Restatement (Second) of Conflicts, § 145(2)(a), (b) (1971); UbiquiTel Inc. v. Sprint Corp., 2005 WL 3533697, at *3-4 (Del. Ch. Dec. 19, 2005) (applying a full § 145 analysis to determine choice of law for a tortious interference with contract claim); Horizon Pers. Commun., Inc. v. Sprint Corp., 2006 WL 2337592, at *25 (Del.Ch. Aug. 4, 2006) (same); Soterion Corp. v. Soteria Mezzanine Corp., 2012 WL 5378251, at *12 (Del.Ch. Oct. 31, 2012) (same).
. Travelers Indem. Co., 594 A.2d at 47-48.
. Kelco Metals, Inc. v. Morgan, 2010 WL 1427583, at *4 (N.D.I11. April 5, 2010).
. See Id. (providing a clear explanation of the manner in which the Restatement (Second) of Conflicts ‘‘presumptive rules” should be applied).
. Travelers Indem. Co., 594 A.2d at 47.
. Restatement (Second) of Conflicts § 6 (1971).
. Id. at § 145.
. Id. at § 145(2). See also Travelers Indem. Co., 594 A.2d at 48 (‘‘[T]he Restatement test does not authorize a court to simply add up the interests on both sides of the equation and automatically apply the law of the jurisdiction meeting the highest number of contacts listed in Sections 145 and 6. Section 145 has a qualitative aspect.”).
. See Cleveland Reg. Med. Ctr., L.P. v. Celtic Props., L.C., 323 S.W.3d 322, 348 (Tex.Ct.App.2010)(holding that "a parent corporation is incapable of tortuously [sic] interfering with its subsidiary’s contracts.”).
. See Shared Commun. Serv. Of 1800-80 JFK Blvd., Inc. v. Bell Atlantic Prop., Inc., 692 A.2d 570 (Pa.Super.l997)(holding that parent can commit actionable tortious interference with contract in certain circumstances).
. Compl. at ¶¶ 1, 5.
. Restatement (Second) of Conflicts, § 145(2) cmt. f (1971). See also UbiquiTel Inc., 2005 WL 3533697, at *3 (same); Pittway Corp. v. Lockheed Aircraft Corp., 641 F.2d 524, 528 (7th Cir.l981)(‘The harm that [plaintiff] suffered and for which it seeks to be compensated was purely economic and as such was sustained in Illinois, where [plaintiff's] principal place of business is located.... ”).
. Compl. at ¶¶ 2, 3.
. Id. at ¶ 43.
. Of course, the facts as developed in discovery may prove otherwise.
. Cf. UbiquiTel Inc., 2005 WL 3533697, at *4 ("Where, as here, the injury will occur in more than one state, ‘the place where the defendant's conduct occurred will usually be given particular weight in determining the state of the applicable law.’ ”) (citations omitted).
. Compl. at ¶¶ 1-3.
. Restatement (Second) of Conflicts, § 145(2) cmt. e (1971)(place of business is more important than state of incorporation when "the interest [at issue in the litigation] is a business or financial one, such as in the case of unfair competition [or] interference with contractual relations.”).
. Compl. at ¶¶ 1-3.
. Eureka contends that the plaintiff’s principal place of business is the most important contact of all of § 145's contacts in cases
. Compl. a^5.
. Id. at Ex. 1 (the Agreement, incorporated by reference at ¶ 5).
. See Id. at ¶¶ 40-48; Juliette Fowler Homes, Inc. v. Welch Assoc., Inc., 793 S.W.2d 660, 664 (Tex. 1990); Phillips v. Selig, 959 A.2d 420, 429 (Pa.Super.2008).
. See Restatement (Second) of Conflicts, § 145(2) cmt. e (1971) (the place where the parties' relationship is centered will be given more weight when "the place of injury or the place of conduct ... are also located in [that] state.”); Soterion Corp., 2012 WL 5378251, at *13 (considering choice of law for a tortious interference with contract claim and finding "that the factor with the greatest importance is [ ] the place where the relationship between the parties was centered.”).
. UbiquiTel Inc., 2005 WL 3533697, at *5.
. Id.
. Compl. at ¶ 5 (incorporating Agreement, attached as Ex. 1).
. Id. at ¶ 43.
. Restatement (Second) of Conflicts, § 6, cmt. g (197 Distinguishing between negligence-based torts and other torts).
. See Defendants Op. Br. at 5-6 (citing Johnston, 560 F.Supp. at 918; Hill, 562 F.Supp. at 1334-35).
. Id. See also Travelers Indent. Co., 594 A.2d at 43, 47.
. Id.See also UbiquiTel Inc., 2005 WL 3533697, at *4 (noting distinction between purely financial or economic injuries and other injuries).
. See Restatement (Second) of Conflicts, § 6 cmt. i (1971).
. See Travelers Indent. Co., 594 A.2d at 47.
. UbiquiTel, 2005 WL 3533697, at *5 (noting that the record on a motion to dismiss is "undeveloped [] with respect to many of the factors relevant to the choice of law analysis" and, therefore, holding that the choice of law "conclusion is preliminary only.”). The Court shares this view of the record sub judice and, therefore, likewise concludes that this choice of law determination must be deemed "preliminary only.”
. 925 F.2d 670 (3d Cir.1991).
. Id. at 673.
. Id.
. See Green v. Interstate United Mgt. Serv. Corp., 748 F.2d 827, 831 (3d Cir.1984).
. Id.
. Id. (citations omitted).
. Id.
. Id.
. Advent Systems Ltd., 925 F.2d at 673.
. Defendants Rep. Br. at 6.
. Compl. at ¶ 44, 45.
. Jaws (Universal Pictures 1975) (Chief Martin Brody to Matt Hooper).
. See Central Mart. Co. v. Morgan Stanley Mort. Cap. Holdings, LLC, 27 A.3d 531, 537 (Del.201 l)(strongly reiterating that "the governing pleading standard in Delaware to survive a motion to dismiss is 'reasonable conceivability’ that plaintiff can prove a set of facts that would entitle him to relief.”).
.See Baker v. Rangos, 229 Pa.Super. 333, 324 A.2d 498, 506 (1974) (discussing elements of a prima facie civil conspiracy claim).